Last year our startup went through a serious downtime. We had a large deal signed that fell through with only 7% of its original commitment. During this time, we went through what every entrepreneur fears – no money. We had already started the wheels turning for future growth plans, and yet we didn’t have the cash to do so.
This was one of the toughest situations I’ve ever been in, but we learned many things that helped us survive. Here’s my advice to entrepreneurs in the same situation:
1) Re-evaluate your idea. Is it a good one? Do you have proof that it will grow? Why do you want to be an entrepreneur? You have to do a lot of soul searching at this point. We definitely did that – and all individually. For me, I had to take a lot of alone time to reflect. I’m an introvert, so time alone is very important for me to reflect on the situation. I believe in ZipFit down to my core, and realized that we truly had a bad run of luck.
2) Make necessary changes to grow. When you start a company, it’s easy to get stuck on the original plan, but as an entrepreneur you have to be flexible and willing to make necessary changes needed for your company to grow. Once we reevaluated our idea and knew that it was still a good one, we started making the necessary changes needed so we could continue to grow. We decided not to renew our leases for our pop-up shops since traffic was down significantly year over year between 40-50%. We pivoted from having brick & mortar locations to being an e-commerce company. Since we had little to no marketing dollars to spend on digital marketing, we came up with unique acquisition strategies to assist with the growth of our e-commerce channel.
3) Cut back on or freeze your salaries. This is tough to do for an entrepreneur. You have to have a little cushion in the bank to make it work. What’s even more scary is when you don’t have any cushion. Most of our team had already used our cushion in the last year. What would you do? Get creative. Thanks to Airbnb, we were able to rent out our apartments and stayed with friends or boyfriends. We literally made 2-3x our rent, so it gave us some breathing room. It’s definitely not comfortable living out of your home, but if you made the decision to continue working on your company, then step out of your box and find a way to make it happen.
4) Cut all expenses, and I mean ALL EXPENSES both personal and professional. No more meals out, no more shopping trips, and check every penny you spend on the business. This actually teaches you to be very disciplined. We checked every penny spent, and cut corners whenever we could. ZipFit has been disciplined since the start, we even built our own walls (literally), and laid our own floors when we had pop-up shops.
5) Find new investors. It’s hard to find investors regardless, but they do understand that financial deals can fall through. We found the right investors during this season. They will definitely get a good deal because of our circumstances, but you have to do that to make it happen. So bite the bullet. If they’re the right group or individual, then it’s worth the discount.
6) Reward your team for your hard work. Being able to survive with no cash is not only telling of your startup idea but also of your team that was along for the ride. When we pivoted from brick & mortar to e-commerce, we still had furniture left from the stores so we sold most of it on Craigslist and used some of that cash for our next few team outings because that type of discipline deserves a reward.
This is obviously not all you can do to survive, but it’s the cliff notes version of how we survived. I’m happy to say that since we’ve pivoted our online sales have been growing about 20-40% month over month in the last year. We made the right move for ZipFit, but it took hard work and discipline to make it happen.
I would love to hear your entrepreneur survival stories. If you have something to add, feel free to tweet us @zipfitdenim.
Co-contributor: Alex Batdorf, CMO