10 Early Warning Signs Your Startup Is Failing Before Cash Runs Out

Want the checklist and the 48 hour plan? Read this page first.

The Cash challenge.

Cash problems are late-stage symptoms. The damage usually starts months earlier in places your P&L does not show: decision speed, trust, and operational discipline. Treat the runway as the scoreboard, not the game. These warning signs originate from founder talk tracks and investor threads, as well as the turnaround checklist we use in practice. Use them to spot trouble six to twelve months before the bank balance tells you.    

How to use this list: for each sign, I give the real pain in their words, one metric to watch, and one move you can execute this week. Then, close with an FAQ and provide a way to obtain a free checklist, along with a quantified Recovery Odds Index.

1) Investors go quiet and replies slow down

When trust erodes, people delay. Investors answer later. Key customers keep “just reviewing” instead of renewing. That silence is a decision. The checklist frames this as a trust issue, not a funding issue.  

Metric: average response time from key investors and customers. Track it weekly.

This week: name the risk in plain language, share one page on current facts, and ask for a yes or no on the next milestone date.  

2) Your best people are interviewing elsewhere

You hear it second hand. Cameras off. Fewer ideas in meetings. A direct report “just taking a call.” Talent votes with their feet long before resignations.  

Metric: regretted attrition risk list updated weekly.

This week: Meet the top five people one-on-one. Ask what would make them stay for six months. Act on one item within seven days.  

3) No weekly cash tracking

This is the most common failure pattern across startups and SMEs. Teams run “profitable” on paper while invoices live their best lives unpaid. If you are not reviewing cash weekly, you are flying blind.  

Metric: 13-week cash forecast owned by one person.

This week: switch to weekly cash reviews with a single page: cash in bank, burn, collections, top five payables, danger date.  

4) Projects start and never finish

Work piles up. Nothing ships. One founder put a number on the cost: “missed out on over 138,000 in revenue due to a product bottleneck.” That is not a backlog problem. That is a survival problem.  

Metric: percent of projects finished on time per month.

This week: kill two low-impact projects. Move those owners to close the most significant revenue leak or collections block.  

5) Decision cycles slow from days to weeks

The board pack gets longer. Meetings become status, not strategy. People avoid hard calls and keep “gathering input.” In a crisis, slow beats bad. Slow losses.  

Metric: average age of open decisions.

This week: Set a 48-hour rule for the top three decisions. One owner. One deadline. Default to action.  

6) Board alignment breaks

Leaders contradict each other in front of the team. Priorities shift by the week. The founder starts managing up rather than leading. That gap destroys recovery odds.  

Metric: a single written list of three priorities agreed by board and leadership, reviewed weekly.

This week: write the three. Share them. Ask for an explicit yes from the chair. Stop work that does not serve them.  

7) Runway drops under 12 months with rising burn

Founders talk about 18 to 24 months as the stability zone. In practice, many run thinner. Under six months becomes near fatal for fundraising and hiring. One founder said it cleanly: “Running out of runway is a primary cause of demise.”    

Metric: runway months, burn trend, and the date you hit six months.

This week: extend runway by cutting burn with one move that saves a whole month. Decide once, not in rounds.  

8) Unpaid invoices grow and age

Positive MRR can still kill you if cash does not arrive. Unpaid invoices and churn-driven leaks starve the business. Founders focus heavily on stopping revenue leaks for a reason.  

Metric: AR aging and DSO.

This week: call the top five late accounts. Offer simple payment plans. Freeze new work until paid. Assign one owner and report by the following Monday.  

9) Strategy changes every quarter

If you cannot answer “what business are we in” the same way twice, you do not have strategic clarity. Roadmaps swing to please the loudest customer. Focus dies. So does trust.  

Metric: number of strategic shifts in the last two quarters.

This week: write a one-page strategy and a one-page “not now” list. Share both. Protect them for 90 days.  

10) Founder energy and health collapse

This is the quiet killer. Sleep goes. Anxiety rises. You avoid the office. Teams feel it first. Outcomes follow. The human toll is visible across communities, and it correlates with failure to execute.  

Metric: your own energy score, tracked daily.

This week: remove one recurring obligation. Add one block for real work and one for sleep. Tell the team what you changed.  

