6 Numbers Founders Should Check Before Every Big Spending Decision
Sam's List Editorial | 2026-07-20
6 Numbers Founders Should Check Before Every Big Spending Decision Most founders make big spending calls off one number: the balance in the business checking account. It is the fastest way to feel rich on a Tuesday and get blindsided on the fifteenth. The bank balance is a snapshot of money that has already arrived, not money you actually get to keep. Before you sign a lease, hire a role, or buy a quarter of inventory, these are the six numbers that tell you whether the yes is safe. 1. Cash Runway in Weeks, Not the Bank Balance Runway is how long your cash lasts at your current burn, and it is the number the bank balance pretends to be. Take your cash on hand, subtract what is already committed, and divide by your average weekly net burn. If a hire adds burn, rerun it with the new number. A decision that shortens runway from twenty weeks to eight is a different decision than the one you thought you were making. The point is not to never spend. It is to know the runway you are trading away. 2. Committed vs. Available Cash Your balance includes money that is already spoken for: next payroll, sales tax you are holding, payroll taxes, and bills you have received but not paid. That is committed cash, and spending it twice is how solvent businesses miss a payroll. Available cash is what is left after you set the committed pile aside. Make big decisions against that number. It is almost always smaller and far more honest than the balance on your dashboard. 3. Contribution Margin on What the Spend Is Meant to Grow If the spend is supposed to drive more sales, you need to know what a sale actually keeps. Contribution margin is revenue minus the variable costs of delivering it, and it tells you whether growth funds itself or quietly drains you. A new salesperson who books low-margin work can grow revenue and shrink cash at the same time. Check the margin on the specific thing you are trying to scale, not your blended average, which hides the weak lines behind the strong ones. 4. Trailing Collections, Not Revenue Booked Booked revenue is a promise. Collections are the cash that showed up. If your customers pay in forty-five days, a great sales month is a cash problem two months out, right when the new expense hits. Look at what you actually collected over the last several weeks and the trend line. Spending against invoices you have sent but not been paid for is one of the most common ways a profitable business runs short. 5. The Tax Reserve You Have Not Funded Yet Profit is not spendable until the tax on it is set aside. A strong year with no reserve is a balance...
