7 Things to Try During a Cash Shortage in Startup Tech Companies

Try these tactics if you run into a cash shortage in your startup.

Cash is what keeps your startup running. If you start running low on reserves, or if you hit a financial emergency, a cash shortage can jeopardize your entire business model. Fortunately, there are some steps that can bail you out of this emergency situation:

Chase down unpaid invoices. First, take a look at your pending invoices and see if there are any that are unpaid. Then, start sending emails and making phone calls. Depending on your industry, a handful of collected invoices could be enough to get you over the hump.
Cut unnecessary expenses. In the short-term, cut unnecessary expenses, like travel-oriented expenses, entertainment, and extra perks in the office. If your shortage looks like it will last another few months, consider downsizing the office.
Get a line of credit. Opening a business line of credit can afford you some serious breathing room. As long as your credit is in good shape, you shouldn’t have a problem securing a few thousand dollars’ worth of leeway.
Acquire additional funding. Consider contacting your investors, or a new investor to secure extra funding. It’s a big step, but is sometimes worth taking if you see a light at the end of the tunnel.
Consider using crowdfunding to collect funds from customers, peers, or other people who believe in your organization.
Sell something else (temporarily). Instead of concentrating all your efforts on your core products and services, pivot to sell something else as a temporary measure; for example, you could market yourself as a consultant to fill the gaps while you optimize the rest of your business to be profitable.
Delay employee paychecks. As a measure of last resort, you can ask your employees to delay cashing or accepting paychecks. Don’t do this regularly if you want to maintain your employees’ loyalty, however.

These strategies are just short-term fixes that can help you survive in the event of an emergency; they aren’t long-term strategies to prevent this from happening again in the future. You’ll need both approaches if you want to optimize your business and survive in the months and years to come. If you’re interested in learning more, or getting more direct help for your startup, contact me today!

About the Author

Jose Vasquez is a serial entrepreneur and tech specialist dedicated to helping startup tech companies grow and succeed. As the founder of Build. Brand. Blast., Jose has worked with dozens of enterprises to find direction, gain momentum, and achieve results.