All in? Invest everything you have into your Start-Up? No reserves except credit cards? Throw caution to the wind, jump onto that boat and make it float? If it springs a leak, use credit (borrowings) to float it for a while, until it finally floats?
Eventually, sail off into the sunset with the gentle wind at your back, the beautiful girl at your side.
I like the idea. Reality might be something entirely different. Do you have a business plan? Have you thought out what can ( and probably will) go wrong? Have you figured out how your competition succeeds? Have you really done the research to know what your costs and risks are? Remember, you are about to put real money into this…
A true story may clarify. I have a good friend who started a business. At first they did very well. He upped the ante and put all his cash into it. Then the recession hit, and he weathered the storm, but incurred over $ 90,000 of credit card debt to keep it afloat. Limped along for several very stressful years. End of the story is he got lucky and found someone to buy the business for the ever growing mound of debt. He was lucky, but broke. Don’t end up like that guy.
What went wrong? He had a good business plan, but never anticipated the change in the market and the recession. When they hit, he didn’t see it coming, and had only Plan B and not Plan C. He didn’t have a “pull the plug” dead-stop. In retrospect, when the business was doing so well, he should have just kept it going and not expanded. He should have been banking cash for a “rainy day” at exactly the time he expanded. Many businesses have fallen into this trap.
Sure, you can do what you want, but you better have a killer business plan, and a realistic view of when to stop the bleeding, should it occur. You’d better stay on top of things and see what’s coming down the road long before it hits you.
For more information, check out CEAnow.org, where we have some great courses on business planning, forecasting and business entrepreneurship.