Signs the Startup Needs a Turnaround

Here are some signs your startup needs a turnaround:

You’re close to breaching loan covenants.

The financial performance is still below expectations.

The startup’s revenue and profitability are below the industry average.

Cash flow continues to be a problem.

The startup has been running for a few years but still can’t find breakeven.

Here are some initial steps to take:

Check your top-line revenue to see if there’s enough to cover the costs.

If not you may need more sales and marketing.

Are revenues flat or declining?

If so, have you decreased costs accordingly?

Check the cost of acquiring customers to see if it’s still in line with the business model.

If so, you may need to find lower-cost channels for acquiring customers. 

Check the cost of goods sold.   

If it has grown recently then you may need to raise your prices. 

Check your pricing. 

If you’re the low-cost provider then you must have a low-cost structure for the business.

Analyze the profitability of the customer to see if some portion of your customer base is dragging the business down.

Analyze the expenses by category to see which factors are causing the losses.

It’s important to take action on problems found.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.