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The Importance of Burn Rate and Cash Runway

Up and Running

If you’re out of cash, you’re out of business. If you’re running a startup or small business in these times, you have to be thinking about a Plan B and even a Plan C. As I write this, at least 20% of the United States is on lockdown and only “essential” businesses have their doors open. You have positive cash flow.

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The Virus Survival Strategy For Your Startup

Steve Blank

With the Covid-19 virus a worldwide pandemic, if you’re leading any startup or small business, you have to be asking yourself, “What’s Plan B? While the impact on small businesses and workers in the “gig-economy” hasn’t made the news, it will be worse for them. But next the question is, ‘What happens to my business?”.

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Three questions to answer about your COVID response

Berkonomics

Many businesses threatened with closure forever. Small businesses are the most vulnerable, even though most have furloughed employees. FINANCIAL: Do you have twelve to eighteen months of cash to cover your “burn rate” now and as you recover? Plan for reductions in fixed overhead, salaries, and other costs now.

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8 Big-Company Habits That Don’t Work In A New Venture

Startup Professionals Musings

They assume that every business role comes with health insurance, a subsidized retirement plan, and maybe a company car or first-class travel. The longer you wait to start your own business, the higher the default burn rate, and the less happy you will be to take a financial step down.

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Startup Grind Turns the Tables on Mark Suster

Both Sides of the Table

You know, there were a number of small businesses in San Diego that were producing hard drives and computer assemblies and, you know, a lot of stuff in the IT sector, and I had gone off to meet a bunch of them because I didn’t know if I could get a job. They paid engineers $4,000 more entry-point.

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How to Manage Cash Flow in a Crisis

Up and Running

And we business owners need to make sure that our businesses not only survive this crisis but find ways to thrive. For small businesses, cash flow management in a crisis is absolutely vital. It can mean the difference between stabilizing your business or falling behind. Cut all salaries by 20%.

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The Cost Equation for a Startup is Better Than Ever

Startup Professionals Musings

That’s a burn rate of at least $10K per month that can be eliminated if you are handy with computers and Quickbooks. As a rule of thumb, you should double every employee’s salary in estimating employee costs, so less is more. I recognize that different small businesses will have different types of startup costs.

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