The article discusses the importance of understanding and managing a startup's burn rate, which refers to the rate at which a company spends its cash reserves. The author highlights that reducing burn rate is not the sole goal for startups, as spending is necessary for growth and success. Startups should consider unit economics (earning on each item sold) and the cost of growth (primarily employee expenses) to determine the right balance and raise enough funds to cover expenses for 12-18 months. While increasing burn rate can be justified for market expansion, lowering it should be a last resort, and major spending cuts can be detrimental. Ultimately, managing burn rate is crucial for startup survival and attracting investors.
Startup Burn Rate Cash Flow By Lewis Hower
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