What is a Cashflow Runway?

A cash flow runway is a measure of the amount of time a business has to generate enough cash flow to cover its expenses. It is calculated by dividing the amount of cash on hand by the amount of cash the business needs to cover its expenses over a certain time period. For example, if a business has $50,000 in cash on hand and needs to cover $10,000 in monthly expenses, then it has a cash flow runway of five months.

When we hear about businesses, especially start-ups, talking about runway left it’s usually in reference to negative cash flow. The conversation usually diverts over to how to extend the runway and typically done in a way to reduce expenses. 

My mindset, though, is how can I increase revenue? Is there an element of my services that others are needing before they fully commit to monthly or long term relationship with my business? Is there a complimentary service that I could provide to help existing clients? 

The answer here, of course, is yes. Take some time to find the elements or add-ons that could be helpful. 

You’ll notice that we now offer Ask A Bookkeeper sessions - this was created by noticing how much business owners needed someone to ask financial questions to but weren’t quite ready for something long term. 

Workshops, workbooks, templates, all of those items can create value to your business and could be the stepping stool to a long term relationship with other businesses. 

By keeping it simple and focusing on a give-first mindset, you can and will build long term relationships with clients and business supporters. 

If you’re looking for support, getting clear on your finances is a great place to start. Book a free consult now.