Investors are fickle. Sometimes they're seized by a fear of missing out, terrified of not being in on the latest hot fad.

If such investors fund your company, they'll tell you to spend whatever it takes to grow at more than 100 percent a year. Other times, a failed IPO in your industry will send those same investors scurrying. If they talk to you at all, they'll tell you to get profitable before you have any hope of getting more money.

I think capital from large institutions is generally the worst form of capital for your business. Customer profits are the best. Why? Institutional investors demand board seats and can fire you. If you can make money selling to customers, you're free to operate as you please.

If you've already raised money from investors to spend whatever it takes to grow, you're probably burning through cash at a rapid clip. You might be setting the price for your product way below your costs so customers will view it as an irresistible bargain. Your office might be located in expensive parts of cities like San Francisco or Boston; you might be spending heavily on conferences and hiring high-powered salespeople around the world.

If investors reverse themselves and cut you off, you can easily calculate how long it'll take you to burn through your remaining cash. The hard part is making that money last long enough to get your company profitable.

Here are five steps to get you there:

1. Listen to your stakeholders.

Sometimes the current CEO may not be the right person to fix the problem. In that case a new CEO comes in to fix it. If you are willing to look at your business with a clean sheet of paper--as my late MIT professor Michael Hammer used to say--your first step is to ask questions and listen to the answers of all your stakeholders.

Talk to board members, suppliers, employees, and customers. Ask them what's working and what's not working. Figure out who's making your company better and who's free-riding or bringing everyone down.

This process can help you to pinpoint the key issues facing the company and develop a cost-reduction plan. Steve Stuut, CEO of identity management service Jumio--which filed for bankruptcy under his direction after he took over from previous management and is now growing quickly, told me, "I was a McKinsey consultant and what we do when we arrive is to talk to everyone--every executive, director, key employee, competitors, ex-employees--which always leads me to identify the key issues."

2. Pinpoint the biggest cash leaks.

A company that is burning through cash fast has little time to slash costs. The previous step should help you develop a plan to identify the best ways to cut those costs very quickly.

Are there highly paid people who are dragging the company down or not contributing? Can you find a new tenant for your office and get out of your lease? Are you spending too much on marketing without getting any benefit?

Are some of your sales offices costing more money than they bring in? Are some of your engineers taking high salaries without contributing to new product development? Can you raise prices without losing customers?

3. Develop a plan to slash spending on the biggest cash leaks.

Once you've found those cash leaks, you should figure out how to fix them. But be practical about it--rank the ideas based on how much cash they'll save and how quickly those cash spigots can be switched off once you decide to implement the plan. Focus first on the cash saving ideas that will save the most money the fastest.

At this point, you should also decide who on the team you think will be able to help you keep the company going and get them to help you with carrying out the cost cuts. You should tell them that you need them to help keep the company going, ask them to be discrete about the cost cutting plan, and seek their input on how best to implement it.

4. Make short-term cost cuts fast.

Don't waste time implementing the cost cutting plan. If you are going to dismiss staff, cut everyone on the same day if you can. Get out of your lease within the current month if you can pull it off. The sooner you make those cost cuts, the longer your remaining money will last. And make sure everyone who's left knows that you want them to stay.

5. Work with the people you keep to plan future efficiencies.

After the initial cuts, work with the people you keep to develop longer-term plans to get the company on a path to profitability by boosting revenue to each customer, or making marketing, sales and service operate more efficiently.

Published on: Jul 26, 2018
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.