Originally published as a LinkedIN article on John Holt’s profile page



So… you’ve done the analysis, aligned with your board/advisors and the net result is your business is in Survival Mode.

Here is the recap on my definition of Survival mode:

  • Less than 12 months cash after all possible cost reductions and assuming no or little Revenue growth. Current Revenue is less than 75% of monthly operating expenses
  • Your sales model just hasn’t got started in any predictable or repeatable way and it’s a similar state for your marketing/ demand generation activities for leads
  • You have not hit Product-Market fit and the market/s you’re in are significantly impacted by COVID 19 conditions
  • Your Customer activity/interest in your domain is low and they are potentially focussed inward on Survival/Scaling themselves with little likelihood of that changing in the near/short term

The first thing to highlight around Survival mode is that you are by no means alone being in this situation. There’s nothing to be gained by blaming or berating actions or inactions from the past (“should have / could have”) – it is what it is.

Secondly many organisations were in this mode well before the Pandemic – some have been there for years.

The best piece of going fully through this process – you have a starting point around which everyone is aligned.

The solutions to getting out of Survival mode are simple at a high level:

Option 1 – Reach break-even before cash runs out
Option 2 – Secure additional investment
Option 3 – Shut down

Some perspective on each starting in reverse order:

Option 3 – Shut down
As gut-wrenching and abhorrent this option may be, it needs to be actively considered. Here’s why I think that:

  1. Your most valuable and most finite asset is your time.
  2. Maximising your time on earth is not just about work – many of us have a very strong connection to work and creating commercial value to drive our purpose and meaning in life but it often clouds the view of the most important things in life.
  3. Continuing to work on something that has been massively impacted by negative change just to avoid being a “quitter” or in fear of what people will think is, in my opinion, dumb.

The smartest entrepreneurs I’ve engaged and admired look for opportunities and big problems to solve with big returns for their time and capital.

They continuously assess the impact and progress their making in comparison to their original excitement and expectations of the opportunity. If they’re seeing negative shifts they act correctly to put things back on track or they disengage and focus on another opportunity.

Remember that a radical shift in market conditions creates challenges for many existing businesses but also creates numerous opportunities for new ones or in some cases a complete redesign of an existing business.

Option 2 – Secure additional investment
In many cases a business just does not have the momentum to realistically drive towards a break-even position before cash runs out.

If this is the case and you still see the opportunity and potential returns down the track as worthwhile then focussing on the core activities that will make your business investable.

I’ve done this myself and seen many others do it successfully. In my experience it relies on proving to existing or new investors that:

  • Your opportunity to create value is still valid and available – it’s just delayed beyond current capital resources. Being that direct and summarising the core reasons you believe that is always useful.
  • The progress you have made supports your assertion in a) with some compelling metrics and anecdotes – engagement growth, customer feedback and ideally statements to reinforce their need for your product has been deferred – not removed.
  • The linkage to the ability to scale in a large market is still clearly demonstrable and the assumptions around when that market becomes more accessible are realistic and within a reasonable investment timeframe.

Deep diving with your customer and prospect base is very important here to reconfirm your understanding of their usage of your product, their satisfaction with it and what the roadmap should prioritise next features to maximise their ongoing engagement.

You should be doing this regularly regardless (in my opinion) but here it provides you with the best base from which to address the question of “how do I make my business investable before running out of cash?”

In some situations I’ve seen Founders engage their customer and prospect base to the point of getting a clear conditional commitment to purchase – in some cases with timeframes and agreed prices. This is still not as good as a closed deal with money in the bank but it gives investors confidence around the opportunity to get revenue on-track when conditions improve.

It also gives you a deeper insight into your probability of getting that order down the track and linking that to your product roadmap.

Finally on this option I always like to confirm that the investor base we are talking to (existing or new) has the capacity to make an investment in the required timeframe. Ideally I’d go as far as getting as solid a conditional commitment to that investment as you can – e.g we will invest if engagement metrics move from x to y and cost of acquiring and managing customers reduces by z.

Option 1 – Reach Break-Even before Cash runs out

Over 20 years I’ve seen this approach played out many ways including in my own ventures as a CEO or Director.

Here are some perspectives based on that experience:

Every business has a minimum viable point of operation – the point where any less resources simply doesn’t allow the continued servicing of existing customers or the acquisition of new ones.

I’ve found many founders and boards, in hindsight, tend to underestimate where this point is or end up realising they have cut too deep in the wrong places .

This has often been caused by “lightweight” assumptions without really digging in with Customers and team members about how things really work day to day and who actually drives the business forward outside the context of the organisation chart.

The gig economy offers much more optionality to maintain some essential functions in a business at a lower cost point temporarily until more resources are affordable.

Once you have costs at the minimum viable level it’s all about driving all time and resources to sales.

When market conditions change radically it always pays to spend some quality time re qualifying your sales pipeline and their readiness to buy as well as your existing customers and how their needs or ability to pay for your product has been impacted.

This process normally delivers some surprises in terms of unexpected impact or opportunity to your revenue. It is also valuable to again check in on how your product is being used and whether there are any feature or service tweaks that you can apply to increase your revenue from existing customers or close prospects faster.


Survival mode describes many organisations in normal times or when market conditions change radically. The main objective/benefit of the framework is to give your team a common starting point with as much reality and shared understanding of the key factors.

At headline you have three options to pursue to transition into a more sustainable mode before the cash runs out.

The hardest of these options to consider is shutting the business down. For many businesses given the realities of the resources available to them and the likelihood of market conditions.

From a Founder perspective this is more a decision around the best use of your time rather than a need to avoid failure.

In terms of the impact to others – your team and customers this is always hard but the reality is that if you’ve done the work around the state of your resources and the market it’s likely you will reach a similar decision in an uncontrollable fashion when you run out of cash.

The other two options are both hard work but actually the “natural” state of most startups often for many years as you refine your product and business model to match the market.

The trick to me is ensuring you can always answer this question positively:

With all the data and valid anecdotal information available have I made the best decision for the company without bias or preference to ego or elimination of any options simply because they are emotionally unpalatable?

Next up: thoughts on Sustainable Mode