If the new business or start up actually does run out of cash after say six months, what does the entrepreneur do?

Cut and run or continue?

The sensible entrepreneur would not put all of his own money into the initial start-up. He/she would;

• hold some back
• start trading with borrowed money
• use credit facilities as much as possible
• keep a family friend very well informed, as back up

In other words, have that further 3 - 6 months of funds readily available.

However the decision would then be, is it worth investing the ‘final tranche’.

To do this the entrepreneur must go back to their self-belief. Remove themselves from the emotion and look for all the tell tale signs of the seeds of success.

• Is the business growing?
• Have all the possible start-up problems been overcome?
• Are there any unseen costs coming down the line?
• Are there any external market factors likely to derail the new business in the next 6 months?

If there is any doubt in the answers to the above questions, and these questions are not exhaustive but generic then the entrepreneur should cut and run.

Harsh but the business is not ready, it needs much more time to establish itself.

It needs more time, generally money to succeed.