Too much cash can kick your business butt...
Too much cash in a business for an undisciplined operator leads to management by throwing crap at the wall and seeing what sticks.
For the entreprenuer there are few things in business that provide guidance and discipline as much as operating out of operating cash flows.
Aside from the experience and pain associated with blowing through cash in a business and seeing that it doesnt necessarily lead to increased returns and growth, what other mechanism is in place to provide an entrepreneur with operataional discipline when one day they are bootstrapping their operations and the next they have millions in the bank?
Operating out of available cash flow provides the necessary pressure on an entreprenuer to carefully analyze all the opportunities available, generate new opportunities, and intensely focus on both selecting the next step to take, one that has the greatest potential to move business forward, and executing. This compares to the fully funded start up where the entreprenuer isn’t forced to pick the next feature and instead can have multiple features and products being developed simultaneously along with major marketing and PR efforts being implemented. While the multi-development process seems like it increases the chances of success, the more than likely outcome, for most entrepreneurs, will be luke warm developments and far less cash in the business.
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