Jason Calacanis has some great thoughts about what to do when you think your startup is about to fail. I’ve gone through this experience once as a founder of e-thepeople.org, and I’ve seen it at a couple of companies that my friends have been involved in. This advice is bang on. Let me summarize, and you can read his long but highly readable original missive here.
1. Test your funders. Tell them you believe, and that you are going to stretch things out but you want them to put in more now (even though you still have a ramp).
2. Test your employees. Make the cuts. Consider salary reductions, but make sure that the employees who remain are still happy.
3. Test your landlord and vendors. Negotiate for a little free rent, subletting permission and other discounts. Losing you completely is not in their interest.
4. Put yourself to the test. Offer to sell your car to put the money into the company! Take the same reductions as the staff.
5. Put your product to the test. Make sales calls yourself. Celebrate the process of sales: new leads, pitches, etc.
6. Know when to quit. Use your last 120 days of burn to wind down honorably.
Great stuff–thanks Jason [x2].
(And if you are as obsessed with failure as I am, check out my other post “Why failure isn’t the worst outcome.“)