From Burn to Balance: How Smart Founders Manage Cash in Chaotic Markets | ECL

Tariffs are coming, or they’re not. They’re here to stay, or they’re going away. The SaaS market has slowed into maturity, except for where it’s expanding. If current market conditions have you feeling like the meme of the dog who says, “This is fine,” while surrounded by fire, you’re not alone. 

There’s never an easy time to be a founder, but this moment feels particularly challenging. Changing your cash management approach can alleviate some of the pressure and set up your startup to be more agile and take advantage of opportunities when they arise. 

Step 1. Know Your Burn

The difference between founders who drown during market volatility and those who thrive starts with how closely they follow their cash burn. Think of it this way—you know where you want to go, so you punch your destination into your map of choice. But unless you know where you’re starting, there isn’t an app on Earth that can tell you how to get there. 

How to calculate your cash burn (so you can take control of your startup finances): 

Cash Burn = Monthly Operating Expenses - Total Monthly Revenue

Pre-Revenue Burn = Monthly Operating Expenses

Step 2. Extend Your Runway (with the Levers that Actually Work)

The startup founders who thrive in chaotic markets find ways to extend their runway with surgical precision. Instead of slashing headcount and cutting spending with wild abandon, you’ll be most effective if you pause to identify the high-impact levers that will allow you to preserve momentum while reducing burn. 

Cutting non-essential spending to preserve cash flow:

• Audit software tools and reduce your subscriptions to those with a clear ROI
• Pause low-yielding marketing channels
• Consolidate vendor contracts 

Additional opportunities for cost savings:

• Switching cloud providers
• Renegotiating service contracts
• Switching to automation where possible

Most importantly, your runway isn’t just determined by what you spend. You can also increase your runway by addressing cash inflow, which brings us to…

Step 3. Rethink Your Revenue Strategy

When was the last time you gave serious consideration to your pricing strategy? Trends in the market are showing an uptick in per-usage and hybrid pricing models. SaaS companies are effectively leveraging combinations of subscription and pay-as-you-go pricing. This is especially true for AI startups and SaaS companies bundling AI features into existing products. Increased AI use requires increased resources (and costs). Per-usage models ensure that customers cover those costs while also keeping the entry point low enough to convert and retain customers. 

From per-user pricing to tiered pricing to freemium models, it’s worth spending some time reviewing the pros and cons of each pricing strategy for your business. Finding the ideal pricing strategy for your business can be the key that unlocks reduced customer acquisition costs (CAC) and churn, in turn, increasing customer lifetime value (CLTV).  

Step 4. Fund Smarter—Capital Strategy for a Volatile Market

Surprises happen, especially in a chaotic market. And sometimes you need an infusion of capital. Knowing how to access startup-friendly capital when you need it can be make-or-break in times of uncertainty. Capital is more expensive than it was a year ago, and lenders are tightening their credit boxes—the criteria they use to assess an applicant's creditworthiness. 

Here’s what to look for: flexibility and accessibility. Revenue-based financing, for example, is funded based on your recurring revenue, making it accessible to SaaS startups that might not qualify for a bank loan based on time-in-business (or other stricter credit criteria). Financing that operates like a line of credit—allowing you to borrow and repay as much as you need over the term of the loan—can help you maximize your options while limiting interest costs. 

Look for non-dilutive sources of funding. Don’t let anxiety about market conditions drive you to giving up more equity than you’d otherwise want to. Take your time. Talk with a financial expert. Ensure that you’re making financially sober decisions when it comes to taking on new investors. (And you may find that using non-dilutive funding to weather the economic storm will help you postpone your next funding round until you can secure more favorable terms.)

Step 5. Build a Team That Thinks in Dollars

Bloated headcount will drain your capital, but if you have a team that’s filled with people who understand ROI and know how to drive it, then your headcount isn’t a cost, it’s a benefit. 

Find an execution model, like SMART goals or 4DX, that you can adopt across the organization. Encourage your team to set their own goals (so they feel a greater sense of ownership), set lead and lag measures, and tie their work to revenue.

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