S7 E27 – Spend your cash wisely – manage your burn rate with Jeremy Gray

A penny saved is a penny earned – Benjamin Franklin Ensure you know your burn rate and track it frequently – I would suggest a monthly at a minimum This means a monthly cash flow statement Set up controls to ensure spending commitments are properly authorized Consider the use of credit cards – giving you the ability to check spending online at any time Insist on receipts Avoid petty cash Structure your organization to reflect where you are in your business growth cycle. If you are still designing your product offering it is too early to be paying for sales and marketing personnel If you have only a few employees an in-house HR resource is probably unnecessary Have a hiring plan. Identify your core competence and outsource the rest What is your secret sauce? What is going to make your company successful? Manage your working capital (the necessary evil) intensely Negotiated extended terms with suppliers or attractive discounts for early payment. Ensure your systems enable you to take advantage of the discounts available and prevent duplicate payments Clearly set payment terms with customers at the outset This is the time to have that frank conversation. Avoid invoicing errors – consider e-invoicing Invoice promptly Keep inventories to a minimum. Keep that warehouse small Track inventories to avoid losses due to shelf life or obsolescence. If you have unwanted inventory – sell it! Not only will this generate some income it will avoid disposal costs Avoid long term commitments to maximize flexibility Short term leases – co working spaces Use contract employees for specific tasks Use IT solutions to help visualize your cash position. License rather than buy. Locate a service provider who already has a license Avoid staff churn – replacing staff is expensive, slows down progress and impacts morale Tap into every resource that is available to you: If boot strapping, call on ex colleagues with skills you need If VC backed they may have experts that can help for free or at modest rates.

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