The hidden cost in running a B2B startup

By Eyal Shinar, founder, Fundbox

It should come to no surprise to anyone that running a startup is hard work. You’re juggling a variety of tasks, running on limited sleep, and trying to balance rapid growth with product-market fit. But all of this has been well-documented.

If you’re operating a B2B service where you invoice your customers, you also need to worry about getting paid in a timely manner. A lot of startups don’t have the luxury of waiting 30-60-90 days to get paid because they need to invest that money ASAP to fuel growth.

So what happens when entrepreneurial organizations get paid slowly? What’s the first thing that gets cut? Recently our team at Fundbox explored these questions and published their results in the infographic below. I found some of the results surprising, like the fact that 79% of business owners said that their salary is the first to get cut. Can you imagine the CEO of a large enterprise skipping a paycheck while his or her business waited on payment? Not likely.

The reason these owners cut their own salaries is to protect their company’s growth. Consider one respondent, who said “As a small business it seems I have two options that have any integrity to them. Those are: to not pay myself, and to reduce marketing cost. Not paying myself is first because reducing marketing cost is about equivalent to hitting a self destruct button.”

So, if you run a B2B startup you can take comfort in knowing that you’re not alone in facing some of the challenges of getting paid slowly. But you should also think about ways to incentivize your customers to pay you quickly so you don’t have to make these tough tradeoffs. These payments are critical to your business’s growth—and to your personal financial health.

View the full size infographic on the Fundbox blog.