“It’s not pretty. The way things are going we’re not going to finish for five months and even with everyone on reduced salaries we will exhaust all our funding in four – and that’s without wasting $10,000 on artwork.”
Fans of HBO’s Silicon Valley may remember this moment in Season One, when Jared Dunn tries to motivate the Pied Piper team ahead of a TechCrunch Disrupt. At the time, it felt like comedy. Today, for many early-stage and mid-market businesses, if feels uncomfortably close to reality.
The cash burn reality check
In the current global economic climate businesses, especially those in the pre-revenue or early growth phases, need to be laser-focused on their cash burn and cash flow forecasting. Capital that once felt abundant is now far more difficult to secure. The IPO market has struggled to rebound to pre-pandemic highs. Just five IPOs were recorded in the first half of 2025, according to S&P Capital IQ and total deal value decreased to $770m of which Virgin Australia’s listing contributed $685m. This contrasts with the 76 listings and $4.935b raised in 2020.
Even listed entities have turned to alternative funding arrangements, including convertible notes more typically seen in pre-IPO stages. Going Concern – the financial reporting principle that assesses whether a business can continue operating and meet its obligations for the foreseeable future – has become increasing critical. For Directors, whether of a listed or private business, Going Concern is no longer a once-a-year audit consideration. It is a daily strategic focus.
The questions Directors should be asking
Management and Boards need to continuously evaluate:
- How accurate is our cash flow forecasting?
- What contingencies are in place if revenue targets are missed?
- What alternative funding options can we pursue if a capital raise underperforms?
- How would an Emphasis of Matter for a Material Uncertainty, related to Going Concern, be perceived by shareholders in my audit or review report?
- Are we monitoring debt covenants monthly for compliance and early communication where any potential breaches are forecast?
These questions become even more pressing when cost-cutting decisions are required:
- How quickly can development spending or overhead costs be reduced?
- Is there potential for sale and lease-back arrangements on key valuable assets?
- Is divestment of non-core business activities a viable and worthwhile consideration?
- Can Directors defer or forgo salary, or accept equity instead of cash?
- Are Directors willing and able to temporarily inject their own money to help keep things afloat?
- Is the realistic exit pathway a business and IP sale?
Acting early matters
Many businesses fail not because they lacked potential, but because they did not make the right decisions or did not make them early enough. Spending is easy when optimism is high. Reaching cash-flow breakeven is far harder when product development must continue, but the revenue is lagging expectations and isn’t supporting the costs and optimism has evaporated.
And while burning $10,000 on artwork for the office may be a comedic subplot on TV, similar decisions in the real world can be the difference between survival and administration.
Why Going Concern should stay top of mind
In uncertain markets, robust Going Concern assessment isn’t just an audit requirement – it’s a strategic discipline. Directors and management must keep a clear, forward-looking view of cash runway, funding options and financial resilience. The ‘good times’ won’t always roll and the businesses that survive and thrive are those that plan for when they don’t. As they say, at the end of the day, cash is still king.
Take control of your cash flow and Going Concern strategy today. Our advisory team can help you clarify your cash position and plan your next steps.
