MONEY

The Blessing of Not Enough Money

Believe it or not, being broke isn't always a bad thing. Senior contributing editor and veteran entrepreneur Norm Brodsky explains why.
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Remember how investors poured money into all those dot-com startups, such as Kibu.com and Kozmo.com, in the late 1990s? As soon as it was in the bank, the entrepreneurs found a way to spend it. 

What they didn't do was figure out how to generate enough cash flow internally to keep going when the outside capital was gone. The money made them feel invincible. They let a million unimportant things distract them. And then they went out of business.

The truth is that most startups don't fail because they run out of money. They fail because the entrepreneurs lose focus. From that perspective, too much money can be a bigger problem than too little money.

In fact, too little money can sometimes be a blessing. When you can't solve problems or overcome obstacles by spending, you're forced to use your brain to find a solution. You innovate. I faced a huge problem when I had a falling out with the investors in my first company, Perfect Courier.

If I couldn't come up with the money to buy them out, they'd buy me out, and I'd lose the business. So I wracked my brain, trying to think of someone who could lend me what I needed. Finally it hit me: my largest customer.

I went to see my contact there, explained the situation, and asked if I could get a year's worth of payments up front. It took some negotiating, but the customer came through for me, and I was able to buy out my investors.

Many successful entrepreneurs I know have similar stories to tell. They're successful because they're creative. It's usually the unsuccessful ones who complain about not having enough money.

 

 

IMAGE: Getty Images
From the April 2014 issue of Inc. magazine

NORM BRODSKY | Columnist

Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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