What does a start-up do after it run out of money? Originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Running out of money can be a very difficult position to be in. I hope these points help if you are ever in, or are currently in such a situation.
1. Don’t Panic
First, you should explore whether or not the underlying business issue can be fixed despite running 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 weeks of runway left and employees depending on you. Do Not Panic. This will not help and can lead to irrational actions.
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. But first things first, let’s help the company survive. To do this, you need a clear head. Take deep breaths, talk it out, and go to #2.
2. Prioritize Options
List out your options. I suggest creating a Google Doc, so 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 offers, 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 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 so you can survive another day. This may mean laying off employees while you completely evolve the business model.
4. Stay Level-Headed
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.
Hopefully, you found a good investor, merged, were 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 others can benefit and you can demonstrate to the world that you will carry your learnings into the next venture.