Cash Conservation in Turbulent Markets.
Markets don't care about your growth projections. When volatility hits, the companies that survive aren't the ones with the best product or the largest market share—they're the ones with cash in the bank.
The Runway Illusion
Most SMBs calculate runway based on current burn rate. This is dangerously optimistic. In turbulent markets, your revenue can drop faster than you can cut costs.
The safe assumption: plan for revenue to decline 30% while costs take 6 months to adjust. If your runway doesn't survive that scenario, you're more vulnerable than you think.
Cash isn't just about survival—it's about optionality. Companies with strong balance sheets can acquire struggling competitors, negotiate better terms with suppliers, and invest when others are retreating.
Cash is optionality
The Three Levers
Cash conservation comes down to three levers: accelerate collections, delay payments, reduce burn. Most companies focus exclusively on the third lever, but the first two often yield faster results.
Accelerating collections: Offer early payment discounts. Move to upfront billing models. Automate invoice reminders. These changes can compress your cash conversion cycle by weeks.
Delaying payments: Negotiate extended payment terms with suppliers. Shift from annual to monthly subscriptions where possible. Prioritize vendors based on strategic importance, not just amount owed.
Collections before cuts
Strategic Cuts vs. Panic Cuts
When it's time to reduce burn, the worst thing you can do is cut across the board. A 10% reduction in every department feels fair but destroys capability unevenly.
Strategic cuts preserve the functions that drive revenue and customer retention. They eliminate the initiatives that were never going to move the needle anyway—the nice-to-haves masquerading as must-haves.
Make your cuts deep enough that you only have to make them once. Multiple rounds of layoffs destroy morale faster than one difficult decision.
The best time to conserve cash was six months ago. The second best time is now. Build your war chest before you need it, and you'll have choices when others only have constraints.