Running a business in the UK as a Nigerian entrepreneur can feel like a daily hustle — covering expenses, chasing payments, and hoping things balance out at month’s end. But how do you really know how long your business can keep going before money runs out? That’s where understanding your financial runway comes in.
🔑 Key Takeaways
- Runway = How long your business can survive before running out of cash. (Cash reserves ÷ monthly cash burn).
- Fixed expenses (like rent, salaries, subscriptions) are risky because they don’t change even if income drops.
- Keep at least 30% of your expenses variable so you can adjust quickly when times are tough.
- Extend your runway by cutting costs, stabilizing revenue, improving payment terms, seeking short-term funding, and boosting cash efficiency.
✈️ What is “Runway” in Business?
Runway is simply how many months your business can continue operating before the money finishes — assuming nothing changes in income or spending.
Think of it like fuel in a car: if your bank balance is the petrol tank, your runway is how many miles you can drive before the car stops.
🧮 How to Calculate Your Runway
Formula:
Cash reserves ÷ Monthly burn = Runway (in months)
- Cash reserves = what’s in your business account, savings, or short-term funds.
- Monthly burn = your average monthly expenses minus revenue.
👉 Example:
If you spend £5,000 monthly and only bring in £3,000, your burn is £2,000. If you have £10,000 in the bank, your runway is 5 months.
📊 Fixed vs Variable Expenses
- Fixed expenses: rent, software subscriptions, permanent staff salaries.
- Variable expenses: freelance contractors, cost of goods, delivery fees.
💡 Tip: Try to keep at least 30% of your costs variable so you can cut down quickly if income slows.
💡 5 Ways Nigerians in the UK Can Extend Their Runway
- Cut or renegotiate fixed costs – pause unused subscriptions, renegotiate rent, or shift from full-time to contract staff.
- Stabilise revenue – offer clients retainer deals, discounts for upfront payments, or subscriptions for services.
- Improve payment terms – request longer payment windows with suppliers, but encourage quicker payments from your own customers.
- Access short-term funding – consider a line of credit, invoice factoring, or small business loan (just ensure repayment terms fit your reality).
- Focus on cash efficiency – double down on services/products with strong profit margins and cut out those draining resources without returns.
🚀 Why This Matters
The UK economy is uncertain, and many small businesses struggle to stay afloat. Understanding your runway puts you in control — helping you make smarter decisions, whether that’s hiring, pausing, or pivoting your business.
Cash is king. Runway is your financial reality check. Once you know it, you can adjust and keep your business moving forward.
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