There’s a lot that can be said for that moment when your startup finally hits the big time. That moment when investors are lining up to write you a check for more money than you ever thought you’d see in this lifetime.
The only real dilemma left in your life and business at that point is what the heck you’re gonna spend all that money on? Of course, there’s startup and expansion expenses to consider…
… Perhaps a little extra left over for some fun and sun for you, your partners, and your biggest clients, right? Nah!
The trouble with investor money is that you didn’t have to work for it. You’re like a poor panhandler sitting in front of a Walmart begging for spare change. Then suddenly, someone drops a mint certified 1901 Morgan Silver Dollar in the pot and the world suddenly seems like it’s your oyster.
Oh the things one could buy with such money!
The trouble is, that investor money isn’t really yours. You have to be responsible with it or the well’s gonna dry up. Spend that money on a company-funded ski vacation to the Alps or on a hot new “Company Benz” and you’ll hear nothing but laughter the next time you pony up to your investors for money – when the business is on the verge of going down.
They talk to each other too, so don’t think just because you burned your bridges with one, that you’ll be able to sweet talk another VC firm or angel investor into dropping money into your business – a business run by fools who treat their cash like lottery winnings!
Here’s a few more “practical” things to avoid spending investor’s cash on in the short term:
Unnecessary Employees
Now, if you’re opening a restaurant or launching a massive big box store, or building a fulfillment center, you might need more employees.
If you’re running a lean startup geared toward innovation and product development, chances are you won’t need near the amount of added staff that you’re considering to add to the company.
Adding staff just because it seems like something you should do is like wrapping a boo constrictor around your neck: once it’s there it not only cuts off the air going in (cash flow), it’ll squeeze harder once you start to lose consciousness (when the cash starts to dry up).
Real Estate
Whether rented or purchased, real estate can spell certain death for a startup that doesn’t really need it. There will be caveats and your investor will make you aware if you’re an exception.
The fact is, there are too many virtual options for running a company, wasting that money on real estate at this point just makes you dummy and a future failed entrepreneur – and not the good been-through-it-and-made-it kind!
Travel
This includes cushy ski getaways like those mentioned in the opening. Almost all entrepreneurs dream of one day flying from one place to another in the comfort of their private jet, meeting with clients and closing multi-million dollar deals.
If you’re a lean startup, you’re not there yet slugger! Ever heard of Gmail, Hangouts, or Skype there genius?
Advertising
Print runs, radio spots, banner ads, paid guest posts, etc. As with everything, there will be caveats depending on the business you’re in. However, most startups spend way too much moolah on advertising in the beginning.
Just because you’ve found an investor doesn’t mean you can blow a million on a prime time television spot (and what smart person advertises on TV these days anyway?)
Focus on social presence and social advertising options like promoted posts and tweets for now.
$10,000 Websites
Don’t be a goofball and blow a large majority of your load on a massive, overly complex website either. Unless you have a killer app or ecommerce platform on your hands the size and scale of Amazon, focus on building your business and reputation.
Consider how much you would have valued that money you’re considering spending before the investor came along. Could that money make the difference between closing the doors or not in the near future?
Software
Yes, you bozo – there is a software that does that! Why did all this money coming in suddenly make you so lazy? Sales, collaboration, social and other types of expensive software solutions aren’t likely needed at this point. And for a couple of reasons.
First, you’re going to have to research and find the best software application for whatever need you’re trying to fill.
Second, you’ll have to learn how to use it and go through the hassle that comes with educating you and your team on how to use it effectively.
Summary
Basically, an investor cash influx isn’t any kind of excuse to start throwing money around everywhere. It doesn’t matter how many tens-of-thousands or millions are bestowed upon the company.
Better to “hustle” like Gary Vee always says, than throw money at things and see what works and what doesn’t.
Fact is, in the coming months, while you’re hustling your @ss off, you’re likely going to come across opportunities and “real” things the business needs that cost money.
Put that money in the bank and get to work sucka!
