I recently started working with a young entrepreneur named “Chris”. Chris has a really cool idea to disrupt the industry he is in.
On a shoestring budget Chris has built up a large customer base, and Chris is generating revenue.
One of the first things I will usually ask an entrepreneur is to review the financial plan. Chris had a reasonably detailed financial plan.
And I get much more comfortable when I see someone with a financial plan than when I see someone without a financial plan.
The good news was that Chris had at least 18 months of funding before he was going to run out of money. So we had plenty of time to plan what to do next.
Chris is in really good shape to execute his plan.
Chris has plenty of money, a growing customer base, and well thought out plan going forward. I like Chris’ chances of success.
On the other hand, I am worried about your prospects.
You’re out of money, and, from what I can see, you don’t have a financial plan. You’re going to have to dig deep if you’re going to keep your company alive.
By digging deep, I mean you may have to do some distasteful things. Even then, you may still fail.
The first thing I would do in your shoes is build a financial plan, so you know how much money you truly need. It will not take you long to do, maybe a day, but at least you will know where you stand.
Then I would find whatever way I could to get some money in the bank as quickly as I could.
You mentioned you have customers. Hopefully, they are paying customers, so maybe you can get your customers to pre-pay or pay you faster to increase your cash flow.
Learn your lesson regardless of what happens.
Finally, I would learn from this experience. Have a financial plan, so you know where you stand. Then update your plan regularly because no plan is perfect.
Maybe next time you’ll get way ahead of the problem, so you aren’t in such dire straights.
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