What to do this week if two or more signs show up together

1. Name the situation: one page, facts only. No spin. Share it with the board, leads, and key investors.  

2. Cut decision time. Switch to a weekly operating rhythm. Three priorities. One owner per priority. Weekly cash and pipeline review.  

3. Stabilize cash. Extend runway by at least one month in one move, not through drip cuts. Call late payers. Pause low-value work.  

If you are already under six months of runway, assume the funding market is more complex than you expect. Many investors refer to the current climate as an investor recession. Plan with that in mind.  

Short quotes you can use with your team

“Running out of runway is a primary cause of demise.”  

“Missed out on over 1XX,000 in revenue due to a product bottleneck.”  

FAQ

How can my startup be saved?

Score your situation across six domains: leadership alignment, decision speed, cash runway, stakeholder trust, operational discipline, and strategic clarity. If three or more are weak and the runway is under six months, you need immediate intervention. Use the free Early Warning and Bridge Round checklist to get a fast view, then take the Recovery Odds Index to get a quantified score and the next five moves.  

When should I shut down a startup?

Shut down when your plan cannot produce twelve months of runway within thirty days, and you lack investor or board belief to bridge to a real milestone. If trust is gone, decisions are slow, and cash is under three months, a controlled wind-down can protect people and value better than a slow bleed. Document the facts and present the decision to the board, including dates and numbers.    

Next step

Read the list here or download the free Early Warning and Bridge Round checklist and run it with your leadership team this week. For a quantified view, consider the Recovery Odds Index assessment. It is a 20-minute diagnostic that scores your performance across six domains and provides a priority action plan. The price is 199 euros. Use it to align your board on facts, not hope.    

This Is Not How Angel Investing Was Supposed to Work

It was supposed to be simple.

Angels back ambitious founders. Founders grow, raise, and exit. The returns recycle into the next generation of startups.

At least, that was the unwritten social contract of early-stage investing. Capital. Optimism. Legacy.

Read through the end, and I will provide a concrete solution to change direction.

Over the past five years, the loop has been broken. Exits have stalled, and bridge rounds have become the rule, not the exception. What was once about fueling innovation now feels like a struggle for survival.

One angel I talked to put it bluntly:

"This is not how angel investing is supposed to work anymore. All the cash that angels allocate to startup investments is tied up in existing investments. Meanwhile, VCs are facing a similar crisis: startups that should've graduated to venture investment need bridge rounds from their existing angel investors."

He is right. The numbers back him. Across Europe, exits fell sharply after 2021. Dealroom data indicates that European startup exits declined by approximately 42% from 2021 to 2024. PitchBook and Carta both report that the gap between priced rounds now averages about two years. Recent 2025 data confirms it: nearly 28% of all venture deals are now bridge or extension rounds, capital looping back into old bets rather than seeding new ones.

Deep-seated fatigue is often the underlying issue, and financial concerns are just a symptom. We've all been there, more times than we'd like to admit: The investor update that starts with 'raising a short bridge' drains belief. The zombie company that refuses to grow or die absorbs more time, money, and mental energy than the combined efforts of the following ten fresh ideas.

It's no surprise that 85% of founders now report elevated stress and nearly half rate their mental health as poor. Fatigue is measurable and contagious.

While the market still looks busy, everyone talks about resilience and patience. But under the surface, portfolios are frozen. Capital moves, but progress does not. Three out of four VC-backed startups fail to return capital, and less than 30% of attempted turnarounds succeed. The odds are known and bad.

When founders say, "We need more funding," what they often mean is, "We do not know what else to do" because they are not getting the help they need.

That's where most decisions go wrong. Waiting is comfortable. It feels supportive, and looks responsible. But it delays the inevitable. We need a new approach, a new way of thinking.

Not long ago, I sat in an investor call that started, again, with the words 'just a short bridge.' The hard questions weren't asked early, primarily out of comfort. Over time, it turned into absolute contempt and distrust from both sides. The company's now stuck, no trust, no movement, no way forward.

What to do about it?

Before the next bridge, run a thorough audit on the soft KPIs and root causes that often hinder business, not just check financial and pipeline metrics.

Measure and quantify questions like:

• Does the leadership team have crisis management competence?

