7 Ways to increase Startup Runway

"I would say that you need a minimum of 12 months, but 18 to 24 months is ideal." - Paul Graham, co-founder of Y Combinator

From Paul Graham’s statement, the longer the runway the better it is. A 24 month runway demands more financing, and that's not always possible. It’s often inappropriate or not possible to increase initial capital investment. There are some ways, however, to lengthen the runway.

In the world of start-ups, the runway ends when the money runs out. And that happens a lot.

So, let’s consider ways to lengthen the runway to increase the chances of success. The Runway = (Funds Remaining + Revenue)/Expenses Per Month.

If initial capital isn’t to be increased, then the runway can be lengthened by increasing revenue and/or decreasing costs.

Here are 7 ways to help make that happen:

1. Keep the team small:

"The bigger the team, the bigger the wage bill."

One of our client's started his platform hiring a co-founder, a technical team and numerous other team members. He soon learnt it takes a lot of time for diverse people to come together and work as a cohesive team to build a platform. It took him 2 years to build his platform but it had a lot of bugs, which meant didn’t work so well. Thanks to his business acumen that without solely depending on the product, he started generating revenue not waiting for the product to complete. Had he waited for the product to complete, his startup might not have seen the morning rays. Finally, he took a tough decision and scrapped the product that was built so far. He commissioned fn7 to built a fully functional platform for him, which we completed in less than 3 months. He’s very happy and has witnessed a threefold increase in his business turnover from using the platform.

2. Don’t include too many features at once:

It’s always tempting to add as many features as possible to a platform at the beginning. This is a typical mistake that’s common for first time founders. It’s not the number of the features that matters, rather the quality of the features and how they position your startup in the market.

Our client made this mistake, trying to add too many features and in the process lost a lot of money and two years work. In the second attempt, working with fn7, he has focused on building fewer features and made them really good. He says the current growth he’s experiencing is testament to the value of a robust platform, with fewer bells and whistles.

3. Generate early revenue:

"When we feel we have a clever concept to solve a problem, it’s easy to fall so in love with our idea, that we spend too long trying to build the perfect product/platform."

But businesses need traction - revenue generation at least till the product is fully ready. Can an initial product generate initial revenues? If it can’t, then why not? Is it a case that the product is configured poorly? For Pankaj that’s what he faced. Had he waited for his original product to be ready, he could have lost a lot more time and money.

The book “Traction” by Gabriel Weinberg teaches why traction development should happen alongside product development and how that can be done. This is a highly recommended read.

We’re taking the same approach at fn7. Our mission is to make the startup process smoother starting with startup idea validation to building platforms and helping founders to connect with incubation centres and investors. While we continue to build great products, we are already working with startup founders in creating irresistible value propositions and highly user friendly platforms. We did this for Pankaj and he’s now fast tracking the scaling of his business.

4. Outsource to complement your team:

This strategy complements the strategy to keep the team size small. With so many business functions a startup needs to address, it’s not possible to do all of these perfectly. By outsourcing with good partners, founders can both reduce costs and improve the quality of outcomes.

Teams tend to have specialities they are good at and weaknesses in other areas. Pankaj’s team has very a good track record of business development and hence they could manage to generate revenue without their platform being ready. However, technical aspects weren’t their strength and hence they failed to build a fully functioning platform. This is not an uncommon situation for non-tech founders to struggle to create strong tech founded platforms. Even if they recruit their own internal tech team, they can still face difficulties given the complexities of tech developments.

5. Enhance employee productivity:

Although it can demand more money while funds are limited, investment in employee development can pay great returns in early days.

There are creative ways to support team members, such as relaxed leave conditions, greater work from home provisions, support to join a gym and get fit, and team development activities. Such initiatives can have very positive impacts on team morale and in turn on revenue generation.

6. Build Strategic Alliances:

To build strategic alliances early on can help nurture strengths that might not otherwise arise. Strategic alliances can bring relationships that are complementary to business operations, allowing win win outcomes for the parties in the alliance. Imagine being able to share a customer base with an associate business, while adding to the services and products that business can offer the market.

7. Have a mentor:

As we have discussed, there are so many activities founders and their team have to focus on. Sometimes those teams are single focused, so can miss out seeing problems that are right in front of them. Bring in the mentor, someone who can draw on a history of entrepreneurial and innovative activities, who is able to see things from an objective ‘outsiders’ view. Without the emotion often present for the founder, the mentor can identify emerging problems, before they become problems.

We hope at fn7 that our Team can support founders and startup teams with a number of the ideas covered here, that will see the startup runway increased enough to see ventures succeed through the initial development stages.

Getting the technical foundation correct from the beginning is an essential first step. That’s what we at fn7 do.

If you’re planning a startup, or researching about your idea and wonder about platform and product MVP development, please make contact and we can share a systematic approach for how best to approach this important business development.

Book a FREE consultation with me if you are ready to build an MVP or to understand the systematic process of MVP development today.! Book FREE Consultation.