Running a startup is one of the most fulfilling and hardest jobs you can have. It is great to feel like you have full control of your own destiny when you are building a business until you start to see some signs that your startup may be dying. A slower than anticipated sales cycle, an unforeseen competitor, investors that won’t bridge you, the list goes on and on. Here are the top five things you should do when your startup is running out of money.
First, you should explore whether or not the underlying business issue can be fixed before you run out of money. This could be an opportunity to evolve the business to be self-sustaining or attract more interest. Assuming you did this and came up empty handed, it’s easy to feel like the business is crashing. You only have a couple of weeks of runway left and employees depending on you. Do not panic. This will not help and can lead to irrational actions. You should look for solutions especially if you source your funds from other avenues beyond venture capital. In the grand scheme of things, you are already doing better than most of the population in getting your idea off the ground and into reality. You will survive this, even if the company does not.
List out your options by creating a Google Doc, you can share with others such as investors, business partners and trusted advisors that may be able to help. At this point, you have two main options: a) raise money or b) be sold/merge. List out potentially interested parties and all of the reasons they may want to provide funding or buy/merge with your company, e.g. an exclusive contract offer, amazing technology, world-class talent. Ask others for their suggestions. Prioritize those that would be most likely to invest, buy, or where you have a close relationship.
Set up calls and meetings from your list of potentially interested parties. Be happy when someone says ‘No’ so you can move on to others that may be a ‘Yes.’ Keep updating your list and stay focused on the best outcomes. You may even be able to get two parties interested so they can bid against each other. If nothing is coming to fruition, think of ways to cut back in order to survive another day. This may mean laying off employees while you completely evolve the business model.
There will be good calls and bad calls and numerous ups and downs. Don’t get too excited by every positive indication. It’s not over until the deal is done and money is in the bank. It’s also not over until it’s over, so don’t be negative until it is the last second of operations. Be realistic but optimistic and keep fighting.
There are so many investors and venture capitalists & funds out there. Hopefully, you found a good investor, merged/acquired, or completely evolved to a business that can support itself or attract more attention. If not and the business died, do a post-mortem. Reflect on lessons learned. Share them so that others can benefit and you can demonstrate to the world that you will carry your learning into the next venture. You will always have another chance. You will thrive.