If you have “failed fast” it’s still possible to recover as long as your team has shared trust and a sense of common purpose.
Failed Fast, Now What?
Q: We started out with a mission that we found compelling and executed pretty well against it but now we are out of money and cannot figure out how to find way forward.
Bootstrapping a startup is like a business turn around: some things were working or you would have just shut it down, but not enough to allow you to prosper with the strategies you have been executing against to date.
How to Move Forward When You Are Out of Money
If you are out of money but your team still wants to work together, you have started to build some solid business relationships, and you have a good grasp of the market and relevant technologies then there are a number of things you can do to move forward.
- If you are not making offers start making offers today.
Don’t worry as much about scaling as discovering what people are willing to pay for in the box of treasures your team has accumulated on your entrepreneurial journey.
- Shrink your focus to core offers that get interest.
If your offers are not generating interest and follow don’t make them larger, make them smaller and more narrowly targeted. Make them simple but as compelling as possible so that if you get a “no” you have confidence you have to try something else not just cut price. It’s OK to increase the scope of your offer in response to a bona fide request from a customer that points out why your simpler offer was insufficient.
- Fall back on services.
They are the easiest to offer, the easiest to adapt, refine, and improve.
- Sell what you have.
Make offers based on what you can deliver in a 30 day time frame: worry less about profit and more about determining what prospects want and are willing to pay for.
- Take a step back and consult part time in a related field.
Or even an unrelated if it allows you to cover your living expenses and continue to explore the market with additional small offers.
- Sell someone else’s products and/or services.
If yours are not baked enough to get traction. But sell to the same customers you ultimately want to serve.
- Increase your luck by planning for a certain amount of random variation.
Have a backup plan when things don’t break your way and be prepared to exploit opportunities when they break your way.
- Make “or plans” not “and plans.”
Don’t rely on a sequence of three or four steps all working correctly. Instead try three or four things in parallel where any one success allows you to move forward at least step.
- Become more outgoing and network.
The more people you talk to the more likely you are to learn something new. It’s great to read a lot as well but there is a category of information that is not written down that is frequently a source of competitive advantage. Reach out to a mix of old friends, former coworkers, friends of friends and strangers in new environments
- Sales is a conversation with other people.
But you have you actually have to talk to people. You cannot just have conversations in your mind and conclude that your offer is not good enough.
- Build on your expertise.
Be mindful of what you are looking for and hunt widely for it. Better to blend two or three distinct kinds of expertise to further differentiate than try to be the best at one thing
- Stay true to your unique interests and passions.
But don’t lose sight of the need to serve customers.
- Never go “all in.”
From the beginning plan for iteration. Nothing works the first time and putting all your chips on the next throw of the dice rarely ends well. Leave a reserve that allows you to exploit what you learned from near miss.
- Clear Eyes, Full Hearts, Can’t Lose.
Balance a clear-eyed view of the realities of your situation with as much cheerful courage as you can muster.
- Plan for a Marathon Not a Sprint.
Don’t neglect family and friends, your sleep, healthy eating and your obligations to others and to yourself.
“Out of Money” is Often Manageable–Here are Some Hard Problems
If you have failed fast because you are out of money, it’s often a manageable problem–or at least a recoverable error. There are more important resources that are much more difficult to replace or renew:
- Team morale and shared trust. If team members no longer trust one another–if you and your cofounders can no longer collaborate that is almost impossible to recover from.
- The trust of your customers and prospects. If you have demonstrated not just a failure to execute but a lack of integrity or honesty then it will be a long time before you can move forward with these same people. A failure to execute or a mistake in judgement is recoverable if you have demonstrated a commitment to your customers’ success and worked to rectify your shortcomings. The failure of a prototype is much less troubling than the failure to meet a commitment, which is less troubling than making a commitment you have no intention of meeting.
- A lack of relevant domain expertise. This normally can be addressed by adding a team member of with relevant experience, partnering with another firm to round out your offering, or forming an advisory board to address the gap.
First Maintain Team Morale and Shared Trust
You have to see things as they are and not lose faith in your ability not just to persevere but to prevail. Trust is built over time and enhanced by humility, authentic and candid conversations, making and meeting commitments, timely responses to questions and requests for help, genuine praise and appreciation, and shared celebration when milestones are reached.
Avoid destructive personal criticism, win-lose arguments, disrespect, and an unwillingness to at least see a situation from other points of view.
A Peer Advisory Group Can Help
One of the reasons that we offer mastermind groups is they provide a unique support structure for early stage teams. They give you a safe space to voice your fears and to get feedback on your plans. They help you uncover your blind spots before your competitors do and they offer a range of perspectives, sometimes conflicting, that help you see things as they are and the possible moves available to you. They help you weather the natural ups and downs of bootstrapping a technology startup: it’s a group of peer advisors facing many of the same challenges you are wrestling with.
Related Blog Posts
- “So…What’s Your Story?“
- Sustaining is More Important Than Starting
- Experiments vs. Commitments
- A Clear Eyed View of the Way Forward
- Increase Your Luck Surface Area to Get More Customers
Photo Credit: Licensed from Boscorelli at 123RF