• How strong and consistent is shareholder trust in management's ability to lead through uncertainty?

• Does the leadership have the energy to pull the business out of this crisis?

• How many unplanned funding rounds have happened in the past 24 months?

• What is the management team's experience as CEO/GM?

I put the most telling 11 questions into an Early Warning and Bridge Round scorecard. If you're interested, please DM me before the next "quick bridge" lands in your inbox.

This is precisely why I developed the Turnaround Readiness and Recovery Odds Index. It's a tool that helps you assess the likelihood of a successful turnaround. It takes twenty minutes. It measures what investors and boards rarely quantify: leadership alignment, decision discipline, focus, and operational will, as well as financials and strategies.

It identifies where recovery is possible and where it is not, saving money, time, and reputation.

The goal is simple. Decide early to increase your recovery odds and release what cannot.

Investors lose more from delayed decisions than anything else. The Recovery Odds Index exists to end that loop. To replace hope with evidence, and to provide investors, boards, and management with a straightforward way to distinguish between real recovery and slow decline.

If you hold a business or portfolio that feels frozen, run it through the Recovery Odds Index. This can be a struggling tech startup, a traditional manufacturing company facing market shifts, or a service-based business dealing with changing consumer behaviors.

That is how you restart the loop that made angel investing work in the first place. This loop, which involved backing ambitious founders, supporting their growth, and recycling returns into new startups, was the essence of early-stage investing.

Business Distress: Why 60% of Turnarounds Fail & How to Prepare

Most CEOs don't see it coming. Revenue drops quarter after quarter. Cash flow tightens. Key employees start leaving. By the time boards demand action, it's often too late.

Business distress doesn't announce itself with sirens. It creeps in quietly through declining margins, stretched vendor payments, and missed growth targets. Yet despite clear warning signs, 60% of turnaround attempts fail because leaders wait too long to act or tackle the wrong problems first.

The difference between companies that survive distress and those that don't comes down to one critical factor: readiness. Organizations that prepare for a crisis before it hits have dramatically better survival odds. Those that wait until they're already bleeding cash face an uphill battle against time, resources, and stakeholder confidence.

This isn't theoretical advice. These are hard-earned insights from executives who've navigated companies through distress—and lived to tell about it.

What Defines a Business in Distress

Business distress occurs when a company is unable to meet its financial obligations or maintain normal operations without significant external intervention. This goes beyond temporary cash flow hiccups or seasonal downturns. We're talking about fundamental threats to survival.

Several factors typically drive businesses into distress. Economic downturns can devastate entire sectors overnight. Poor management decisions—like aggressive expansion without adequate capital or ignoring changing market demands—create vulnerabilities that compound over time. External shocks, such as supply chain disruptions or regulatory changes, can also push otherwise healthy businesses to the brink of insolvency.

The key indicators encompass both financial and operational aspects. Declining revenues over multiple quarters, increasing debt-to-equity ratios, and shrinking profit margins signal trouble ahead. However, operational red flags matter just as much: key employee turnover, customer complaints, missed deadlines, and deteriorating supplier relationships all indicate deeper problems.

Savvy executives track these metrics continuously. They don't wait for quarterly board meetings to assess their company's health.

Early Warning Signs That Demand Attention

Financial red flags

Financial red flags usually appear first. Revenue growth stalls or turns negative. Accounts receivable stretch longer as customers delay payments. Cash conversion cycles extend, tying up more working capital. Debt service becomes a monthly struggle rather than a routine payment.

Operational Breakdowns

But operational inefficiencies often precede financial distress. Production bottlenecks reduce output and increase costs. Supply chain issues create inventory shortages or force expensive rush orders. Quality issues trigger customer complaints and returns, damaging a brand's reputation and future sales.

Market & Customer Signals

Market-related challenges compound these internal issues. Increased competition pressures pricing and market share. Changing customer preferences make existing products less relevant. New technologies disrupt traditional business models, requiring expensive adaptations or complete pivots.

The pattern is predictable: operational problems create financial stress, which in turn limits the resources available to address these problems. This downward spiral accelerates unless leadership intervenes decisively.

The Devastating Cost of Waiting

Ignoring early warning signs doesn't make them disappear. It makes them multiply.

