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Shay Ijaz
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Help for businesses with less than a year to break even

Let's say you're a startup founder with 12 months or fewer of runway after raising an angel or institutional round. Psychological management is the hardest element of low runway situations. You must manage your anxiousness to be realistic about your possibilities without being unduly optimistic. It's precarious. Founders must act immediately to become Default Alive. You can shift from Default Dead to Default Alive by growing revenue faster, cutting costs, or both. Unproductive ideas Founders can get stuck in a mental cycle and become unable to act. Commonly unproductive ideas: If I run out of money, investors will fund my company. I can sell the company if funding fails. My talks with potential acquirers or investors are advanced and likely to happen. Cost-cutting won't attract buyers. Cost-cutting will lower staff morale. Cutting costs won't attract investors. Don't use these reasons to stay Default Dead. Burn prevention tips Making more money immediately reduces burn. Hopefully you've been trying anyway. What if revenue cannot be rapidly increased to become Default Alive immediately? Cut expenses. Real estate/lease contracts are tough to break. Late-stage firms die from real estate commitments. Most high-burn scenarios involve payroll costs. If you cut workers, treat them well. Be open with your remaining staff. Remember: Treat staff as you would like to be treated. PR and marketing expenses and odd perks/parties are easy to cut. Don't spend on this. Dead end What if you have fewer than three months of cash? It's crucial to address your liabilities and the possibility of company closure. Usually, <2 months is too late. If you are in this situation, you must promptly lay off your staff and give them severance, pay down your obligations, and spend your remaining cash for shutdown expenditures. If you don't do this and end up with zero cash and salary, tax, or other responsibilities, things will get really bad. Considerations now: Close your business when it's too late. Avoid bankruptcy. You owe. Pay taxes and payroll. Personal culpability is possible in complicated situations. Discuss orderly shutdown with your lawyers. Avoid dragging things out and ending up with little gain for you, your employees, your investors, or your consumers. Even if things go wrong, act honourably. Low runway founders struggle. Ask for help. Mentors and advisors can guide you. Founders who have made it this far find it hardest to "admit defeat." If you're worried about your reputation, remember that handling bad situations correctly is just as vital as handling good ones. Finally, don't lie to yourself and act promptly and firmly.
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