Diminishing runway? Here's what to do - 5 startup tips by Prateek Sanjay

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Many startups find themselves running out of cash, with a diminishing runway. It is stressful and challenging, but there isn’t a lot of good advice about this situation, besides the usual grind/diehard pep talk.

My friend Prateek Sanjay is a startup consultant who has helped numerous startups raise capital. (BTW, he’s been my guest on The Meet.Capital Startup Podcast about a year ago, and you can listen to our conversation here ).

Prateek got tired of seeing founders crushing under the stress of a shortening runway so he started thinking of ways to help. He’s seen quite a bit and has some actionable advice on what to do.

He gave me his 5 tips for startups running low on cash:

1. Go to your customers: Reach out to your customers and ask them if there is anything more you can do for them. Ask them where they get the most value from your service or product, and offer to do more. Provide services without worrying about scalability, delegation, or anything besides providing value and getting paid in return. Also, ask them if they know anyone else who can use your services.

2. Go to your past clients: Remind them of your past work, and take interest in their current situation. Ask if you can do anything more of them. Ask if they know anyone they can refer to you.

3. Reach out to prospective clients, past and present: Check again on any lead that showed some interest in what you have to offer. Ask them more broadly what their needs are and where you can help them. Offer them a tailored solution (again, it doesn’t have to scale). (Besides getting you some extra cash, this will also teach you a lot about what your clients really want.)

4. Cut short anything you are paying for: cancel all subscriptions and services to cut your expenses and stop the bleeding. Do whatever you can on your own. When it comes to services and products that are essential to maintaining your startup, consider canceling anyway and renegotiating your price before taking them back.

5. Go to your investors: If your investors are experienced and realistic, they won’t be shocked to hear that things might not be going as expected. It happens (a lot). Explain the situation honestly. Show them all the things you are doing to extend your runway and protect their investment, then ask them for help. You can also ask them to invest again (perhaps with some special or improved terms). They do have an extra incentive to invest, to protect their original investment. However, don’t expect them to give you money out of charity. They will invest if you can show them how their money will be used to get back on track, and will ultimately get them a hefty return on their investment.

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Till next Tuesday,

Tzakhi and the Meet.Capital team

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