5 Startup Cost Cutting Tips to Extend Your Runway

In today’s environment, where capital is harder to come by, startups need to prioritize efficiency over growth-at-all-costs. The path to breakeven isn’t just about survival—it’s about taking control of your own trajectory.

That doesn’t mean slashing blindly to stretch your runway. It means being intentional. Cutting smart. Building a leaner company that still moves fast—but with discipline.

Here’s a practical guide to approaching cost cutting the right way in order to extend your runway without stalling momentum.

1. Understand Your Numbers and Target

Before making any moves, get clarity on your existing financials. You need to understand what your total (net) cash outflow is each month. I normally do this in a spreadsheet which includes the cost descriptions in the rows and months in the columns. I normally include the prior year by month and try to forecast out the next 12 months (at least).

I start by listing out how much cash is coming in from external sources—customers, grants, capital, etc.  Since the goal is to get an honest view of your cash position, be realistic. Only include revenue growth if it’s supported by your current pipeline, or consistent with your trends over the past six months.  I’ve had many companies try to build optimistic plans around revenue that didn’t materialize – only to find themselves scrambling when the cash didn’t come in as expected. Hope isn’t a strategy. The purpose here is to get grounded in what’s real, so you can make decisions with confidence.

Next, break down your monthly cash outflows. I find it useful to break costs down into the following buckets:

• • Headcount by department (including contractors)
  • Software subscriptions
  • Sales and Marketing
  • Office & overhead

It’s important to be thorough in this step.  Look at the last 12 months of financials to capture annual charges and timing properly. The goal is to understand not just how much you’re spending, but where you’re spending—and whether that spend is aligned with your current stage and strategy.

At the end of this step, you should have a spreadsheet which shows all of your cash inflows and outflows today and projected for the next 12 months.  Based on this, you should be able to determine how much you need to cut in order to get closer to cash flow break-even.

Now comes the hard part of figuring out which costs to cut.

Cost-cutting is a company-wide effort. Bring your leadership team into the process early. Share the “why” and make sure decisions connect to strategy.

When the team understands the goal is sustainability and speed-to-breakeven, you’ll get more buy-in and better ideas.

2. Review your Headcount Expenses

For most tech companies, payroll is the biggest line item—so it’s the logical place to start. But this isn’t about rushing to terminate. It’s about taking a hard look at where your team is today versus what’s truly needed to hit your company objectives.

Start by grouping headcount by function—Product, Engineering, Sales, Marketing, Ops, G&A, etc.—and work through the following questions:

• • Which roles are directly tied to current revenue or product delivery?
    • Since the focus is on reducing cash burn, you may need to make tough calls—like delaying or shelving future product initiatives until you have the resources to support them properly.
  • Are there any underutilized or underperforming team members?
  • Are there any overlapping responsibilities within or across teams?
  • Can any roles be shifted from full-time to fractional or contract?

Right-sizing now puts you in a better position to grow efficiently when the time is right. Check out our post on headcount planning.

3. Optimize your Software Subscriptions

Having the right combination of tools can simplify your processes and save time, but SaaS spend adds up fast—especially when tools go unused or overlap. Pull a list of everything you’re paying for. Then ask:

• • Are we actually using this—and do we really need it?
  • Are there cheaper tools that can do the same job?
  • Is there overlap with other tools we are currently using?
  • Can we reduce seats or downgrade the plan?

Cut what’s not essential and renegotiate where you can. Vendors often have flexibility—especially if you’re up for renewal. Small savings here compound quickly, especially if your stack has grown with the team.

4. Keep a Close Eye on Your Sales and Marketing Spend

Sales and marketing often make up a significant portion of spend—and it’s an area where costs can creep up if not reviewed regularly.

Start by mapping out your major investments: paid ads, agencies, content creation, sponsorships, events, etc. Then dig into what’s actually moving the needle. A few questions I typically ask when reviewing spend in this area:

• • What’s directly driving leads, revenue, or retention?
  • What’s nice to have, but not essential right now?
  • Can we shift spend toward higher-conversion channels or double down on organic?

This isn’t about cutting growth—it’s about improving marketing efficiency. Double down where you see returns. Pause what’s underperforming. And if you’re unsure? Test smaller before you scale.

5. Check-In on Your Office and Overhead Expenditures

Revisit your office setup, lease terms, and recurring overhead. If you’re hybrid or remote, do you still need the same footprint?

Options to consider include:

• • Downsize or sublease unused space
  • Move to co-working or flex office plans
  • Cancel or pause non-essential services

These cuts may not be huge individually, but they add up—and they’re often the least disruptive.

Cutting costs isn’t just about survival—it’s about building a more focused, resilient company. When you understand your numbers and make intentional trade-offs, you create space to extend runway, stay in control, and execute with clarity. Breakeven may not happen overnight, but every smart cut gives you more time—and more leverage—to get there on your terms.

Need a second set of eyes on your numbers or help thinking through the trade-offs? We work with early-stage teams to bring financial clarity and help you operate lean without losing momentum. Book a quick call to chat.