Get off the wagon

WARNING: Repeatedly taking money from investors can be habit-forming and harmful to young companies. There’s nothing wrong with getting money from outside investment sources. In fact, it may be mandatory to jumpstart your business. But enough is enough. When you find yourself constantly going back to the well for more money, there’s something wrong. If you are neglecting sales in favor of courting investors, you may never be able to go cold turkey on investment money. And the plea for money can wear thin with your existing investors. They may start looking at you like their kid in college who repeatedly tells them “everything’s going great -- just send more money.” It’s not a pretty picture.

Capital intensive or capital sensitive

Obviously, some companies require more upfront money than others. If your business is capital intensive, you may not be able to generate the cash flow for manufacturing to meet demand for your product. That’s actually a good problem to have, and you’ll literally be able to take that to the bank. On the other hand, you may be fooling yourself. All businesses are sensitive to capital needs and can always spend additional money. Not all of them need it to survive and grow. If you focus more of your attention on creating profitable revenue, you may be able to generate get more cash and avoid some of the downside of taking on more investment money.

Speed isn’t always a good excuse

“If only we had more money, we could get to market faster.” This is probably one of the most common pleas for investment dollars, and it is often substantive. If this is the way you’re thinking, make sure that you’ve explored every avenue possible for generating your own cash through sales -- before you start spending your time pursuing more investors. If you haven’t perfected the sales strategies for your products and services, it’s going to take a long time to make new sales people productive. Without an experienced-based blueprint for sales, all the money in the world isn’t going to help speed things up.

Don’t postpone the inevitable

When investment capital is plentiful, it’s often easier to get money from investors than from customers. That scenario is addictive and sometimes enables entrepreneurs to go on for a long time without changing gears to create persistent revenues. At some point, you’ll have to bite the bullet and generate enough revenues to support the business. It takes a long time to build an effective sales machine. If you apply your time to selling, and build a culture of sales in your company as you go, you’ll be way ahead of the game. So you might as well get started.