Setting up a startup company is a struggle. You need to find enough funding to ensure that the company takes off along with finding the right resources so it runs smoothly. There are a lot of great startup ideas that don’t translate into entrepreneurial success right away.
You might even reach a point where you no longer have enough finances to keep the business running. It could be because the idea was not well-embraced by many people. It is also possible that your investors are no longer willing to bridge you. Worse, you might suddenly have a competitor attracting all your target customers to their side.
If this happens, the first thing you need to do is stay calm, there is no point in panicking. Money is fluid in any business and this is an issue that can still be fixed. Once your business is running out of money, you still have a few weeks left to recover. Make the most of whatever time you have in your hands. When you are panicking, you might make the wrong decisions and this is going to hurt your business even more. Gather your thoughts, compose yourself and focus on what needs to be done.
Here are a few things you can do when your business starts running out of money:
1. Determine what went wrong
Before you can think about what needs to be done, you have to assess what happened first. Get to the root cause of why you are running out of money at this point in your startup business. You can only decide what would be best for the business if you have assessed all the details.
However, make sure that this process does not turn out to be a blame game. You don’t want to reach a point when feelings get hurt and you get stuck with that. This is not the time to blame, it is the time to make the right moves.
2. Write out your options
Since you are already having a hard time with your business, you can either raise money to pay for the loans and have enough cash on hand, or sell the business. There is no right or wrong direction. It depends on how you assess the situation. If you think you can still find a way to raise money and salvage the business, do it. On the other hand, if you can find interested investors and they have the capacity to turn things around, you better entrust the company to them.
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln
3. Start moving
You only have a small window between now and the day when you fully run out of money to keep the business running, therefore, you need to act quickly. If you want to look for investors, call people. Let them understand your offer. Tell them to make a decision as soon as possible so that you can also entertain other interested parties. If you cannot find investors, you might decide to lay off some employees. This is not the best way to move forward, but it is a cost-cutting measure after all.
4. Don’t act desperate
Yes, you don’t have enough money to run the business the way you would have wanted and you are also running out of time, but this does not mean that you should act desperately. You have to remain professional. When talking to potential investors, don’t show that you are in a panic mode. Instead, show them the benefits of buying your business or investing in it without lying about your current financial status.
You should also negotiate and make deals that are somewhat favorable to you. Don’t immediately close a deal because you feel like you won’t have any other option left if you let go of this one.
Aside from raising money, continue looking for creative means to improve your business. If you have determined that you have low sales, you might want to improve your products. If the problem is that you are not reaching out to a lot of people, rethink your marketing strategies.
This time, you should involve more people on your team. Perhaps, the previous ideas failed because you did not consult a lot of people. You only relied on what you thought was right. It doesn’t work that way for startups. A lot of people have something to contribute to improve the business and you need to trust that they can get things done.
If your target customers were taken away from you by other unexpected competitors, don’t just leave the fight, you have to fight head on. Nonetheless, this does not mean you have to fight dirty. It means you need to find out what their weaknesses are and improve on them so you can have another selling point. Keep researching and understand what the market needs and what the trends are.
“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.” – Pele
6. Integrate other business ideas
Your business might not be doing well right now for several reasons. If you think that it is because you didn’t come up with a great idea, perhaps it is time to integrate other ideas. You can expand your business so you can reach out to more people. You can also start another business that is more profitable so that you can use the said profits to improve the other business. It is just a matter of how you make the most out of this new business idea to improve everything.
What were some things you did when your business ran out of money? Comment below!
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