Bouncing Back From Financial Fails: Startup Lessons From Serial Entrepreneur And Investor David Rose And Young Entrepreneur Council Founder Scott Gerber
So you just closed your Series A round of funding for a cool $1.5 million. Excellent. But what if something happened to that funding (or you woke up from your entrepreneurial pipe dream)? After all, nothing is ever certain in this life. Deep.
Do you have a prepared Plan B? No?
Many startup lessons have already been learned by the folks who have come before you. Let’s ask the experts, in this case investor and serial entrepreneur David Rose and YEC founder Scott Gerber, about what to do if your startup financing falls through.
Scott Gerber on how to survive (and thrive) after a financial fail:
Extend your plan further
Investor and banks aren’t as reliable as they used to be. Bottom line. If you need $100,000 loan from the bank but are only approved for $25k, re-assess what you can do with that money, hit your milestones and gain trust with your bank by showing success with the first investment. You’ll have a better chance of extending your loan and doing more for your business.
Establish your wants versus your needs
Use your bootstrapped mentality to go back through your business plan and assess your absolute needs; if it’s just a “nice thing to have” cut it out.
Find alternatives to your expenses
Once you’ve established your needs, figure out other ways to spend the money. For example, if office space is one of your needs, maybe look into co-working spaces for a lesser cost.
Invest in your sales capabilities
Scott says whatever you do, do NOT cut back on your sales and marketing efforts. He made that mistake and lost potential clients, which cost him more in the end.
David Rose on spending money you don’t have
Don’t count your chickens before they’re hatched
David warns not to spend money before you receive funding you are expecting. He’s done it, and it actually caused one of his businesses to go under. Ouch.
His suggestion: Be lean, be penny-wise. Spend only the money you have in the bank for your startup, and when the funding does go through (fingers crossed), then you can look into slowing investing it in other areas.
So, for all you startups waiting with bated breath for your financial injection remember to be flexible, cut your wants, and spend wisely. Financial stability has yet to return to any sort of solid form, keep this in mind before you jump the spending gun, and you’ll keep your startup afloat.