I love what I do, it’s meaningful and I don’t do it for the money. The problem? I’m running out of money. In the red for 3 years and I’ve officially depleted all my savings. Biz is growing but not as fast as I hope to… or am I just delusional?

Been there. Not easy, but try to tough it out. A lot of people are in your same shoes, so you’re def not alone. I call it ‘walking through the valley of death’. Aka startup trough, the downward curve before your business starts to hit profitability.

What are you doing wrong ?

You shouldn’t do it only for the money, but also for the money. Profitability and the ways to obtain it should always be on your mind.

OP here.

Thanks for all the comments.

Been there. Not easy, but try to tough it out. A lot of people are in your same shoes, so you’re def not alone. I call it ‘walking through the valley of death’. Aka startup trough, the downward curve before your business starts to hit profitability.

I realize I’m not the only one and I gotta tough it out. I’ve came too far to turn around. I’ve given my commitment and I’m not ready to betray my clients or anyone who have trusted me. However on those sleepless nights it gets to me. Compounded by the fact that life gets in the way the best(worst) timing possible, I fear one day I would snap. I’m so glad I stumbled upon SA; that night could’ve been it.

What are you doing wrong ?

You shouldn’t do it only for the money, but also for the money. Profitability and the ways to obtain it should always be on your mind.

Maybe this could’ve been partly where the problem lies – is that I wasn’t profit driven, or at least not enough.

I am proud and I stand by the fact that I do not charge more than what I would pay for, but without the volume to make up for it I end up on the losing end. Then the more desperate financially I become, the bigger the lingering thought that I feel I’m trying to close without the client’s best interest in mind.

Anonymous says:

January 19, 2015 at 1:54 am

If that’s true, I think you might be pricing it too low.

The gains from a trade comes mostly from asymmetry in capabilities. So, if when you consider what you’d charge for your product, you’re doing it from the standpoint of yourself, you’re pricing your product for someone who’s already capable of doing it, and thus, it has low value.

You might consider that your client has specialized in doing other stuff and not in the stuff you do. That’s where the gains come from: the work you do must have more value for your clients than to yourself. And the work your clients do for others have more value to their customers than to them.

If you only charge your clients what you’d pay yourself, then you may be generating a lot of value for them but only capturing too little of it. And you know what? If you keep doing it, your clients may end up loosing a trade that would be great for them, even at higher prices.

Reply

You’re committed and believe in what you’re doing – that’s a huge part of success in any endeavor. However, this belief system is not always supported by financial results.

At the risk of differing with others who’ve responded on SA, I have one suggestion:

Focus on growth. VC’s and the capital markets are focused on growth over all other metrics.

Although it can wreck havoc on the P&L in the short term, growth often attracts institutional capital and validation. This is a good thing.

Having multiple options for capital secures the future of the business. It also can provide potential financial exits for you, which addresses some of the issues you’re currently facing.

Definitely lots of people toughing it out. The key is take perspective, keep exercising, don’t obsess the business too much, but keep on plugging away.

A useful exercise is to have test metrics you have to hit to prove to yourself that it is worth continuing without cutting, or worth continuing without giving up depending on how desperate the situation is . Our business has had many hurdles, and having key test points is fundamental.

Also, I think you are misguided in terms of your pricing. You should look to sell for as much as people are willing to pay, to come away thinking your product is excellent. Many early adopters, especially those with resources, are happy to pay far more than a struggling entrepreneur. Worth understanding the client needs and what would make them pay up to make your business sustainable.

Listen to or read the pumpkin plan. May help.

Sounds like a good time to evaluate your expenses and see where cost overruns are getting you. Cut what you can. Are you spending on software you never use or an office space? Refocus your marketing and cut what diesnt work. Then get in the mindset of making money on wverything you do. You don’t have to take people for a ride, but you don’t have to be taken for a ride either.

Don’t complain, drive an Uber/Lyft to make some extra money if you believe in your startup.

If you’re not doing it for the money, they your in trouble. Be real. Love does not buy you food. Charging money means you love yourself and value your product. Pls don’t mistake passion for profitability. You gotta get a business plan. DO you love being on the street? I guess not. So start making the business about earning some money!

“I am proud and I stand by the fact that I do not charge more than what I would pay for, but without the volume to make up for it I end up on the losing end. Then the more desperate financially I become, the bigger the lingering thought that I feel I’m trying to close without the client’s best interest in mind.”

I made this daft mistake for 5 yrs and ended up so disgruntled, so broke and shut down the business.

Are you saying your product isn’t worth much? Your customers are not necessarily of the same mindset as you. When you start a business, the first thing you do is define your customer. Never go by what you would pay, but what tastes, and spending power your customer has. You create value. then your customer gets excited and is happy to pay. it’s not unethical if you are giving a good product.

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