The article emphasizes the importance of knowing one's financial runway in startups, a crucial indicator of a company's health. As a Fractional CFO, the author notes that many founders fail to answer this fundamental question, which can lead to severe pitfalls like aggressive scaling, premature hiring, and delayed fundraising. These issues often arise from a lack of financial visibility, leaving founders unprepared for cash flow crises. The piece stresses that hope is not a viable strategy; thorough understanding of finances is essential for sustainable growth and success.
Running out of cash is one of the most preventable causes of startup failure - and yet, it remains one of the most common.
If a founder doesn't know their runway, they are steering their business without a map, hoping momentum alone will get them safely to the next milestone.
When a founder doesn't have a clear, confident answer about their cash runway, they're at risk of falling into several common traps.
Hope isn't a strategy; it's crucial for founders to have complete visibility into their financial room to avoid crises.
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