Business is a system, comprising a number of interdependent building blocks, which together determine its performance. In an interdependent system, the weakest link determines the performance of the system. Depending upon stage of each business, one of these blocks could constraint (and therefore determine) its progress. It, therefore behooves on the entrepreneur to focus on the weakest link at any time.
However, our experience of working with startups as well as early stage business shows a dangerous trend. Irrespective of the state of the business, a vast majority of entrepreneurs is driven to almost a cult belief that funds (finance) is the key constraint of the business, which in reality is not always true. Our study reveals that in majority of the cases, something other than finance become the constraint or the business still would have a long enough time by when finance could become a constraint. As a result of this cult trend entrepreneurs loose focus of their business and instead of focusing on the real constraint, are forced to drive their business by solely financial considerations.
Actually, startup ecosystem has come up a long way in India and entrepreneurship is increasingly being considered as an alternative career by youngsters. Even during the financial crisis of 2008, entrepreneurship only grew p. Also, the startup space has never been so flush with funds as it is now. Investors are literally walking around with checks in their pockets, in a hurry to invest. Given that there is already a wrong perception built that funding is the key constraint of new business, neuentrepreneurs often face dilemma about timing of funds.
This case study, Taking Funds NOW or LATER, presents one such case and the direction to come out of this serious conflict. The basis of solving conflicts, as always has been, stick to the fundamental of business; and in this case let your business tell you if its requires funds NOW. Do not take funds, just because it is available.
31 March 2014