If you have a handle on your business you will have seen it coming, the stomach churning meeting with your cash flow forecast that tells you if you do not hit your revenue targets in the next 30 days you are going to run out of cash.
Game over.
Over the years I along with many other CEO's , Entrepreneurs and Business Owners have been in a financial Apocalypse at times in their business career.
At either the Board meeting or the one on one you have with your finance guy the data you get presented is the equivalent of a numerical drive by shooting .
It can scare the hell out of you.
Here are some thoughts on how you should deal with that situation as and if it arises.
First up and most importantly, are you out of money because either your business model is flawed or you management is terrible or are you are simply not selling at the numbers you forecasted?
If its your business model then you really have to seriously consider getting out while you still can and ensuring everyone gets paid. The combination of no cash on hand and a failing business model is a serious situation. Knowing when to walk away is one of the traits of any good entrepreneur.
If you are financially devastated by something outside your control or you could not have foreseen then you do have a lot of options, but it’s very important you understand the financial, legal and emotional risk you are taking on.
Frankly the fastest way to raise cash for a business that you absolutely believe will make it is to share your equity.
I'm not talking of a lengthy fund raising process, its more a case of parcelling up shares to the three key foundations of your company.
Think staff, customers, and finally partners.
After all these people have already invested in you , whether that was by joining you, working alongside you or buying a product or service from you.
This is not the same as raising money from friends and family. Avoid at all costs.
This is one of the most critical rights of passage you will go through as an Entrepreneur, at this stage you have to stay true to 2 key principles.
First -Bind yourself to the mast.Ulysses had it right: in order to endure listening to the seductive-but-deadly sirens, not only did he have himself bound to the mast, but he ordered his crew to ignore his demands to set him free. The result: the venture survived Ulysses' passionate implorations which would have driven them to ruin. For the entrepreneur, that means surrounding yourself with people who will do what is right for the venture, not what your feelings dictate. It is very difficult for the strong-willed entrepreneur to really listen to critics; if you find people who will be painfully honest with you, get them on board.
Second -Know when to settle up and move on. One of the reasons qualified people don't make the entrepreneurial choice is that they don't trust themselves to know when or how to press the restart button. Although perseverance in the face of adversity is often ranked as the most important entrepreneurial characteristic, experienced entrepreneurs actually learn how to manage risk by failing fast and small, regrouping, and starting down a different path.
As Joseph Conrad wrote years ago, "Any fool can carry on, but only the wise man knows how to shorten sail".
Always do what is right, not just for but for everyone that has invested in your business.
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