Of course, sometimes layoffs are the best solution. When cash is in short supply, Bourne suggests pink-slipping anyone who's not involved in helping the company reach the next step. But if the company sputters out of cash first, his skills will be of little use. That means cutting expenses to almost nothing by getting rid of staff, giving up the office space, and sending the phone number to voice mail while the founders quietly nurture their idea until the VC market improves. In the meantime, entrepreneurs shouldn't overlook cash from sources other than VCs.
Angel investors are one possibility, though there's less cash available than there was a year ago.
Bourne more than recouped his investment when the fledgling dot-com was acquired by Navarre Corp. in 1996. Lacking a crystal ball, entrepreneurs can only hope the hangover wears off within the next six months or so. If it doesn't, even venture-backed companies will find that simply staying in business is a bigger challenge. But if it does, those who've shown they can weather the drought may find they're among the first to have their thirst quenched. Business Week Online may receive a share of any fees you pay for services.