When you hear about startups, they are usually success stories of thriving businesses, but this isn’t a perfectly accurate reflection of reality. Many startups are wildly profitable at first but can’t be sustained for the long haul, and many never quite get off the ground.
You may be one of the lot who had a rough go of it, doing everything you can to keep your new business afloat. It is a scary and incredibly stressful position to be in. It only takes some altered thinking to turn difficult circumstances into potential for an upside.
Peace of Mind Comes from Preparedness
If you’re running a business, then you probably have your ducks in a row, for the most part. But there are a vast number of business owners who really don’t plan for the worst, and this is key.
Let’s be honest, though; sometimes you just don’t have the resources to put aside a substantial amount of money for an emergency-contingency-fund. That’s why having your priorities straightened out is a fundamental element of being prepared for lean times, or the outright failure of the business.
Adjusting Your Priorities
In normal, stable conditions, you allocate funds for the needs of your startup in a specific order. If you find yourself in a position where the lifeblood of your business seems to be steadily draining, then it’s a good time to re-allocate those funds. Just like the human body diverts all its resources to the most vital areas when the body is threatened, you can divert your resources to what is most important during perilous times.
That might mean cutting staff and investing that money into a new project or venture, or it might just mean cutting overhead by shortening your business hours, so that you can focus more resources into developing a new business model. Wherever you make those budget cuts, it will enable you to concentrate your efforts on simply surviving.
Get Back into the Black: Realistic Financial Planning
One area where you cannot fool yourself is your startup’s actual financial situation. You are not doing your business any favors by estimating optimistically. Your budget is far from subjective, as any business owner is painfully aware of.
So one of the best things you can do for your struggling startup is to calculate exactly the amount that you need to stay afloat, for the next week, the next month, and even the next year (although the next year may be uncertain, so that’s a little tougher).
Then, once you know precisely the amount you’ll need to keep your startup alive, you can work on figuring out how to hit that mark. The idea is to be deliberately pre-emptive, instead of reactive to crises as they come.
Don’t Borrow Out of Desperation
Word to the wise: If your startup is in the red, the answer is probably not to throw more money at it—especially if you don’t have the money. Sometimes, you have no choice but to borrow money to get out of a tight spot, but if you can help it, it’s probably a bad idea to take out a loan under duress.
It depends on your specific case, while at the same time, putting more money into something that is already eating money is most likely a recipe for disaster. There is clearly a deeper problem that needs to be addressed first. Not to mention that if you’re borrowing the money, you obviously don’t have it to begin with, which means you’re taking on potentially terminal debt.
Consider Your Next Venture
When smart people discern that something looks to be failing, they start looking for the viable alternatives. Your startup is your baby; it was an ambitious pursuit into which you have put your entire life force, sometimes at the expense of your physical, mental, and emotional well-being. So, in a nutshell, it’s not easy to give it up.
But great startups fail every day, and it’s just practical to look into alternative ventures when you see that it may be failing. You are of course going to do everything in your power to keep it alive; however, as your left hand is clinging to your current business, your right hand should be reaching for the next one.
Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.
Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.