[ad_1]
Sumit Singh, Exited Operator and VC, General Partner @ Brass Ring Ventures.
Raising capital isn’t about availability of capital; it’s about proving discipline and vision in a way that looks very different than it did a few years ago. Investors aren’t just looking at the size of your market or the strength of your product. They want to know if you can run a disciplined business. As early stage investors, we see this every day: founders who understand their numbers have more leverage, more time, and more options than those who don’t.
Cash Runway, Scenario Planning And Working Capital Management: The Most Important Finance Skills For Founders Today
For early-stage companies, finance is a core part of leadership. Knowing your runway, planning for different outcomes and managing cash flow help you build confidence with investors and your team.
Know Your Runway Like You Know Your Pitch
Runway is simple: how many months until the cash runs out. In my experience, too often, founders either don’t track it closely or only update it when an investor asks. That’s risky.
It’s not enough to say, “We have 12 months of runway.” You should be able to say: “We have 12 months at current burn, and if we adjust hiring and marketing spend, we can stretch it to 18.” That kind of answer shows you’re paying attention and are in control, which makes a huge difference in a fundraising conversation.
Always Have A Plan B (And C)
No forecast is perfect. Deals slip, costs creep, markets change. The best founders don’t just plan for one future; they build a few.
• Best Case: Hitting targets and accelerating growth
• Base Case: Steady progress with the current team
• Worst Case: Sales lagging, spend tightened to extend runway
This isn’t about being negative. It’s about being prepared. When you’ve already thought through how you’ll react, you don’t end up making rushed decisions when things change.
Cash Flow Will Sneak Up On You If You’re Not Watching
In my experience, most startups don’t fail because the product doesn’t work; they fail because they run out of money before the cash comes in. Managing receivables, payables and payment terms might not feel urgent, but it can make or break you.
Think about selling into schools or healthcare systems. You might sign a $100,000 deal in September, but the money doesn’t actually hit your account until December. If you haven’t planned for that gap, you’re suddenly scrambling for payroll. Founders who negotiate deposits, push for faster payment terms or use financing tools stay in control instead of getting caught off guard.
Finance As A Superpower
Finance isn’t about being the “numbers person”—it’s about being a better founder. Startups that maintain rigorous cash discipline and longer runway tend to be better positioned to raise on schedule and avoid down-rounds. That’s not because investors love spreadsheets. It’s because financial discipline shows maturity, credibility and focus.
Founders who know their numbers get to play offense rather than focusing on survival. They raise on better terms, inspire confidence in their teams and make faster decisions when opportunities show up.
A Simple Monthly Checklist
Here’s the rhythm I recommend every founder build into their month:
1. Runway: Know exactly how many months of cash you have left, and what levers extend it.
2. Scenarios: Check your best, base and worst cases. Are your assumptions still realistic?
3. Cash Flow: Look at receivables and payables. Spot gaps early before they turn into crises.
It takes an hour a month. But that hour can make the difference between being forced into tough choices and running your company on your terms.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
[ad_2]
Source link