Startups

How to Handle Your Startup Company When You’re Running Out of Money

Published

8 years ago

Apr 7, 2018

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.

5. Keep working hard

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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Grace Rivera

Grace Rivera lives in Boulder, CO with her husband, Jack, and twin boys, Felix and Max. Grace assists companies with their brand and marketing strategies, specializing in effective retail store layout such as printed ads, custom signs and more. Armed with a Master’s Degree in Marketing, countless blog posts and publications, and proven results, it is no surprise that many local companies trust Grace to get their business on the road to success.

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Startups

How an LLC Can Help Shield Your Personal Assets

Published

1 week ago

Aug 1, 2026

Addicted2Success Editor

Image Credit: Addicted2success

You are a freelance designer, and your client sued you over a trademark mistake. If you believe that your personal savings are safe, then you may be wrong. You are operating as a default sole proprietor. You and your business are the exact same person. As a result, your personal bank account, your car, and even your home are legally up for grabs.

However, if you start an LLC, you can build a legal shield between your business liabilities and your personal life. These days, you can easily form an LLC online.

How Does This Legal Shield Work

When you start an LLC, your business gets a distinct legal identity. Now, your LLC can open its own bank accounts, sign contracts, take out loans, buy equipment, and be held responsible for its own actions. You are not liable. This boundary between you and your business is called the “corporate veil.”

Visualizing the Separation

Inside the Shield (Business Assets)

Everything your company owns is included in this shield. If your business faces a debt collector or a lawsuit, only your business assets are at risk, such as:

Money in the business bank account
Inventory and raw materials
Office equipment, computers, and company vehicles
Business intellectual property

Outside the Shield (Your Personal Assets)

You don’t have to worry about your personal assets, such as:

Your personal checking and savings accounts
Your home and personal real estate
Your family vehicles
Your retirement funds (401k, IRA) and personal investments

What LLC Protection Covers

Business Debts and Contracts

When your LLC signs a commercial lease, hires a contractor, or buys inventory on credit, these are the obligations of the LLC. Your creditors will come after the assets of the LLC if your business can’t pay.

Lawsuits

If your business is sued over a contract dispute, faulty service, or an operational issue, lawsuits will be filed against your business. All your personal assets are safe.

What LLC Protection Does Not Cover

Personal Torts

The term “tort” refers to an act that causes harm or injury to someone else. The LLC shields you from the mistakes of your employees and general business liabilities. However, it never protects you from your own personal actions. For example, if you personally commit fraud, you can be sued personally.

Personal Guarantees

Vendors often hesitate to lend money to new, growing businesses. Such businesses don’t have long credit histories. Lenders often require you to sign a personal guarantee.

How Owners Accidentally Destroy Their Protection

The legal shield provided by forming an LLC only works when you run your business properly. The corporate veil can be pierced when a court decides that your LLC is not legitimate and strips away your protection in a lawsuit. This usually happens when you make one of the following three mistakes.

Commingling Funds

Many small business owners often mix their personal money with their business money. You are commingling funds when you use your business debit card to buy your personal groceries or you deposit a client’s payment directly into your personal checking account. The legal wall crumbles when you don’t treat your business and personal finances as completely separate.

Missing an Operating Agreement

An operating agreement is the legal document that outlines:

How your LLC is run
Who owns what percentage
How profits are handled

If the creditor’s lawyer finds out that an operating agreement is missing, they may argue that your LLC is just a shell.

Falling Out of “Good Standing”

When you start an LLC, you must file annual reports and pay franchise taxes to keep it active. The state will place your business in “Administrative Dissolution” or bad standing if you miss any of these deadlines. You could lose your limited liability protection if you operate a business under an inactive or dissolved LLC.

Startups

Move Fast without Breaking People: Product Safety Lessons for Ambitious Startups

Published

4 weeks ago

Jul 15, 2026

Addicted2Success Editor

Image Credit: Addicted2success

Fast growth can hide product risks until customers get hurt, especially when safety comes late in development. A software bug can be patched, but a chair, charger, or smart device can cause a burn, fall, cut, or crash.

For founders moving from a prototype to mass sales, the cases handled by Michael Kelly Injury Lawyers in Boston show why launch goals should not push testing, warnings, and foreseeable risks aside. A product claim can involve the design, how a unit was made, user instructions, or several firms in the supply chain.

Why Minimum Viable Should Never Mean Minimally Safe

A minimum viable product should test whether people want an idea, not how much danger they will accept. Teams can delay colors or premium finishes, but not guards, safe heat limits, sound wiring, or clear instructions.

Set Safety Rules Before the Build

The product brief should define who will use the item, where, and what could happen during setup, cleaning, storage, wear, or mistakes. It should also consider what a child, guest, tired worker, or first-time buyer might do.

Shared rules help teams move faster. Designers know which guards must remain. Engineers know which parts cannot fail. Suppliers know what cannot change without review.

Test How People Really Use It

A neat demo is not the real world. Users place products on wet counters, soft rugs, or rough ground. They skip a guide, use the wrong cable, or handle an item in unexpected ways.

Testing should cover misuse without predicting every extreme act. When a risk can be reduced through a guard, lock, stop switch, or clear signal, that design change is often greater than a warning alone.

How Design and Manufacturing Risks Differ

Some risks are built into the design. Others arise when production fails to match the approved plan. Teams need to identify the source before choosing a correction.

Design Problems Start with the Plan

A design problem can affect every unit. A base may tip, a blade may sit too close to a hand, a control may activate too easily, or a battery space may trap heat.

Final inspection cannot repair a flawed plan. The team may need a new shape, shield, limit, material, or control, followed by testing before more units ship.

Manufacturing Problems Break the Plan

A manufacturing problem occurs when a unit or batch does not match the approved design. A fastener may be missing, a weld may be weak, a wire may be damaged, or the wrong component may enter production.

Good records help define the scope. The team should know who made each part, which batch used it, what checks occurred, and where units went. Fast trace work can keep one fault from becoming a wider crisis.

When Customer Feedback Signals More Than Dissatisfaction

Support teams hear about delays, difficult setups, strange sounds, and refunds. Most reports are routine. Yet heat, smoke, sparks, breakage, sharp edges, sudden movement, falls, or failed guards require review.

Treat Complaints as Safety Data

One report may lack key facts, but similar reports can reveal a pattern. Staff should record the model, batch, date, use, photographs, and outcome, then alert someone who can pause sales or order testing.

Teams should not blame unusual use before asking whether another reasonable buyer could make the same choice. A support ticket can be the first sign of a hazard that lab testing missed.

Preserve the Product and the Record

After an injury, the product can help explain what failed. A repair, disposal, or undocumented test can remove evidence. The same applies to old labels, manuals, test files, customer messages, and design notes.

Startups should keep relevant items safely, record who examines them, and preserve earlier versions of instructions and warnings. This history can show what changed and why.

Why Warnings Must Reflect Real Use

A warning works only when a user notices it at the right time. Dense text at the back of a manual may not help during setup. The message should name the hazard, explain the harm, and state what reduces the risk.

Placement matters too. A charging risk belongs near the port. A weight limit belongs where weight is added. Even so, warnings should not replace a safer design when the hazard can reasonably be removed.

How Founders Can Preserve Speed without Cutting Safeguards

A delayed launch, redesign, or recall can feel like defeat. In practice, early action can prevent harm, protect trust, and give the team better facts for the next version. The strongest startups move quickly because their systems protect people.

When a product injures someone, legal guidance can help preserve the item, collect design and manufacturing records, identify responsible companies, and examine whether a defect or unsafe choice caused the harm.