"You have 8 months."
That's what our CFO told us in January. We had $180,000 in the bank. We were burning $22,000 a month.
180 divided by 22 equals 8.18 months until we were broke.
We'd raised a small seed round 18 months earlier. Built a decent product. Had 200 paying customers. But we weren't profitable. And the funding market had dried up.
We had two choices: raise more money (impossible) or get profitable (hard).
We chose hard.
The Burn Rate Breakdown
First, I calculated our actual burn rate. Not the number in our spreadsheet. The real number.
Salaries: $14,000/month (4 people including me)
AWS/Hosting: $1,800/month
Software/tools: $1,200/month
Office: $2,400/month
Marketing: $1,500/month
Miscellaneous: $1,100/month
Total: $22,000/month.
Revenue: $8,500/month.
Net burn: $13,500/month.
We needed to close that gap. Fast.
The Cuts
Here's what we did in February:
Office ($2,400 → $0): Went fully remote. Broke the lease. Paid a penalty but saved $28,800/year.
AWS ($1,800 → $900): Optimized everything. Deleted old data, right-sized instances, negotiated a reserved instance discount.
Software ($1,200 → $400): Cut 7 tools we barely used. Kept the essentials.
Marketing ($1,500 → $500): Paused all paid ads. Focused on content and SEO only.
New burn: $15,800/month. Still not great, but better.
Growing Revenue
Cuts alone wouldn't save us. We needed more revenue.
We had 200 customers paying an average of $42/month. Churn was 8% monthly (awful).
We made three changes:
1. Raised prices for new customers. $42 → $67. Lost some trials, but better unit economics.
2. Fixed churn. Called every customer who canceled. Found the top 3 reasons. Fixed them.
3. Added annual plans. 2 months free if you pay yearly. Cash flow improved immediately.
Where We Landed
By June (5 months later):
Revenue: $18,200/month
Burn: $16,500/month
Net: +$1,700/month (profitable!)
We made it. Barely. With 3 months of runway left.
Now we're at $24K MRR and hiring again. But carefully. Very carefully.
Know your burn rate. Live by it. Or die by it.