The new Tumblr blog 'My Startup has 30 Days to Live' has captured the attention of the business blogging world. In it, the hitherto anonymous author recounts his company's tragic path from a lean, boot-strapped start-up to a bloated, VC-funded mess that is a month away from catastrophe. Though there are only five posts so far, the brutally honest writing pulls you into the mindset of that nameless entrepreneur staring into the precipice as their business crumbles around them. This blog seems to really dig into many of the fears that entrepreneurs face daily -- the loss of control, the fate of their team, and the possible end of the business they built with their blood, sweat, and tears. The reality, unfortunately, is that businesses fail -- only a third of new businesses survive their first ten years -- and learning how to handle a failing business is as important as knowing how to run a successful one. With that in mind, if you do find yourself at the helm of a sinking ship, there are a few things you should do.
Try Not to Panic
This may seem like an easy thing for the CEO of a successful company to say, but I've had my share of scary moments and close calls. When I mortgaged my house to buy MyCorp, I completely threw myself into re-building and re-modeling the company because, if I failed, I wouldn't have a house. Worse, my children wouldn't have a home. Losing a business could mean losing a lot more when it comes to your personal assets, and the thought of that alone is enough to be paralyzed by fear. But if you are gripped in a panic attack, you aren't thinking clearly. You are stuck on the 'what if,' when really you need to focus on the 'what now.' Realizing your business is failing is frightening, but there is still time to turn things around. Try your best to stay calm -- the coming months are going to be very, very hard and you'll need to stay focused and level-headed as much as possible.
A good business owner cares about their team, and when money begins to get tight, one of the first things you are going to need to address is whether or not you'll have to fire anyone. These are the men and women who helped you build your business, and worrying about their future is completely understandable. But cuts have to be made, or money is just going to dry up even faster, giving you less time to get your business back on track. Plus, if things go well, you can always hire them to come back on board. Cuts shouldn't only be made to your team either -- look at your product line and figure out what is selling, and what isn't. Are there products or services that you really just can't seem to sell? Cut them out of your business, and focus on what you have a history of success with. This may tighten how much money you bring in, but if you focus on what your company does best, those sectors can grow and make up the difference.
Create an Exit Strategy
All entrepreneurs, successful or otherwise, should have an exit strategy. I know this might sound like the captain fleeing their ship as it sinks into the ocean, but when your business is facing its last days, you don't want your future to be as bleak as your company's. When things begin to get so shaky that you think you'll never be able to recover, start looking for potential buyers and sell at a loss. This isn't ideal, but it gives you a way out, some money to help pay off debts, and maybe even a small source of funding to start a new business if you think you can handle another try. You should always do everything you can to turn things around, but if that's impossible, then know how to bow out without being caught in the wake your business leaves behind.
The author of the blog that inspired this post ended their first entry with the words 'I'm Scared.' And it's those two words that sum up how nearly every business owner feels as they watch their numbers dip into the red. If you can stay calm, trim your start-up, and make operations extremely lean, you might be able to begin climbing out of that hole. But every entrepreneur should also keep an exit strategy in place just in case the company can't be righted. It is natural to be afraid of the possible end to your livelihood, but if you can use that fear to turn things around, or at least learn from the failures of this venture, your foray into business will have had a positive outcome.