Totally agree that managing burn rate and projecting runway is much harder than it sounds. If you have a super simple product or company, it's easier.
But once you start growing faster or adding in 10+ employees, it gets more and more complicated. The top three reasons why founders mess us their runway projections are spot-on.
Only using actual spend data for forecasting future burn rate — If you're not realistic about future spending or big, one-time costs, that cliff will arrive faster than you expect.
Overlooked or underestimated costs — Founders' optimism can bite them.
Ad hoc financial processes — Manual errors can be super expensive.
Thanks for engaging @digitalSisyphus! Good to see that we are on the same page
To everyone reading this, Truealpha is conducting a burn rate tracking workshop for early stage founders look to get grips on their burn rate and runway.
I always calculate my projected costs, then add 30%. That usually gives me enough cushion. And it's so much better to have money left over than to run out!
Articles like these should be popular, but they end of being the least popular. I think the reason for this is because the author knows the best answer to a question like this is "it depends", and he tries to cover all "it depends" cases in the article.
What ends up happening is the article goes into 100 different direction without a clear purpose. We, as humans, like punchy/"heading into 1 point" articles so articles like these get ignored.
I think one way to solve for this problem is with examples. For example, under you "Relying on ad-hoc spreadsheets and processes", can you screenshot a good vs. a bad spreadsheet? You could do this with a lot of points you make in the article.
Totally agree that managing burn rate and projecting runway is much harder than it sounds. If you have a super simple product or company, it's easier.
But once you start growing faster or adding in 10+ employees, it gets more and more complicated. The top three reasons why founders mess us their runway projections are spot-on.
Only using actual spend data for forecasting future burn rate — If you're not realistic about future spending or big, one-time costs, that cliff will arrive faster than you expect.
Overlooked or underestimated costs — Founders' optimism can bite them.
Ad hoc financial processes — Manual errors can be super expensive.
Thanks for engaging @digitalSisyphus! Good to see that we are on the same page
To everyone reading this, Truealpha is conducting a burn rate tracking workshop for early stage founders look to get grips on their burn rate and runway.
Register here - https://www.eventbrite.com/e/getting-to-grips-with-burn-rate-tickets-360472973367
I always calculate my projected costs, then add 30%. That usually gives me enough cushion. And it's so much better to have money left over than to run out!
Also, it mentions finding a good burn rate template. Here's one that appears to be solid. 👍
Articles like these should be popular, but they end of being the least popular. I think the reason for this is because the author knows the best answer to a question like this is "it depends", and he tries to cover all "it depends" cases in the article.
What ends up happening is the article goes into 100 different direction without a clear purpose. We, as humans, like punchy/"heading into 1 point" articles so articles like these get ignored.
I think one way to solve for this problem is with examples. For example, under you "Relying on ad-hoc spreadsheets and processes", can you screenshot a good vs. a bad spreadsheet? You could do this with a lot of points you make in the article.
Thanks for the feedback. We'll try to incorporate more specific examples going forward as we build our resource hub.