Being Broke Means Being Disciplined
October 13, 2009
An excellent blog post by Wil Schroter
While everyone else is running around trying to find capital for startup companies, let me be the first to tell you the one true benefit of not having any cash – it forces you to be disciplined. Being broke means being disciplined about the investment decisions you make and forces you to be resourceful to find solutions to your problems.
Smart and resourceful startups that can find creative ways to solve their capital crises emerge stronger and faster than their capital-laden counterparts who throw money at problems instead of solving them. When you’re starting up broke, don’t think of it as a handicap – it’s an incredible opportunity to strengthen your company with the ingenuity required to succeed on a budget.
A dollar bill is a blindfold
Having money in the bank keeps you from worrying about things like making payroll, customers paying their bills on time, and covering rent. And that’s the problem. Those are things you should be constantly worried about even if you do have money in the bank. You should always be conscious of whether or not you are getting paid on time, whether the people on your payroll are carrying their weight, and whether you actually need the things you’re buying for the business. That’s healthy.
You can numb the pain of most business problems by throwing money at them, but that doesn’t necessarily constitute a solution. The problem is two-fold. First, cash has a funny way of treating the symptoms of organizational problems without actually addressing the root causes. This may work while you have cash to toss away, but as soon as your receivables are late that problem will be right back in your face. Secondly, a startup rarely has the spare resources to treat a problem with money. They need cash to grow, not to throw at problems.
To read the rest of this excellent post, click here.
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