Re:What to do if your startup is running out of cash
by zeckalpha on Thursday March 26, 2020 @12:40AM
(#22690816)
> 4.) Defer payments to vendors. If it's 15 days net pay in 60. Our customers do this all the time.
Not good advice if you think the crunch may last more than 60 days.
Re:What to do if your startup is running out of cash
by hodgesrm on Thursday March 26, 2020 @11:15AM
(#22694332)
It's part of 'flattening the curve'. In 60 days your overall burn can be lower due to other factors, so you can add the payments back in.
Re:What to do if your startup is running out of cash
by zeckalpha on Thursday March 26, 2020 @07:04PM
(#22698895)
Be sure to annualize your effective interest rate.
Re:What to do if your startup is running out of cash
by xwdv on Thursday March 26, 2020 @09:05PM
(#22699606)
My man, a lot of these things are symptoms of zombie startups. Maybe once in a while a legit business has to do these things to survive, but most of the time the businesses doing these things are zombies. They’ll never succeed, but they will also never “fail”.
1.) Cut/defer all discretionary costs.
2.) Founder salaries go to zero. They signed up for it.
3.) Defer sales commissions, e.g., don't pay until the company gets paid.
4.) Defer payments to vendors. If it's 15 days net pay in 60. Our customers do this all the time.
5.) Last of all lay off staff. If you can avoid this step it makes your bounce-back way faster.
Do all of this before you need to.
At the same time go after your marketing strategy. Downturns like what we are seeing now also represent opportunities for companies that can reposition to save users costs. Payoff for this will be longer term.
Finally...It's a bit late to point this out, but it's dumb not to setup a credit line when times are good so you can get through cash flow crunches. I would shoot for something that gives you 6 months runway if you can get it.