8 Ways To Fast-Track Your Startup To Positive Cash Flow


Serial entrepreneur, angel investor and founder of Rephrasely.

With monetary policy and liquidity tightening up and interest rates rising, it may become increasingly difficult for startups to find funding. To prepare for this possibility, startups need to secure funding soon and/or maintain strong balance sheets with positive cash flow. Here are eight tips for achieving the latter.

1. Review all expenses.

One of the first places to start when looking to improve cash flow is reducing expenses and thereby lowering your monthly and annual burn rates. This may require some tough decisions, but it will be worth it in the long run. Often, there are many items to cut, including rarely used software and other subscriptions.

Additionally, review your inventory levels and cut back on any non-essential items. Startups often have high burn rates because they want to invest in growth, turn out new products and services and hire full-time employees too early and too quickly. However, in an environment of rising interest rates, it is important to keep your burn rate low so that you can still generate positive cash flow.

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2. Automate bill payments.

One way to reduce late payment fees and save on interest is to automate your bill payments. This way, you can be sure that your bills are always paid on time.

3. Negotiate better payment terms.

If your startup is struggling to make ends meet, it may be time to renegotiate your payment terms with vendors. This could involve lengthening the time you have to pay your invoices or asking for a discount for early payment.

4. Offer discounts for early payment.

Another way to improve cash flow is to offer customers discounts for early payment. This could mean giving them a percentage of the invoice total or a specific amount off. This will incentivize customers to pay sooner, which will help your startup’s bottom line.

5. Review your pricing.

If your startup is not generating enough revenue, it may be time to review your pricing. This could involve raising your prices or introducing new pricing tiers. However, be sure to do your research first to ensure that you are not pricing yourself out of the market. Increasing pricing may not be popular with customers, but it might be necessary to maintain positive cash flow.

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6. Improve collections.

If your startup is invoicing customers, it is important to have a good process in place for collections. This could involve following up with customers via email or phone or using a collections agency. The goal is to ensure that you are paid in a timely manner.

7. Use lean methods to acquire customers.

Consider investing time in cheaper ways to acquire customers, including search engine optimization and referral programs, which leverage existing user experiences to spread the news about your product and get more users. Often, the very best product evangelists are existing users, and incentivizing them to share the good news with others is almost always worthwhile.

8. Focus on your minimum sellable product.

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​​Finally, the biggest savings will likely come from focusing relentlessly on your minimum sellable product and turning down good but expensive and orthogonal ideas. The minimum sellable product is the version of your product or service that has the fewest features but is still able to be sold. Once you have this product or service, you can start generating revenue and cash flow and allow it to buttress the rest of the business.

These are just some of the ways you can work toward positive cash flow, but it is important to remember that cutting costs can be just as valuable as increasing revenue, if not more so. Retaining a strict budgetary discipline will prepare you to weather tough times, high inflation and rising interest rates with a calm and calculated frame of mind.


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