Life as an entrepreneur isn’t as glamorous as it looks. For every wonder boy like Zuckerberg or Jobs, there’s a startup founder grabbing dinner out of a vending machine and hoping he can find enough resources to keep his startup alive until next week.
5 Tips for Keeping Your Startup Afloat
As a startup founder, your eyes always have to be on the future. You make sacrifices in the present so that you can reap the harvest in the future. But there are also critical moments in a startup’s growth and maturation where you have to focus on the here and now – particularly when cash is low (or non-existent) and you’re struggling to stay afloat.
During these moments of famine, the only goal is survival. But before you go into full desperation mode, try to put some of the following suggestions into practice. They’ll allow you to stay afloat without compromising future growth and long-term objectives.
1. Reevaluate the Team
For many startups, payroll is the single biggest expense. Even paying a couple of employees minimum wage can be enough to throw your financials out of order when sales aren’t yet coming in. And as difficult as it is to rock the boat, you might need to reevaluate the team.
There are ways to keep people on the team without blowing your budget. You might defer compensation, give up equity in the business, or hire interns with the expectation that they may eventually become paid employees. Consider each of these options and make decisions that are good for the long-term health of your business. However, always remember that you can’t reach your future goals without surviving the present.
2. Pour All Money Back Into the Business
One of the biggest problems entrepreneurs run into is paying themselves too much too quickly. Ideally, you should be pouring all of the money you make back into the business. If you don’t have any personal savings, you’ll need to take a small salary – but keep it minimal.
You may need to pick up a part-time job on the side that allows you to make a few hundred bucks per week. Whether it’s driving for Uber, delivering pizza, or mowing lawns on the weekend, a dollar earned is a dollar more that your startup can use to remain operational.
3. Use a Quick Cash Loan
When a startup is really in a pinch and needs money right away, a quick cash loan is often the best way to go. They can provide as much as $5,000 within just a few hours (typically handled 100 percent online). You need to make sure you pay it back quickly to avoid excessive fees, but it’s a nice option to have in your back pocket.
4. Find an Investor
If you need a bunch of cash put into the business, rather than just a quick infusion, you probably need an investor. The key with selecting an investor, especially post-launch, is to carefully research the “fit.”
“The relationship you form with an investor is going to have a huge impact on the future of your company. If you decide that a fit just isn’t right for you, keep looking,” entrepreneur Zoe Anderson advises. “You don’t want to wind up in a situation where your vision is lost because of investor incompatibility.”
Be wary of giving up a ton of equity without also getting some valuable coaching/connections in return. Losing lots of equity, especially at this point in the game, can really hurt you in the future.
5. Take Advantage of Free Opportunities
If you’re struggling to keep up, it’s possible that your expenses are way out of alignment. There are lots of free options – including free tools, software, and marketing opportunities. Pursue these and see if you can lower your operational expenses and shore up a little of the bleeding.
Aim for Steady Growth
If all of your business metrics seem to indicate that your startup is healthy, yet you continue to experience stretches where it’s difficult to stay afloat (financially), then it’s possible that you’re growing too fast. Keep this in mind and do your best to scale at a rate that is comfortable. It may take a little while to reach your goals, but you’ll have a much stronger company in the end.