How to Sell Anything Online

CHAPTER 2Master your cashflow

About two years ago, I met with a high-growth ventures company for Hero Packaging. The goal of any high-growth ventures team is to help fast-growing companies get their finances in order to, ultimately, sell the business. I felt excited because Hero Packaging had been growing incredibly fast and I wanted to keep that momentum going. I opened up Zoom on my computer (Sydney was in lockdown at the time) and I met its head of finance and an account manager. After our introductions, the first question they asked was, ‘What is your cash runway?’

I had absolutely no idea what the term ‘cash runway’ was and when I asked them to clarify, the head of finance said, ‘If your business didn't make a single dollar from this point onwards, how long would the cash in your bank last to pay all your fixed costs?’

I remember getting a sinking feeling in my stomach. I asked back ‘What should my cash runway be?’ She replied, ‘Ideally six months, but even two to three months is okay. We can work with that.’

Immediately I knew that something was wrong in my business. We had no excess cash at the time, let alone a cash runway of six months. We were operating day-to-day — money in, money out. And I thought that was normal, especially because we were growing with higher revenue.

That Zoom meeting was a huge wake-up call for me. It made me realise why I was so worried all the time, and why the business was in a never-ending cycle of getting loans, paying them off over months ...