Time to take a hard look at the situation.
It's easy to get into the "boiling frog" trap, delay taking definitive
action, and then end up in a situation where decisions are made for you.
If its looking unlikely that you'll pull a rabbit out of a hat, you may be
better off to use the two months to shut the business down cleanly, and
give any employees time to figure out their plan B. If you just let it run
out of money, you'll be left with lots of loose ends, such as overdrawn
back accounts that you can't close out, delinquent payables, etc.
I wish I had pulled the plug on one of my businesses several years back but
instead ended up against a wall, and accepted an awful "acquihire" deal
with the most dishonest person I ever encountered. Everyone got screwed
over, including our investors. It would have been better if we had shut it
down and kept the intellectual property in case another opportunity came
along (in retrospect we were about five years ahead of the market with that
product and probably would've had another shot at it, but instead we ended
up working and getting swindled out of everything by a cretin we all
Without knowing the details, I can't tell you what you should do, except
you should make a frank assessment of the odds of a dramatic turnaround.
I'd compare it to landing a plane when the engine is out. Small aircraft
don't automatically crash when the engine quits, but they do turn into
gliders. You're going to come down to land somewhere, but that doesn't mean
everyone is destined to die in a fire.
I was in your shoes about 15 years ago. If you believe in what you're doing and think you can make it a go, go lean. Go without pay, get a core team and give them equity and bootstrap it on minimum wage or without pay if you have to. If you have investors and they won't give you any more money, give them a choice: they can give you more funding and you keep going, or you shut it down. Or you can recapitalize. If it's worth continuing and you see the light at the end of the tunnel, then you are in the driver's seat. Talk to your board, do a recap as an alternative to shutting down and give equity to yourself and the team that will help you to keep going. Good luck.
Tell us more about your overhead and cogs. How lean is lean? If you are paying people you are definitely going to have to stop doing that, get it down to the founders and nobody gets paid. If you have to get part-time or full-time jobs and try to run it on nights and weekends until you find more funding. Keep the website up and keep looking, switch to guerrilla marketing. I'm with Roberto and Brian, if you believe in it, go serve coffee somewhere if you have to, keep the IP and get more funding or another investor and split the pie again. Good luck!
Founder Society3 Accelerator & Fundraising market place
Extremely hard to say not knowing anything about your situation but obviously you have three major dials
1) Generate or increase revenue
2) Reduce cost.
3) Get alternative funding
Reducing cost is relatively easy, you trim it down to zero - but there is a saying "saving yourself to death". So it involves some strange risks. Definitely stop paying yourself, let go people that do not generate revenue i.e. developer (I know it is very hard) but you maybe able to rehire as soon as it gets better - probably 2-5 month and you are good.
GETTING REVENUE The most important measure is to generate an income stream instantly. I've been there twice. Try to sell sell sell
- Sell some consulting hours - assuming you are an expert in something
- Sell your solution to customers before you do ANYTHING else
- Sell a special version of your product at a special price...
- Sell parts of your technology to other companies
- Sell training classes to businesses
- Sell event tickets for an industry event that you pull together
- Sell.... what ever value you can create
ALTERNATIVE FUNDING There are many flavors of funding. I.e. donations, loans, crowdfunding
And Mark Capps, you are too lazy to read the messages you are receiving. (I
am not affiliated with this organization BTW, just another email
subscriber, just like you).
If you were not totally lazy, you would notice there is a "manage your
email notifications" link at the footer of every message which, if you were
not too lazy to follow it, includes an option to "unsubcribe from all email
So instead of being a dick and whining to everybody on this last, that you
initially subscribed to, maybe follow basic protocol and quietly
unsubscribe with annoying the shit out of everybody else.
And really if that's too much bother, just put this address in your spam
Thank you very much!
Member Issuers Committee at Equity Crowdfunding Alliance of Canada (ECFA)
While you are in a tough spot, you are thinking ahead which gives you a chance of avoiding unnecessary unpleasantness and an opportunity to learn and test yourself. The prospect of loss of your company is hard to contemplate but the key issue is why would your customers care and do they care enough to provide you funds for any reason such as consulting? Happens often if you are on the right track.If so preservation of IP and people skillswith the intent to renew growth is an option on the table. Ask for support more often than not it will be forthcoming. If not then an orderly exit to limit the damage is likely to be your best option.Should you take this path, engage in some reflection of your own personal growth in skills and knowledge as a result of the time spent and what you have learned about yourself. Most often this providescomfort at a turbulent time.
Also, can you tell us a bit more about the business? If you are running a
service industry and you really cannot make it go any further past two more
months, you may want to try shopping it around. It is much easier to sell
or merge a company that is up and running that one that has closed its
doors and will need some emergency life support to bring it back. Anyway,
more information would definitely help.
Jul 17, 2015
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