522: How to Improve Cashflow During a Crisis

What It Covers

Steli Efti and Hiten Shah share tactical strategies for improving startup cash flow during economic crises, covering financial literacy requirements, expense negotiation tactics, prepayment strategies, and hidden cost reduction opportunities.

Key Questions Answered

• •Financial literacy baseline: Founders must learn to read profit and loss statements and review them at least monthly, preferably weekly during crises. Understanding cash burn rate and bank balance at all times is non-negotiable for managing company survival.
• •Vendor renegotiation persistence: Approach every vendor to negotiate lower prices and extended payment terms, then renegotiate again every two weeks if initially rejected. Discounts can expand from 5% to 25% through persistent follow-up with multiple stakeholders involved in outreach.
• •Prepayment incentive strategy: Offer customers significant discounts for annual prepayments instead of monthly contracts. Close.com achieved four consecutive record prepayment months by positioning prepaid deals as limited-time crisis opportunities, dramatically improving cash position without complex sales tactics.
• •Infrastructure cost audits: Software companies can save four to five figures monthly by auditing Amazon Web Services, Google Cloud, or Azure for unused servers and instances. Hiring a DevOps specialist can pay back their monthly salary within 30 days through infrastructure optimization alone.