Extending Your Financial Runway to Give Your Business Room to Fly

You want to give your business the best possible chance of success. You work harder than anyone you know. You read business books, both good and bad, in search of tidbits that will give you the edge. But the best thing you can do for your business is to extend your financial runway.

What Is a Financial Runway?

Runway is the name given to the length of time you have before something untoward happens. Take an airport runway. An airplane has from the beginning of the runway to the end to take flight. There’s nothing but dirt and scariness after that. The same applies to business. We have only so much money and time to make our business fly. After that it’s all dirt and scariness.

Time and Money

The two elements of runway are time and money. Money buys us time to figure out the elements of our business. Money buys us time to refine the software, to build our market share, to put processes into place and to become profitable. The less money we use each week and month, the more time we have. Time may be the difference between flying and crashing.

How Do I Extend My Runway?

Extending your runway may be as simple as paying careful attention to your monthly P&L (you do have your bookkeeper give you a monthly P&L don’t you? If not, get a freelance bookkeeper immediately and be amazed at the heretofore unknown information). I recommend setting aside an hour each month to review your P&L. Focus on both on the income and expense side, make decisions and brainstorm about how those numbers can change and extend your runway. Look at where you’re spending your money and where your money is coming from and think about how to maximize both.

If you’re in a little financial trouble (or a lot), extending your runway may take more. You want to become very clear on what is essential for your business and what can wait. You need to know what must be paid today and what can be put off for brighter times. Also, factor in the idea that some items you are personally liable for, such as credit cards and commercial leases. Those items will follow you if you need to close your business so they get priority.

Finding Professional Help

It’s tough to find good professional help that understands the unique challenges and motivations of entrepreneurs. You want someone who has a large stable of entrepreneurial clients. Your CPA is a good place to start because they have their finger on the pulse of your business. Also look for recommendations from fellow business owners. Finally, be sure to run all advice you receive past the “smell test”. Even if you’re in financial trouble now, you are savvy. Use those skills to determine whom you have confidence in.

Extending your runway can allow a viable business time to grow into maturity and become self-sufficient. Sometimes all you need is a few tweaks to give yourself enough time and money to get to the finish line.

Author:.

Emily Chase Smith is an attorney who specializes in financial solutions for entrepreneurs.  She gives practical advice and inspiration to bridge financial gaps and help you get back in the game.

To guide you with your specific financial and debt tactics for your toughest problems, check out Emily Chase Smith's The Entrepreneur's Money Podcast...

Go Deeper | Website

Want More?

 
New Graphic
Subscriber Counter