Module 7
Decide what happens next
An honest read of your traction, and a decision about funding, bootstrapping or stopping.
By now you have real information: customers, usage, a price, a channel that either works or does not. This module turns that into a decision rather than a drift.
Three outcomes are legitimate. Raise, keep going on revenue, or stop. The failure mode is a fourth: continuing without deciding.
Sign in below to save your answers
Read your traction honestly
Traction is not revenue alone. It is whether people who paid you once are still using it, whether new customers are getting cheaper to acquire, and whether the product is getting more valuable per customer over time.
Write the four numbers plainly: revenue this month, retained customers as a share of those who started, cost to acquire this month against last, and revenue per customer over the last three months. Then write the number you would rather not show anyone.
That last one is the useful part of this exercise. Every founder has it, and it is almost always the number that decides the outcome.
Your turn
| Metric | 3 months ago | Last month | This month |
|---|---|---|---|
What good looks like
- Revenue: $2,000, $5,400, $8,100. Retention of month-one customers: 9 of 11 still active.
- Cost to acquire: $900, $700, $650. Revenue per customer: $980 rising to $1,050.
- Uncomfortable number: two of the nine are friends of mine and would probably not renew at full price.
What raising actually costs
Raising is not free money and it is not validation. It costs equity, it costs three to five months of your attention, and most importantly it sets a growth rate you are then obliged to hit. Money raised at a given valuation carries an expectation of the next one, and if you cannot reach it the round that felt like a win becomes a problem.
It is right when capital is the binding constraint: you know the channel works and more money buys more of it, or the product genuinely requires investment before revenue.
It is wrong when you are raising because sales are hard, because it feels like the next milestone, or because you want someone else to validate the decision. None of those are fixed by a bank balance.
Your turn
What good looks like
- Binding constraint: outreach converts, and I am the only person doing it. Two more salespeople would double bookings and I cannot fund them from cash.
- Also true: honestly, some validation-seeking. Noted.
- Growth rate: a seed round here implies roughly triple next year. With current conversion that means 45 customers. Plausible but not comfortable.
Whether you can fund growth from revenue
Bootstrapping is not the modest option, it is the one that keeps every decision yours. It works when payback on acquisition is fast, margins are healthy and customers pay before or soon after you deliver.
Check three things: how many months to earn back what it costs to win a customer, how much cash sits between you and zero, and whether growth is limited by money or by your own hours. If the limit is your hours, funding buys you people, and that is a real reason. If the limit is that nothing converts, funding buys you a faster version of the same result.
Write the version of the next twelve months where you take no money at all. Many founders discover it is better than the funded version.
Your turn
What good looks like
- Payback: 1.2 months. Runway: 14 months at current burn. Limit: my hours.
- No-raise plan: hire one salesperson from revenue in month three, hold product scope flat, reach roughly $25k a month by month twelve. Slower, entirely mine.
What a clean stop looks like
Stopping well is a skill, and doing it badly costs founders years. A clean stop means telling customers early and honestly, refunding what is unearned, closing accounts and contracts properly, keeping the code and the data you may want later, and writing down what you learned while it is still accurate.
It also means saying it plainly to people, rather than letting the company fade out over eighteen months of half-attention. The fade is what does the damage: it takes the time you could have spent on the next thing and it leaves the story unresolved.
There is no shame in this outcome. Most first attempts end here, and the founders who stop cleanly are the ones who start again quickly with a better idea and a real network.
Your turn
What good looks like
- Told all nine customers by phone, gave 30 days, refunded two prepaid pilots.
- Learned: I chose a buyer I could reach but who could not sign. Next time I confirm signing authority in the first call.
The judgment call
Raise, bootstrap or stop is the largest judgment call in this workbook, and no amount of further analysis resolves it, because the deciding factors are not in the numbers. They are your appetite for the next three years, your obligations outside the company, and what you would regret.
How to think about it
- Separate the question 'is this a good business' from 'is this the business I want to run for five years'. They have different answers and both are valid reasons to stop.
- Raise only when you can name what the money buys and how you will know within six months whether it worked.
- Treat slow but profitable as a legitimate destination, not a holding pattern.
- Set a decision date. Drift is the outcome that costs the most and gets chosen by default.
Questions worth sitting with
- If this grew 20% a year and never more, would you keep doing it?
- What would you spend the money on in the first ninety days, specifically?
- Who else depends on this decision, and have you actually asked them?
- In three years, which version of this would you most regret not trying?
Common questions
When should a startup raise money?
When capital is the binding constraint: the channel converts and more money buys more of it, or the product genuinely needs investment before revenue. Not when sales are hard or when a round feels like the expected next step.
Is bootstrapping worse than raising?
No. It is slower and it keeps every decision yours. It works when acquisition pays back quickly, margins are healthy and customers pay early. Write the no-raise version of your next year before you assume otherwise.
How do you shut down a startup properly?
Tell customers directly with notice, refund unearned money, close contracts and accounts, keep the code and data, and write down what you learned. A clean stop takes weeks. A slow fade takes years.