What are the best ways to manage cash flow during a seed round?

In my 11 years experience, 2 things must remember: 1) You, CEO Founder must check the bank account each day to know your company financial situation 2) Do everything (cut costs, video call instead travel to meet a lot investors) to keep positive cash flow This help you more powerful when raise fund

For instance, a startup founder might share their experience of using a sophisticated financial model to predict cash flow scenarios under different market conditions. This proactive approach helped them anticipate challenges and adjust strategies promptly.

Study the last 4 or 5 bear markets in detail, imagine another bear market is coming, and then imagine it's your last, not your first or initial round.

To manage cash flow effectively during a seed round, create a detailed budget, prioritize spending, negotiate favorable terms, minimize fixed costs, maintain a lean team, track and forecast cash flow, negotiate payment terms with customers, explore alternative funding sources, stay agile and responsive, monitor burn rate, build contingency plans, communicate with stakeholders, negotiate flexible terms with investors, explore early revenue generation, and stay focused on key milestones. These strategies increase the likelihood of successfully reaching subsequent funding rounds with a strong financial foundation.

One thing I have found helpful is to outsource workflow to freelancers as opposed to hiring employees is one way to conserve cash. Also having an advisory board that contributes capital as well as connection helps.

A practical example could be a startup that implemented a strict hiring freeze, focusing instead on cross-training existing employees. This not only saved costs but also fostered a more versatile and resilient team culture.

An inspiring story might involve a startup that pivoted their product strategy based on early customer feedback, leading to a more market-fit product and quicker revenue generation than initially projected.

Many founders overspend on platforms when white-label solutions could work just as well until consumers are ready to pay for innovation. Simplify the MVP if 80% of the impact can be achieved using existing legacy tools as white-label or licensed solutions. Accumulate initial recurring revenue and leverage customers as a source of capital without dilution.

An insightful case could involve a startup that successfully combined a crowdfunding campaign with government grants. This not only diversified their funding sources but also boosted their market visibility and credibility.

As a serial entrepreneur, one of the craziest things I ever hear people say is to stay away from debt. Look at most major Fortune 500 companies, most if not all, have at least some form of debt. There is nothing wrong with taking out that loan. Sure, it may be scary, but the payoff on the right idea paired with the right team will likely pay itself back ten fold if you play your cards right! If you want to bet on something, bet on yourself if you believe in your ability to execute!

Beyond these strategies, startups should also focus on managing customer and vendor relationships. For example, a startup might negotiate longer payment terms with suppliers or offer early payment discounts to customers, improving cash flow. Another vital aspect is the emphasis on financial literacy and discipline. A startup's story could highlight how regular financial health checks and transparent communication with investors and team members helped them navigate through uncertain times.

These strategies collectively enhance resilience and sustainability during the seed stage. Vendor negotiations secure favourable terms, customer payment term negotiations enhance incoming cash flow, and diversifying revenue streams fosters stability. Regular expense audits and building a financial buffer ensure prudent financial management. Leveraging technology, such as accounting software like Xero and cash flow Pulse tools, enables real-time insights and proactive decision-making.

To have a very good structured business plan+ 46 words, which are remaining to post this :) business plan, strategy for at least 5 years ahead…

To manage cash flow during a seed round, focus on efficient budgeting, prioritise essential expenses, negotiate favorable terms with vendors, and explore cost-sharing opportunities. Regularly monitor your burn rate, optimise cash conversion cycles, and maintain transparent communication with investors about your financial status.