Time to Abandon Ship if the Start-up Can’t Pay You

“I haven’t been paid in over 6 months,” the prospective client shared with me. “The founder says the next round of funding is just around the corner, though. I hate to bail out at this point. I’ll lose all my equity. What do you think?”

“The ship is sinking. Time to stop bailing,” I share. I’ve just heard it far too often. The funding is rarely ever just around the corner. Then, when it does come through, it’s only enough to cover the new initiatives or pay off other debts. There are usually many strings attached to the funding.

Oh, and that equity that keeps them holding out hope…. it rarely ever pans out.

It’s hard to let go, to give up. If the company is in such bad shape that it can’t pay the normal paychecks for many months then there are systemic problems. Those aren’t temporary blips.

Most start-ups go through cash crunches and short-term challenges. Good leaders have to anticipate those and have some contingencies in place ahead of time. They need to be able to make adjustments, tighten the belt or secure new funding long before.

Loyal employees can reap the rewards of helping work through those challenges. But, they need to decide if leadership is taking decisive action to right the ship.

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Sinking Ship