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.
I'm making a profit (about 15k/year) but it's not enough to survice in the long term. I guess I will need to start calling people that might help.
Could it be that your business model is faulty?
Dan hinted at this in his suggestion about concentrating on higher margin clients (in other words - focus on those that pay best and eliminate those where the margin is low).
That's just one factor you must consider - others include:
-How many clients / sales do you need in a given period of time to hit your top line requirements (i.e. the gross income you need per month)?
-Who specifically is your market?
-How are you finding them (outbound marketing)?
-How are they finding you (inbound marketing)?
-Why will they choose you over other that provide a similar service (USP)?
-What is your pricing model? Does your market allow for price elasticity?
-What is your offer?
If you don't know the answers to these questions (and others like them) then you are operating blind. When you DO know the answers to these questions then your strategy becomes more clear and your day-to-day "working ON the business" actions become obvious.
I empathize with your situation. I've been there (and I'm willing to bet that most of the experts here have had similar experiences with their businesses).
The great news for you is that you have immediate access to an amazing group of experts that can very likely, for a small investment (the cost of a call or two), help you get back on track.
If you are serious about saving your business - take action today. Find an expert here on Clarity and schedule that call.
I wish you the best of luck!
Maybe the business doesn't need to be "a business". If it's not earning you a full-time living, then that may be disastrous or it may be ok.
Revenue may be insufficient in comparison with a salary; but if you can generate that revenue part-time and think of your business as a side project, an "income stream" alongside others rather than your full-time gig ... then you may be able to scale down that business to its most efficient level and retain it.
Later on, once you have balanced multiple income streams in a way that optimizes your time invested and generates a salary-equivalent income, then you may find a way to adjust the balance and grow that single income stream into a full-sized business. By then, maybe your reputation and clientele will have grown naturally on their own. Or you may have access to more funding or better marketing tools.
It doesn't necessarily need to be "all or nothing".