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



running out of money

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!

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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As an entrepreneur, I’ve learned that understanding market dynamics and choosing the right business model are crucial.

A few months into the startup, I was quick to gauge why it is necessary to go beyond the nuances of operational efficiency and the art of sustaining a business amid growing competition.

Collaboration is key.

The HR and the recruiting teams work with departments to foster a culture of collaboration, but what’s indispensable to business performance is the sync between the marketing and sales teams. What we’d consider as entrepreneurs is the need to ensure seamless collaboration to predict and achieve business goals together. In turn, this will help secure long-term recurring revenue for the business.

Besides, entrepreneurs need to focus on revenue as they gear up to take their startup from $0 to $1 million. The journey is filled with critical decisions, from identifying your target customer base to choosing the right funding strategy.

So, what next?

Read on… because here are five practical, results-driven strategies that you as a founder can implement to make a mark in their industry.

#1. Embrace the Lean Methodology

What is lean methodology?

It is all about pivoting resources to create more value for customers with fewer resources. 

This principle encourages you to be more agile and allow rapid iteration based on customer feedback rather than spending years perfecting a product before it hits the market.

Want to implement it?

Here’s what you can do.

Build “Measure-Learn” Loop: What I did was develop a minimum viable product (MVP), a simple version of the product. You can do the same since it allows you to start the learning process as quickly as possible. After launching MVP, measure how customers use it and learn from their behaviors and feedback.

Here’s what I can recommend here:

  • Identify the core features that solve your customers’ primary needs and focus solely on those to develop your MVP.
  • Know the feedback channels where early users can communicate their experiences, suggestions, and complaints.
  • Analyze user behavior and feedback to make informed product development and iteration decisions.

#2. Focus on Customer Development

Let’s talk about taking our startup to the next level. 

It’s not just about getting customers – it’s about really getting to know them. We need to dive into their world, understand their struggles, and see how our product or service can make a difference in their lives. 

It’s like we’re detectives, piecing together the puzzle of our business hypothesis by actually chatting with our customers

What would you ideally do here?

Understand Customer Segments: I’d say, start dividing your target market into segments and develop a deep understanding of each segment’s demographics, behaviors, needs, and pain points. The idea is to get into their shoes and really feel what they feel.

Ensure your Product Clicks: When starting up, think of what you offer and consider whether it clicks with what our customers need. My thought was “Does my product solve their problems? Does it make their day better?” Put yourself through a tough grilling session to show customers the value proposition and ensure that the product’s promise matches what our customers are looking for.

I’d recommend the following actions here:

  • Talk to them – through surveys, interviews, or even casual chats. The goal? To gather real, raw insights about what they need and expect.
  • Use the collected data to create detailed profiles for each type of customer. This way, everyone on our team really understood we were serving. I think this should help your startup as well.
  • Try out different versions of our product with a few customer groups. It’s all about feedback here – understanding if you’re hitting the mark or if we need to pivot.

#3. Foster a Data-Driven Culture

The digital world is highly data driven since it fuels key decisions in a startup. 

I believe it’s essential for us to build a data-driven culture. This means, you’ll move from making decisions based on hunches or assumptions. Instead, the focus should be on data analytics and insights to guide our strategies and improve our outcomes.

What can you do?

Use Data Analytics Tools: You should be using these tools to gather, analyze, and interpret data related to customer behavior, market trends, and our business operations. Here, consider the adoption of pipeline forecasting that leverages AI to find patterns in marketing data. 

In turn, you’ll get areas for improvement since it can analyze historical data and predict the outcome for you to plan your.

Action Items:

  • Pinpoint key performance indicators (KPIs) that align with your business objectives and ensure they are measurable and actionable.
  • Next, you can consider training your team to understand and use data analytics tools. This might involve workshops or bringing in experts to build a data-savvy workforce.
  • Once everything is in place, regularly review data reports and dashboards. This gives us a clear picture of a startup’s health and helps adjust your strategies and predict future trends.

#4. Strengthen Your Financial Acumen

A good grip on financial skills is important to steer your business towards growth and making sure it stays on track. For this, you’ll have to understand the money side of things, which helps you manage your cash flow. Think of figuring out smart investment moves and sizing up any risks that come your way.

Here’s a tip on how you can get savvy with your finances.

Maintain Rigorous Financial Discipline: I’m really focused on cultivating a strong company culture, one that truly resonates with our mission. So, I’d suggest fostering open communication and encouraging a sense of ownership and collaboration among everyone in the team.

Action Items:

  • Get to know your financial statements inside out – I’m talking about the income statement, balance sheet, and cash flow statement. These are like the vital signs for your business’s financial health
  • Use financial forecasting that helps predict your future money moves. With this, you will have a heads-up on upcoming revenues, expenses, and how much cash you’ll need. Also, research on the available financial forecasting tools that can make predictions spot-on.
  • Don’t go at it alone. Regularly touch base with financial advisors or mentors. With them by your side, you’ll have a fresh perspective on your financial strategies to ensure you’re on the right path to hit your business goals.

5. Prioritize Team Building and Leadership Development

It is crucial to focus on building a solid team and developing strong leaders. This means putting our resources into the people who are going to propel our company forward. 

What you’ll aim for here?

Creating a culture where everyone collaborates and every team member has the chance to emerge as a leader.

What I would do:

Cultivate a Strong Company Culture: This culture should mirror our mission and foster open communication. It’s important that it encourages everyone to feel a sense of ownership and work together.

Invest in Leadership and Team Development: As founders, we’ll have to make way for opportunities for teams to enhance their skills, face new challenges, and grow in their careers.

Some concrete steps that you should consider taking:

  • Begin with clearly communicating your startup’s vision, mission, and values so that every team member is on the same page.
  • Conduct regular team-building activities and workshops to boost skills and strengthen a sense of unity and collaboration.
  • How about starting a mentorship program within our organization? The more experienced team members could guide and support the growth of newer or less experienced folks.
  • Alas… encourage feedback at all levels. We should keep striving to create an environment where open, honest communication is the norm and everyone feels safe to speak up.

I know it’s one thing to get your head around these ideas and quite another to actually make them a part of your everyday business life. But that’s where the real magic happens, right? It’s all in the doing. 

As a startup founder, this means more than just being a big dreamer. How about rolling up your sleeves to be the planner who pays attention to the smallest details. Ultimately, these tips and more tactics around it will help carve a leader in you who listens and cares and the learner who’s always ready to adapt

So, as you’re either starting out or moving forward on this entrepreneurial adventure, keep these practical tips right there.

May these be your guiding lights, helping you steer through the wild and exciting world of building a startup that’s not just a dream, but a thriving reality.

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