Cash runway (months of operating expenses you can cover from current cash) under 3 months is dangerous for any business. Most business failures happen during growth phases counter-intuitively — fast growth requires capital that exceeds current cash flow.
Why 3 months is the floor
Below 3 months, decision-making degrades (panic vs. strategy). Customer payment delays (common — UK average payment 45-60 days) can break the business. Single customer leaving has outsized impact. Banks won't lend when you're already in distress.
How to build runway
Profit retention (don't distribute all profit; build cash reserve). Credit facilities arranged before needed (much easier to get when not desperate). Customer deposits where possible. Subscription models or retainers for recurring revenue. Reduce burn rate in slow months without panic cuts.
What 6-12 months runway enables
Strategic decision making rather than reactive. Investment in growth without panic. Ability to walk away from bad customers. Negotiating power with suppliers. Resilience through downturns. Worth pursuing for any established business.