7 Ways To Extend Your Runway (Without Reducing Headcount)

Budgets are being slashed, companies are announcing layoffs in every industry, and the venture markets have reset (but founders are still adjusting).

As a founder, you’re probably spending more time thinking about finances, extending your runway, and metrics like burn multiple than usual.

There are two main drivers to decreasing your burn and extending your runway:

1. Reduce expenses

2. Grow or retain revenue

Most advice on how to decrease burn focuses on reducing expenses, but below I’ve outlined 7 helpful tactics for both paths (that don’t involve reducing headcount) 👇️

Read time: 5 minutes

📚️ What I’ve Been Reading

First time founders focus on product, but second time founders focus on distribution.

Max’s newsletter delivers actionable growth and marketing advice and tools every morning. I’ve picked up more than a few useful tips from it since I subscribed.

Join 23,000+ other growth-minded founders and marketers by subscribing here now:

⚡️️ How to Cut Burn and Extend Your Runway

Important callout: if your startup is in a dire situation, you may have no option but to cut headcount. Founders can sometimes wait too long to do this — don’t let that happen to your startup.

With that said, layoffs should be a last resort. Here are 7 things you can do before it gets to that point:

Temporarily Cancel All Corporate Credit Cards

Your startup is probably paying for various subscriptions it isn’t actively using or planning to use anytime soon. This is a bit of a hack to remove all of that spend (though your team may not like it).

Simultaneously cancel all of your corporate cards (including your own). Then, issue new cards to everyone on the team who had one before. Everyone will need to migrate over all of their subscriptions. You’ll find that they only actually do it for the ones they actually use.

It’ll cost you some time and productivity, but at a fast moving startup it can be hard to get everyone on the team to manually go through their expenses and identify what can be cut. This is a way around that.

If you do this, I recommend giving your team a heads up ahead of time so they can flag any critical expenses that you won’t want to risk pausing (i.e. infrastructure, paid acquisition channels, etc).

Join Your Customer Success Team

As a founder, you should already know that talking to and learning from your customers is a non-negotiable part of your job.

You should also know that it’s multiple times more expensive to acquire a new customer than retain an existing one.

If cash is tight you need to re-internalize both of those statements and, effectively, join your customer success team. What I mean is you should be the one getting on calls with users who are at risk of churning more often than not.

This is good for two reasons:

• Customers love speaking to the founder. They may be more likely to stick around after speaking with you.

• You’ll learn a lot more about what their concerns are. Try to identify patterns quickly so you can come up with solutions that will make a difference for your users.

Focus Growth Efforts on Content and Referrals

Marketing budgets tend to be the first things to get slashed when capital is tight.

This means that, at a time when it’s already harder for your startup to convince new customers to pay, your growth team also likely has a lower budget to make it happen with.

A good answer is to invest in content marketing (social media, newsletters, etc) and referrals. Why?

• Content marketing can be free to create if you have someone on your team who can do it well (and anyone can learn if they put the time in) yet it can lead to big results (especially if you form relationships with people who can help amplify your content).

• A well designed referral program can keep capital within your product’s ecosystem and potentially increase your k-factor enough for your product to break out.

This isn’t just advice for consumer startups — B2B customers use social media, read newsletters, and like referral discounts too.

If you can afford to, it’s ironically a great time to pursue paid ads. Prices are down since fewer people are running them. But if you want your startup to reach venture scale you’ll likely need at least one scalable, organic channel anyway.

No matter what your approach is, don’t be timid towards growth. The best way to extend your runway is to bring in more revenue (efficiently).

Experiment with New Revenue Streams

Subscribe to Houck's Newsletter Premium to read the rest.