Questions

What to do if my startup is about to fail? I'm running out of cash and finding investors might be difficult (I'm in the service based business). I might be able to make this idea happen but I need more cash and time. I also need to hire more people. If I decide to close my business, would it be easy to find a job?

If you're a service business and haven't been able to make profit, then I highly doubt investors are going to get involved. The beauty of selling your time is you can get people to buy right away, and if they pay anything above $25/hour - then you should make profit assuming you can live off of $50K/year salary.

All that being said, here's what I did when I almost went bankrupt building my company Spheric Technologies (at the time I had 3 employees).

1) I got on the phone and started calling old friends loosely tied to the industry and asked for advice. Doing so introduced me to new opportunities, ideas and connections. I spend every night - after working 8 hours with a client - emailing and calling 15+ people. Some I knew, some I didn't, many I hadn't talked to in years.

2) Focused on sales & getting paid faster. Many times - especially a service based business - will die due to cashflow issues... they can't afford to pay their employees bi-weekly, and wait on the sidelines while their customers pay them net 30, 45 or worse 60+. So I hustled to get my existing customers to pay me Net 0, and going forward, got a deposit (20% up front) and kept the invoice every 2 weeks, Net 0, paid via wire transfer or credit card.

3) Refined the business to focus only on 1 customer type that was profitable. In the early days you take on anything that will "make you money" but you quickly learn that not every customer is the same. If you know this, stop working with customers where you can't make 30% net profits off a project, and use that as your filter for new opportunities. Also, raise your prices if you aren't making profit. Someone in your industry is... so can you.

Unfortunately, there's no short cut or silver bullet - but the pattern to follow is listed above.

I eventually grew that business to 30 employees in 4 years (bootstrapped 100%) and was acquire in May 2008 before the crash. It was the easily the most intense time of my life, but I learned A LOT of lessons that I continue to use today.

Call if I can help, but assuming I maybe priced outside of your range ... that being said, there's thousands of other folks who can help for as little as $30, so get on a call today.


Answered 6 years ago

Unlock Startups Unlimited

Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly.

Already a member? Sign in

Copyright © 2020 Startups.com LLC. All rights reserved.