I Had 4 Weeks of Cash Runway Left

Context

2023 was anecdotally the hardest year since 2002 for most of my friends with startups, scaleups and SMBs. Cashflow liquidity issues hit hard.

Many told me it was worse than 2008 (the Great Recession & Global Financial Crisis). The combo of the highest inflation and interest rates in decades crimped revenues, drove up costs and constrained liquidity.

The abrupt end to ZIRP (zero interest rate policies) resulted in sharp increases in cost of capital and made fundraising incrementally harder.

On top of that, many businesses had to deal with the fall out from COVID, especially declining productivity.

Real Life Story

In early 2020 at the onset of COVID, I was sitting in London dealing with a portfolio company that had less than four weeks of cash runway left.

Over an early breakfast with the CFO, he said:

I just had to laugh.

Till this day, it is one of my favorite business quotes.

PostScript: Good end to the above story. That company underwent a HyperTurnaround! and despite COVID, was able to transform itself strategically, financially and operationally.

Practical Tools

So what can you do with no cash?

Here are the 3 Cs of how to create almost immediate liquidity to extend your cash runway:

• Customers - Reach out to your best and most loyal customers, explain the situation with the right nuance, and offer them a small discount for early payment of their invoices.

• Creditors - Similarly, connect with your key suppliers and negotiate payment plans. There is a special hack with regard to statutory payments (you can find out more below). Remember to look after them afterwards however.

• Credit cards - It is actually possible to pay bills that ostensibly cannot accept credit cards, with credit cards. It is not available in all countries (find out more below).

Find Out More

Do you want to learn more about the practical tools noted above? Are you in a stressful situation with a cash runway problem that is seemingly unfixable?

Feel free to click the button below if you feel you might need help.

Until next week, may the force be with you.

Kevin

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