What to Do When You Are at the End of Your Runway
Your business runway is the amount of cash you have on hand to fund your startup at the very beginning of its launch. Every entrepreneur has their own method of funding their runway; some bootstrap their runway using their personal savings, while others attract attention early from venture capitalists and angel investors. With that initial funding, clever and creative entrepreneurs can accomplish quite a lot — but eventually, all runways end.
If your business isn’t ready to be self-sustaining, you need to find ways to inject cash into your startup at the end of its runway. Here are a few ideas for extending your runway as long as possible and keeping your business dream alive.
Manage Your Expenses
The lower your expenses, the longer your runway will last. Cutting your costs might sound like a simple solution for extending your runway, and for some startups, it might be. Some entrepreneurs with low operating costs and high initial funding might be profligate with their spending during their runway period, and as the end of the runway approaches, it might be simple to distinguish between necessary expenses and superfluous outlay. However, for most entrepreneurs, managing expenses is much easier said than done.
As the end of your runway approaches, you need to take a good, hard look at your company’s expenses. You might rank them in order of necessity to help you understand which costs are priorities and which can be sacrificed to keep your runway going. As your business begins to sustain itself, you may be able to reintroduce some non-essential expenses, but identifying vital business processes will help you focus during this critical time of business growth and development.
Generate New Revenue
Your primary business operations are not generating enough revenue to sustain itself, so you might want to consider integrating other operations that can increase your business’s earnings. These business side hustles can help fund your main business idea as it continues to grow:
Lease or sublet your offices. If your business has a larger property than it currently needs, you might rent out your available offices or warehouses to another business, freelancers or others who are looking for short-term or budget commercial space.
Create online courses. Through your experience in entrepreneurship, you have become an expert in building a business in your industry. You can capitalize on that knowledge and skill by training others through paid online courses.
Then again, you might consider altering your business strategy to boost the profitability of your startup. Some ideas for that include:
Increase your prices. Your products or services might be priced too low, especially considering recent inflation. Adapting your pricing grid to your needs might solve a surprising number of your runway woes.
Switch to subscription pricing. There’s a reason so many companies have pivoted from one-off services to subscription services: The latter is more lucrative. If your business can implement a subscription pricing model, you should consider doing it now.
Offer discounts. Sales and discounts incentivize wavering consumers to give your business a try, which might transform them into loyal customers. You might offer limited-time sales, discounts in return for ratings or reviews or other programs to convert your leads.
Consider New Funding or Financing
When one runway ends, another one can begin. If neither of the above solutions will fully resolve the issue of your rapidly diminishing business savings, you might need to find new sources of funding. If you are one of the rare entrepreneurs who attracted the attention of an angel investor or venture capitalist, you might approach them with your concerns and request another infusion. Otherwise, you should consider some form of financing, like business loans or lines of credit.
If you haven’t yet wondered how to get a small business loan, you should be happy to learn that the process is simple, especially if you work with an online lender. You will need to assemble some crucial business documents, such as your business licenses, your business plan, a year of bank statements, tax returns and balance sheets, among other papers. Your lender should direct you to the best financing option for your business, so you can continue growing and working toward independent success.
Your runway is ending, but that doesn’t mean your business has to come to a close, too. With the right preparations, you can give yourself more time to build a strong and successful organization that takes off and flies.
