Let's Talk Cash

It goes without saying that you need to know how long the money in your bank account will last. But, what most people don’t think about it how crucial cash runway planning is for new deals.



It goes without saying that you need to know how long the money in your bank account will last. But, what most people don’t think about it how crucial cash runway planning is for new deals. If you enter a deal and you can’t afford to run your business through the lifecycle of a deal, that deal will not only mean nothing financially for you, but will hurt your reputation in the market when you can’t execute. You don’t want that, and it isn’t just about closing deals. Don’t hire people without a full plan to pay for them for a significant amount of time. I’ve seen countless small businesses hire people and then have to let them go within 6 months because they can’t afford them. Countless startups once touted as “golden children” I know about in Chicago have done this and it’s never a good look and very hard to come back from. 

This is why having a cash flow forecast is extremely critical for every small business. You have to know how every decision is going to affect how much, or how little, money you have in your bank account. Even big companies actively engage in cash management when considering projects, often resulting in taking on outside financing. It doesn’t matter how big or small you are. It’s important to know how many days of runway you have – at all times.