Diagnostics · Answered by Golden Section from more than 400 B2B software companies observed
Cut first, this month, and then decide whether to raise. Six months leaves no margin for a process that slips, and any investor you approach will read the clock before the deck, so the terms get set by your runway rather than your business. Cut until the forecast shows at least twelve months at the trough: stop spend that cannot pay back inside that window, pause unfilled hires, collect every aged receivable, and protect the people who keep current customers renewing. Tell your board and existing investors now, because an insider bridge is the fastest money available. Once the company is stable, raise from a position where walking away is possible, or discover you no longer need to.
At six months the cut is not optional; it is what makes every other option possible. Raise only once the forecast shows a year of runway without the new money.
| Metric | Value | What it means | Source |
|---|---|---|---|
| Cash reserve | 6 months of operating expense | cash held back at the forecast trough, not spent on the planPart of a real capital requirement; a company with six months total has no reserve at all | Golden Section, publishedGrowth Capital Without Heavy Dilution |
| Lending minimums | $1M ARR and 90%+ NRR | entry criteria for Golden Section revenue-based financingLenders underwrite durable recurring revenue and proven use of funds, not a runway gap | Golden Section, publishedGolden Section Lending |
| Runway after cuts | about 12.9 months | (cash + collected receivables) ÷ reduced monthly burnWorked example from the scenario below: ($1.5M + $0.3M) ÷ $140K | IllustrativeIllustrative arithmetic using the Cash Flow Forecast play |
Runway is a negotiating position before it is a bank balance. A founder with six months cannot run a raise without the deadline showing, and a buyer of your equity who can see the deadline prices it. So the cut is not a failure of the plan; it restores the ability to say no. It also answers the question every investor will ask first, which is whether management can make hard decisions quickly.
What to cut follows from the cash flow forecast, rebuilt with actual collections timing. Spend that produces revenue after the runway ends is a luxury: unramped sales seats, new-market experiments, tools nobody logs into. Delivery, support and account management are not, because churn during a cash crisis turns a hard year into a failed one. Collections often buy more time than founders expect; the accounts receivable process with one named owner and a daily cash report is worth doing in the first week. And a decision made on an investor's soft commitment is still a decision made with no money behind it.
A company at $4M in annual revenue burns $250K a month and holds $1.5M, six months of runway. Two account executives hired last quarter have not closed anything, a second product line has one customer, and $300K of receivables are past 60 days. The founder pauses the new product, parts with one unramped seat, cancels contractor development and unused software, and assigns one person to collections. Burn falls to $140K a month, the receivables come in over six weeks, and runway moves to roughly 13 months. She brings the new forecast to the board before asking anyone for money. All figures are invented for illustration.
If a signed term sheet with committed capital is already in hand and closing is a matter of paperwork, deep cuts may destroy more than they save. And if the company is profitable within the six months on the current plan, the question is cash management, not survival.
From the Golden Section mistakes list, each paired with the play that prevents it.
This is the mistake the question is trying to avoid, and at six months it is a real possibility rather than a theory.
Founders keep spending against a verbal or soft investor commitment and find out it was not cash when the money does not arrive.
Every week the cut is delayed makes it deeper, because the same savings have fewer months to accumulate.
Investors who hear about the cash position late lose the time they would have needed to help.
In the order we would run them. Each is on its own page, most with a free Excel template.
Shows the real zero-cash month and the effect of each cut before you make it.
Puts one owner and a daily cash report on collections, often the fastest runway you can find.
Rebuilds the budget around the cut plan with an owner for every line, so the savings hold.
Uses the board for what it is for in a crisis: air cover for unpopular moves and a sounding board for hard calls.
Executive plays Cash, budget and board plays are the operating tools for a company with six months of runway.
Cut burn immediately until the forecast shows at least a year at the trough, collect aged receivables, and tell your board and investors the real number. Then decide whether to raise, from a position where you could decline the terms. Do not make spending decisions against money that has not arrived.
Sometimes, but usually on worse terms, because the deadline is visible to every investor. Insider bridges from existing investors are the most realistic source at this stage; a new lead investor is more likely once the cuts have created time.
Rarely. Revenue-based financing and SaaS term loans are underwritten on recurring revenue quality and a proven use of funds, and they are repaid whether the quarter works or not. Debt added to a runway gap without a fix behind it shortens the path to default.
Neither our equity nor our lending is a rescue product, and we would rather say that plainly. Once the cut has created a year of runway and the motion is proven, lending can fund what works and equity can fund a structural change; talk to us then.
Talk to Golden Section →Reviewed by Dougal Cameron, CEO & Co-Founder on 2026-09-23. Golden Section observations are labeled separately from external benchmarks and illustrative arithmetic.