You Need To Secure the Money End Of Your Startup Right Now
Why do startups run out of money? Here’s the most preventable way.
Most entrepreneurs are fueled by vision. They love to build. They have at least an aptitude for sales. And they’re hyper-focused on growth. Chances are, if you’re an entrepreneur, and all those things describe you, you’re in a good spot. There’s also a high probability that if you’re weak in any one of those areas, you found someone to fill those gaps.
You know what area entrepreneurs always skip? Handling the money. Not the let’s-go-make-a-lot-of it part. They love that. They hate the nuts-and-bolts part. The part that has math and spreadsheets and forms you fill out in triplicate.
So it’s not a coincidence that this is the area that kills a lot of promising startups. Here’s why that happens and how to avoid it.
Why are entrepreneurs cavalier about managing money?
It’s not that entrepreneurs don’t care about where the money goes. That’s not the case at all. Paraphrasing something Red Hat founder Bob Young told me early in my career, which I completely identify with:
I’m an entrepreneur because when I find something I love, I become totally devoted to it. I dive into it 24/7, until I get about 60 percent of the way into it. Then I get bored.
And it’s not just money. It’s an apathy towards ALL the nuts-and-bolts facets of running a company.
- Entrepreneurs value talent highly. They know it’s their most critical resource. But try getting an entrepreneur to price health insurance policies to keep that talent happy and healthy. Or deal with an interpersonal issue before it becomes a problem. That’s the other 40 percent of HR.
- They want to avoid the courtroom at all costs, but you can expect them to push discussions about patents, contracts, and regulations to the bottom of their priority lists. That’s the other 40 percent of Legal.
- They know that money is the scorecard that’s going to keep the doors open, keep growth up and to the right, and keep the mission and the dream alive.