How to Save Your Startup

The government won't say so, but we're in the middle of a second Great Depression.  That's a tough time to run a cash-constrained small business.  But here's the good news: If you can make it through this, you can make it through anything.

Serial entrepreneur Jason Calacanis built his first company, Silicon Alley Reporter, in the years leading up to the first dotcom bust.  He then watched the company get hit by a tidal wave: Most of his readers got fired, and most of his advertisers went out of business.  Jason fought hard to save the company, and the lessons he learned will serve every entrepreneur well, especially at a time like this.  To wit:

Decide whether you're in or out. 
The next 18 months are going to be a marathon.  If you're not ready to make tough, depressing decisions, just quit now, while you still have some cash to shut the company down.

Figure out how long your cash will last, in months. 
Congratulations!  You're done with the easy part.  Now it gets tough.

Increase the number of months your cash will last by 50%-100%.
How?  By radically cutting your costs and significantly increasing revenue.

Here are some of Jason's suggestions on how to cut costs:

1. Take your landlord out for a drink and tell him/her there's a good chance you're going bust. Sit quietly and see if you get a better deal.

2. Call your IT vendors and tell them you'd like 6 months free. If they don't give it to you, switch to vendors who will.

3. Cut the weakest 1/3 of your staff.  

4. Cut salaries of remaining employees to current market level.

5. Cut your own salary.

Next, focus on revenue.  Specifically, go on sales calls.  You, the CEO.  Clients respond to that.  Chart all sales leads and calls.  Take personal responsibility for following through on each of them.

Do all this, and you'll buy yourself and your business another year or more.  And that could mean the difference between success...and going bust.