Commerce

Maximizing Your Cash Flow: Proven Strategies for Managing Burn and Extending Your Cash Runway

As a business owner, managing burn and extending your cash runway is an important task that requires careful planning and strategic decision-making. By implementing these strategies and being proactive in your efforts, you can better manage burn and extend your cash runway to ensure the long-term sustainability of your business.

It's important to constantly be looking for ways to manage burn and extend your cash runway. This is true for brands at any stage, especially when every dollar counts and you need to be strategic about how you allocate your resources. Here are some specific strategies you can use to do so.

Proactively review your business spends

Regularly review your business spends and identify areas where you might be able to cut back or find cheaper options. The first step in proactively reviewing your business spends is to set up a system for tracking your expenses. This might involve using a spreadsheet or a financial management tool to keep track of your spending.

Once you have a system in place, make it a habit to review them regularly and look for areas where you might be able to cut back or find cheaper options.

Another way to proactively review your business spends is to set spending limits for different categories of expenses. This can help ensure that you are not overspending in any one particular area and can help you stay on track with your budget.

Focus on growing your business

While it can be tempting to focus on maximizing profits in the short term, investing in the long-term growth of your business can help extend your cash runway. This might involve sacrificing your bottom line in the short term in order to invest in marketing or research and development.

One of the most effective ways to grow your business is to invest in marketing. This might involve paid advertising or implementing a content marketing strategy to drive organic traffic to your website. By increasing your visibility and reaching more potential customers, you can help grow your business and extend your cash runway.

Another way to grow your business is to constantly be innovating and improving your products or services. This might involve investing in research and development or seeking out new technologies or techniques to differentiate your offerings from the competition.

Expanding your customer base can also help grow your business by targeting new markets or customer segments, or developing partnerships or collaborations with other businesses.

Diversifying your revenue streams can help reduce your dependence on any one particular customer or product, which can help increase the overall sustainability of your business. This might involve offering new products or services, or exploring alternative revenue sources such as licensing or consulting.

Consider restructuring your business model

If cost-cutting measures and strategic investments are not enough, you may need to consider restructuring your business model. This could involve changing the way you deliver your products or services, or shifting to a business model that is more sustainable in the long run.

The first step in restructuring your business model is to review your current model and identify any areas where it might be inefficient or unsustainable. This might involve looking at your revenue streams, your distribution channels, or your cost structure.

Once you have identified areas for improvement, start brainstorming potential changes that you could make to your business model. Consider changing the way you deliver your products or services, or shifting to a different pricing model. It's important to test and refine any changes before implementing them on a wider scale.

Negotiate lower prices with suppliers

If you are spending a significant amount on materials or other supplies, try negotiating lower prices with your suppliers. This can help reduce your overall costs and extend your cash runway.

Before you start negotiating, it's important to do your research and understand the market rates for the products or services you are purchasing. This will give you a better sense of what you should be paying and will help you negotiate a better deal.

Look at your current contracts with suppliers and identify areas where you might be able to negotiate a lower price (negotiating bulk discounts, longer payment terms, or other concessions).

Once you have identified areas where you can negotiate, create a list of your negotiating points, set clear goals for the negotiations, and gather any supporting data or evidence to back up your case. You can also consider hiring a procurement specialist to help you negotiate the best deal. Be clear about your needs and budget and be open to finding creative solutions that meet both parties' needs.

Explore alternative financing options

If you are having trouble managing burn and extending your cash runway, you may want to consider alternative financing. This is where Ampla comes in.

Ampla offers a range of alternative financing options designed specifically for retail, eCommerce, and omnichannel consumer brands. 

Our flexible financing solutions can help you extend your cash runway, allowing you to focus on growing your business and reaching your goals. Whether you need working capital to cover short-term expenses or longer-term financing to fund growth initiatives, Ampla has a solution that can help. Contact us today to learn more!

Outsource non-essential tasks

If you are struggling to manage burn, outsourcing tasks such as accounting, customer service, or marketing can help reduce your costs and extend your cash runway. Be sure to research potential vendors that can provide those services. You can evaluate them based on factors such as cost, quality, and reliability. Ask for references and review the vendor's track record before making a decision. You can also negotiate a contract that outlines the scope of work, the timeline, and the payment terms. Be sure to include provisions for handling any issues that may arise during the project.

Key Takeaways

Managing burn and extending your cash runway requires a combination of cost-cutting measures, strategic investments, and proactive review of business spends. By being forward-thinking and making these decisions early on, you can help ensure the long-term success and sustainability of your business.

The author generated this text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.

Let's Grow Together

Ready to kick off your journey? 🚀

Image showing Ampla’s integrations with Quickbooks, pinterest, shopify, tiktok, and facebook to name a few. As well as conversion rates and funded status