Wednesday, December 11, 2019

Published December 11, 2019 by Kaur World with 1 comment


Let’s face it! Starting a business is not a piece of cake. From managing the initial cost for the start to coming up with effective planning, there are tons of tasks that the owner has to take care of. And, doing all the tasks of that with the limited financial resource can be very challenging, especially if you are a start-up.
Just like individual needs money to carry out their livelihood, businesses too require funds to carry out the tasks within and outside the office. But, people often get so carried away with their money or indulge themselves in a lifestyle; where it becomes too difficult to handle their financial life. 

In a similar way, businesses have to deal with so many expenses, that it becomes tough to track their money. This concept where your company spends its money is known as “burn rate”. Now, let us discuss a bit more about this topic and understand how it can affect the business. 

What exactly is the burn rate and why it is important?

The burn rate is the term that is used to determine the rate at which a company spends its money on carrying out the different tasks of the business.  If you are a start-up, then you must have a clear cut estimation where your capital is going. Not having enough funds will not only slow you down the business growth but might also lead to shut down, in the worst-case scenario. 

Limitation of resources is the biggest challenge that any newly started business has to deal with. In such a case, it becomes crucial to check the burning rate of the company in check and even work on to reduce it. At the same time, you have to also ensure that while doing so, the quality of the service is maintained. 

Different ways that can help you reduce the burn rate of business 

Here, in this blog, we will be discussing the various ways how you can lower down the burn rate of business and that too without affecting the quality. So, let us get started.

Keep a balanced team in the office

Employees are the biggest resources for any company, be it a small firm or a full-scale organization. Now, you must have a balanced team of employees in the office, especially if you are a start-up. There is no need to go overboard by hiring too many working staff as this will only increase your expenses. 

There will be areas in the business where work is required on a temporary purpose. In such types of work, you don’t need to hire a permanent employee where you can get the work through outsourcing. This will be a better and cost-effective option and you will get a plethora of benefits, such as: 
  1. Highly skilled expertise 
  2. Lower risk management 
  3. Can look on other business core tasks 
  4. A cost-cutting option 
  5. Higher-efficiency 
Master the skills of managing your cash flow 

Now, you will be able to reduce the burn rate of your business only when you have better control over finance. For this, managing cash flow is essential. Checking cash flow will help you know where you are standing financially and what improvements are required. 

These are the steps that you can follow to manage the cash flow of your business: 
  •  Manage the payables 
  •  Proper invoicing 
  •  Keep emergency fund 
  •  Implement strategies effectively 
You can even use any accounting software and other tools that can help you in better managing the cash flow. If you are a newly started firm, there will be a chance that you must have exhausted all your finance in setting the business. Now, in case of funds, you can approach a direct lender who can offer you with 100% Guaranteed loans.

Watch out for the marketing expenses 

Marketing is the key component of any business as it is a way that helps you make people aware of your brand.  Companies spend a large chunk of their revenue in marketing to ensure that they don’t stay behind or loses their valuable customers. 

However, going beyond than you can afford or can manage will eventually cause business trouble. Hence, you must implement a marketing strategy smartly and ensure that it offers ROI. 


By far, you must have well-understood everything about the concept of the Burning rate and what steps does business can take to reduce it. Being a start-up, you must focus on reducing the overall expenses but that without affecting the quality. 

1 comment:

  1. Like your post, it is easy to understand and detailed, I hope you have many good posts to share, thank you.
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