The last thing you want to be doing is losing money on every transaction - a seemingly obvious rule that was ignored by too many as the startup community drifted from business fundamentals during the recent economic boom. You have to grow.Įven if you don’t feel that you’re in a cash-constrained situation, in an environment of heightened uncertainty, the focus should be on getting to profitability in your unit economics. However, as an early-stage startup, you are not going to cut your way to success. Your strategic priority should be to reduce your cash outflow and extend your runway, either by getting to profitability or raising a new round of capital, so you’ll be in a position to respond when the market turns and capital becomes more available. If you’re enduring losses relative to a modest cash position, you don’t have the luxury to heavily invest in growth. Right now, most startups are feeling cash-constrained. To adapt to the new rules, Founders first need to ask if they are cash-constrained. Because of less abundant access to capital and lower valuations, some startups will have a harder time raising money. In the new environment, a lot depends on your cash position.
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