I am not ready to start selling off chunks of my start up quite yet, but I also don't seem to have means to secure more non-equity funding.... Any recommendations? Thanks!
I like the way you framed this question. Staying calm, always leads to better decisions being made. The best way to maintain a "calm" state is to do your best to look at your business from a completely detached view.
Having a talk with myself or anyone else well-reviewed on Clarity can bring needed perspective, but some people can achieve the same analysis on their own.
Questions you should be asking yourself:
1) What evidence do I have that I'm building something others need? Was I expecting to have more evidence than I currently have? If so, do I trust that I know how I can obtain this evidence within the next 30 days?
2) Do I have credible options to fund what remains to be completed to get real customers (not my friends or associates) to use the product and give feedback?
3) Are others working on this project with me willing to make the necessary sacrifices (deferring payment) to get us to the point where we can test with real customers/
If you're not scoring at least 2/3 with confidence, you should reach out to me or someone else on Clarity.
You stay calm by having options. And by staying calm it's easier to think of more options. And that's your job when you're running a lean start up because you're always just about to run out of money. Brainstorm to get your creative juices flowing to think of where you can get more money. There are some ideas on this thread already (sell products, collect on your A/R, lay off some of your team, ...) and there are plenty more if you can take a quiet, calm moment to think about more options.
I'd be happy to brainstorm with you if you want to set up a call.
I have worked with many start ups and this is a common problem. To really answer the question effectively it would be good to know what and who makes up your company at the moment.
Do you have any employees? Are you making any money? Are you the only shareholder? If the answer is yes to the latter it may be time to start being open to other people earning/buying equity in your business particularly if it is starting to get too lean. But that will only be an attractive option to other people if you have a good team and ideally making some money already.
However, assuming you have a service and/or product you can take to market and if you are determined to hold on to the entire house then your main course of action should be to focus on what brings in revenue. Nothing else matters. Sell, sell , hustle, hustle......
If you have no team or are struggling to keep paying for the team you have then equity should be offered to keep or attract the right people to your business. A good team working together is what a business needs to survive and thrive and it also makes the journey a lot more enjoyable if you have the right people on board. Trust me having been the lone ranger once, nothing beats having a good team of people you can work with.
If you don't currently have a product or service you can sell to customers then you need to reach that point asap. If it is a good idea and angels will invest, then just take enough to get you to that point. This minimises the amount of equity you give away plus gets you to the point of earning revenue sooner rather than later. The proper investors can also help you grow your business and therefore add more value than the cash itself.
I hope that helps and if you would like more advice fee free to schedule a call. Thanks Steve
That's a very good question. As a serial entrepreneur, I've been through that situation several times. Most people don't realize how much pressure is on the entrepreneur founding a company, when success is not immediate… and contrary to popular belief in what is shown in the media: in most cases It takes time to establish traction and a credible business.
My 1st recommendation is to make sure to take care of yourself. This is the opposite of what most people do. Too many entrepreneurs run their companies as if it were sprint, rather than a marathon, and then they run out of gas before they get to the finish line. Forgetting to take care of yourself, results in overly stressing yourself, and often leads to making bad decisions. This means you have to make sure you get enough sleep, and also exercise regularly.
2nd, it's important to have another person that you can confide in to talk issues through. This may not be someone in your startup, because often the CEO has to be a cheerleader and can't express doubt or question whether things will work out or not. So for most people i recommend finding someone outside the company, who can be a sounding board for them. They don't need to be an expert business person: as long as they are a good listener and reasonably intelligent. I had a personal friend who had his little business experience as me (at the time) who helped me immeasurably. When I was feeling overly stressed, she would point it out and enable me to think more clearly, and avoid making poor decisions. If you are so fortunate as to have someone who is a mentor, then this is even better.
Finally, my last piece of advice is to never make big decisions too hastily and always sleep on it. The strategy has saved me from making several foolish decisions.
I wish you the best of success and luck with your startup.
I really don't know enough about your product to give you a comprehensive answer, but the best way to raise money is to sell something. Having been through this several times before, here are some of the solutions we've used. In this case, you don't want to sell equity, so you either need to presell your product if it doesn't exist or you need sell your testers or early adopters if it's already available.
If you are offering a product in the B2B space, then it might be a good idea to sell a lifetime license to potential clients for a discount off what they would pay for the regular product, but enough cash to keep you going. It may take multiple to make it work, but it could work.
You can also try to do the same with consumer products and services and offer lifetime or other advantages for a larger upfront commitment.
Although distracting, you could also consider offering services around what you are selling to enhance the revenue stream from the product.
Feel free to reach out to me if you have any questions about how to pull this off.
Let me tell you what you need to do. Let me give you the magic pill if you will.
Take Action. While staying calm sounds good, people are usually just suppressing their anxiety and not wanting to face reality. You have to test. Take massive action. Realize that you are worried and worried for a reason, but don't panic. Always test to make sure the market is interested, needs, or wants in your product before developing it. Do not try to create a need, try to create a product where there is already a hunger for the product with little competition.
Best of Luck,
Michael T. Irvin
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Copywriting, Startups, Internet Entrepreneur, Online Marketing, Making Money