When companies delay addressing distress signals, problems compound exponentially. Vendors reduce credit terms or demand cash on delivery. Banks tighten lending covenants or call in loans early. Key employees jump ship before the situation worsens, taking institutional knowledge and customer relationships with them.

The impact ripples through every stakeholder group. Employees face uncertainty about job security, reducing productivity and increasing turnover. Investors watch their capital erode while management burns through remaining resources on ineffective fixes. Creditors prepare for potential losses, making future financing nearly impossible.

Perhaps most damaging is the erosion of leadership credibility. Boards lose confidence in management teams that failed to spot or address problems early. Customers question the company's ability to fulfill commitments. Vendors demand increasingly strict payment terms.

Recovery becomes exponentially more expensive and less likely with each passing month. Companies that might have needed minor course corrections suddenly require dramatic restructuring or liquidation.

Turnaround Readiness: Prevention Over Crisis Management

Savvy executives don't wait for a crisis to strike. They build turnaround readiness into their governance processes—systematically assessing their organization's vulnerability and preparing response plans before they're needed.

Turnaround readiness means understanding your survival odds in advance. It means knowing which problems would hurt most and having action plans ready to deploy. Most importantly, it means building leadership alignment around potential challenges before emotions and pressure make rational decision-making nearly impossible.

Companies with high turnaround readiness navigate distress more successfully because they've already identified their critical vulnerabilities and developed mitigation strategies. They've stress-tested their cash flow assumptions and prepared contingency plans for various scenarios.

This proactive approach transforms crisis management from reactive firefighting into strategic execution of predetermined plans.

Essential Assessment Tools and Strategies

Effective turnaround readiness requires systematic evaluation across multiple dimensions. Financial stability forms the foundation—analyzing cash flow patterns, debt structures, and revenue diversity. But operational efficiency matters equally: supply chain resilience, production capacity, and key personnel dependencies all influence survival odds.

Professional diagnostic tools can reveal blind spots that internal assessments miss. Comprehensive evaluations examine 42 critical factors across financial health, operational efficiency, market positioning, and leadership capabilities. These assessments provide objective data that cuts through internal biases and wishful thinking.

Self-assessment tools help leadership teams identify their strongest and weakest areas. Regular diagnostic reviews—quarterly or semiannually—track changes in readiness over time and highlight emerging risks before they escalate into crises.

The goal isn't perfect scores across all categories. It's understanding where your organization is most vulnerable and having specific plans to address those vulnerabilities quickly when needed.

Real-World Lessons from Success and Failure

Companies that successfully navigate distress share common characteristics. They act quickly once problems are identified. They focus resources on the highest-impact fixes rather than spreading efforts across multiple initiatives. Most importantly, they maintain clear communication with all stakeholders throughout the process.

Consider a manufacturing company facing supply chain disruptions and declining demand. Instead of cutting costs across the board, leadership identified their three most profitable product lines and concentrated resources there. They renegotiated supplier terms proactively, communicated transparently with key customers about potential delays, and secured bridge financing before cash flow turned critical. The result: they emerged from the downturn stronger and more focused than before.

Contrast that with companies that delay difficult decisions. One technology firm spent months debating whether to lay off employees while burning through cash reserves. By the time they acted, they'd lost key customers to competitors and lacked resources for product development. What could have been a manageable restructuring became a desperate fight for survival.

The pattern is consistent: successful turnarounds happen when leadership faces reality early and acts decisively based on objective data rather than hope or denial.

Your Next Steps: From Assessment to Action

The best time to assess your turnaround readiness was yesterday. The second-best time is right now.

Start with an honest evaluation of your current situation. Are you tracking the right metrics to spot problems early? Does your leadership team agree on the most significant risks facing your organization? Do you have contingency plans ready to deploy if conditions deteriorate?

Professional assessment tools can offer an objective perspective that internal reviews often lack. A comprehensive diagnostic reveals not just your current readiness level but specific priority actions to improve your survival odds.

Don't wait for a crisis to force difficult conversations. Address them proactively when you still have time and resources to implement solutions effectively.

Because in business distress, preparation isn't just about avoiding failure—it's about positioning your organization to emerge stronger when challenges inevitably arise.