Cash flow is the backbone of a startup. A business, by nature, requires capital. That doesn’t mean you need a venture capitalist to invest in your business, it means money gets things done. Money pays employees, it buys an office space, and it pays for equipment.
Money is a tool. It can be used to accomplish things that directly grow the business (bring in more money). It can also be used to accomplish things that are secondary or tertiary to generating more cash flow like system improvements, product improvements, and learning & development.
Bonanza is super tight on cash. Cash flow will not always be the #1 priority but it is right now. Luckily, our monthly expenses are relatively low at this point so making a profit this month is possible. To grow this business as quickly as possible, almost every penny of the profit must go directly towards something that will bring in more money as quickly as possible. The leftover pennies will likely pay for food.
Cash flow serves as a valuable compass. As I decide what to spend my valuable time doing, I ask myself, “Will accomplishing this directly lead to creating more cash flow?” If the answer is no, I search for something that will. If the answer is yes, I dial in and focus.
The cash flow compass is not always completely accurate. There are risks involved. Sending out a proposal to a potential client might directly lead to cash flow, given that we can close the sale. It might not. In that case, the time and energy put forth during the process will have been invested into learning and improving, not cash flow. The investment is still beneficial, but it is secondary to cash flow.
With that said, nothing is 100% guaranteed to generate cash flow. Building and executing a chain of events that leads to income takes a long time and requires a lot of refinement. The probability of success increases with each failure.
It’s so exciting (and rare) when there is a chunk of money in the bank account. It never sits there for long because we invest it as quickly as possible. Right now, most of what our cash goes towards is paying someone to do projects that need to be done. Paying someone to complete a project means existing projects are moving directly towards a final payment. Simultaneously, my time is freed up to get more leads and send out more proposals, setting us up for more slightly delayed cash flow.
It would be nice to pay somebody to get our own branding up, but the monetary return on that project would be very delayed and extremely difficult to measure at this point. I’d rather inject cash into projects or proposals right now until there’s some extra cash to invest on secondary priorities.