How to Cope with a Financial Disaster as a Startup
BY: BORIS DZHINGAROV ON TUESDAY, OCTOBER 06, 2015
No one ever said that starting a new business is easy. In addition to coming up with a business plan, you need to work long hours in order to make everything fall into place. Many people who run startups are unable to get enough sleep, never mind enough free time with family and friends, and they may be overworked and burned out before they know it.
Despite all of your hard work, though, you may end up finding yourself struggling. One of the biggest setbacks for a startup is financial disaster. How can you cope with it after putting in so much effort to make your business a success? Continue reading for a few helpful tips.
Face Reality with a Clear Head
When financial struggles hit your startup, you're definitely going to be really stressed out, and this can prevent you from being able to see things clearly and make the appropriate decisions to get yourself and your organization back on track.
Start by simply getting rid of any delusions that you're currently dealing with. Instead, face your reality, as harsh as it may currently be, and accept the fact that you're struggling financially. Once you set this foundation, you can start taking action in a clear-headed manner.
Check Your Company's Inventory and Make a Plan
The first step in your plan to get back on your feet is to figure out exactly what you have. After all, you've already lost quite a bit, so you need to find out what you can work with. Look through your accounting records to see how much you have in the bank, how much money you still owe, and how much money is expected to come in. Also, calculate how much value your company still has in terms of its various assets.
Once you have a clear idea of what you have to work with, you can begin developing a plan that you can write down and follow. Make sure that you follow this plan closely for as long as it will take to get back on track, whether that's months or even years.
Set Goals or Consider Selling
If you decide to create a plan for yourself, you'll need to set milestones and goals that you can measure and achieve. Again, be realistic. Have specific targets in mind and make a list of actions that you need to take in order to achieve each target.
On the other hand, you may find that you're too far in debt and there's no way to come out of it. Or you may find that the market is no longer doing as well as you'd predicted and there is no longer a large enough demand for your products and/or services. Either way, there are organizations that will buy your drowning company if you choose to put it up for sale, so you can at least come out of it with something rather than nothing.
When you're financially unstable, it's time to take action quickly, so don't hesitate. In the same way that you needed to get your startup running as quickly as possible in order to get things moving, you also need to be able to recover quickly.
If you spend a lot of time without your recovery plan at your fingertips guiding you back to financial stability, your business will only continue to sink even deeper into debt. Therefore, think fast and act fast as well.
Stop Wasting Money and Consider Starting from Scratch
One way to financially recover is to really analyze where you went wrong. Where are you spending unnecessary money, for example? Figure out where you went wrong and go in a different direction.
Substantially downsizing and only keeping your most valuable and necessary assets and employees is also a consideration that you can make if you wish to start from scratch and avoid making the same mistakes again.
Even if you aren't currently facing a financial disaster within your business, you need to be level-headed enough to realize that it can happen to anyone at any time, so have a plan B and recovery plan in place from now. This will help you remain calm and take the appropriate steps right away if you're ever in a scary financial situation.
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