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Why Your Startup Is Burning Through Money Like There’s No Tomorrow


Why Your Startup Is Burning Through Money Like There’s No Tomorrow

Like it or not, startups have a duty to all their stakeholders to keep the rate at which they’re spending money to a minimum. In the early stages, before the product is selling, there just isn’t the money in the bank for frivolous spending. The problem, however, is that many entrepreneurs get into bad mental habits. They repeat the mantra “you’ve gotta spend money to make money” over and over again in their heads and start believing that spending money is good, no matter where it’s being spent. Before they know it, they’re going back to their investors asking for more cash.

Ideally, you want to avoid this situation. There’s no guarantee that investors will want to keep throwing cash at your project, especially if you’ve burnt through all their capital already. Here are some of the reasons you’re burning through so much cash and what to do about it.

You’re Buying All The Software In The Cloud

As a hip and technically-savvy entrepreneur, you know that the future of business lies in the cloud. As a result, you’ve spent a fortune on cloud software to help run your business smoothly. You’ve got all the business apps, like Dropbox, Quickbooks, Slack and so on, and you’re using them to your full advantage. But are they actually generating a return? Often you’ll find that software you thought could save you a lot of time and money isn’t doing anything of the sort. In fact, all that’s happening is that your bank account is being drained and you do not see improved productivity in return.

This is why sites like advise startups to make detailed plans. Planning is how you find out whether the tools you’re using are really worth the asking price. If your business has a shared drive, do you really need to pay a Dropbox sub?

You Don’t Do Anything Yourself

Another common reason for burning through cash is that entrepreneurs are unwilling to do anything themselves. Everything, from driving themselves from A to B to editing their website has to be done by somebody else.

Most entrepreneurs make excuses for this sort of thing by arguing that they are focusing on their “core business.” Their time is precious, they say, and so it’s wasted on mundane tasks. But, as a startup, you usually don’t have the luxury of determining what a mundane task is or is not. Getting other people to do your advertising and build your website is expensive, especially when there are cheap courses available on sites like where you can quickly learn to do it yourself. As for having your own personal chauffeur – forget it.

You’ve Never Heard Of IKEA

If you spend enough time reading business blogs, you’ll undoubtedly come across one extolling the virtues of having a swanky office for impressing clients. But startups can’t afford to jump to this level yet. They need to get the basics in place first. If you’ve never heard of cheap office furniture stores, like IKEA, then say goodbye to all your cash. It’s not coming back.

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I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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