5. Don’t Spend Money Until You Have It
I made a mistake with an early tech firm I had where I secured venture financing, went out and started making deals for how I would spend it, then the money didn’t come in and I was left picking up the pieces. This was in the early tech boom, back in 2000, when financing was easy and then dried up quickly. I had worked hard to build a prototype for my site, pitched like crazy and found a backer. I was so excited and hired all sorts of people I know to start building out the site.
Well, the market started shifting, the investors were giving excuses, contracts were signed but funds didn’t show up when they were supposed to, and eventually I realized they weren’t going to come in. In retrospect I realize the investors probably thought the funds would come from another deal that fell through, and they simply didn’t have the funds to give me. Still, that left me in a bad financial position. I owed money to so many at that point for work they had done. I worked hard and paid everyone off, but didn’t have the funds to go forward with the company at that point. I learned the most important lesson in business — don’t spend money from investors or customers until you actually have it.
Crystal Stranger | 1st Tax
Excerpt from article by Jonathan Long
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