Thursday, August 8, 2013

The Early Entrepreneur: The Fund(ing)amental question

The world is small.  Some people have money.  Other have ideas.  Other have talent and ability to execute.   Rarely do people have all three together.   When ideas marry ability to execute, that becomes a strong proposition for an investor.

Now, investing is like gambling.  Put money on uncertainty, with a belief that things will work out.   Now there are two ways an idea can blossom - slow and steady or big bang.   Most investors prefer the first part.   Unless you are a brand and have credibility,  the fist that finances will remain tight.  In most cases, it is the best possible approach.   I am a strong advocate of this model, where every penny that goes out is looked up as a reluctant expenditure, and a clear cost-benefit discussion is made.   However, this is still not fool proof.
MCFP is the fundamental achievement of a business

As a person who is more on the idea and execution side, I spend sleepless nights on how to meet the monthly ends meet.  Entrepreneurship can be a dream, but the risks of money expenditure are really high.   Even if you get a working capital, willing to break even - that is running at monthly cash positive, is something that I would want to achieve fast.  Why?  Because, the fundamental question of an investor - how long should I stay invested?

The monthly cash positive idea comes from the simple household idea.  One has to pay EMI's, salaries, utility bills on a monthly basis, and still be positive on cash - that will take any household, well, er, any company to the next levle. 

There are ideas that require long periods of investment and incubation.  Now those type of ideas may require a different level of evangelism both from the perspectives of time and money. 
Positive Cash Flow is the answer.

If you are looking for niche market and your go to market is taking a longer time - then there can be only two things - either your idea is too outdated or early, or you are too niche for the market to adapt.   So, work out a plan that addresses the fundamental question - break even at a monthly level as early as possible, that is the boost you can give an investor. 

My position on this is that, treat this investment as short term and make it work - that is break even at a monthly expense level at the earliest.   That brings credibility for the leader, and also sets the platform for a second set of investment come in.  But the fundamental does not change.  Monthly income, being greater than expenses, period - MONTHLY CASH FLOW POSITIVE ( MCFP) and that is the answer to the fund(ing)amental question.

If you are interested or knowing further - please write to

Earlier, in the Early Entrepreneur series:

The Tailor and the Sailor
Evolving the Early Entrepreneur
Or a Freelancer?
It takes two to tango!
Better sorry than safe!
Garage Gangs!
The Dropout Kid!

- Ashok Speaks


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