Friday, March 11, 2011

Which cash is good Cash?

We have heard a lot of people say "Cash is King". The term Cash refers to funds that are available at hand and as liquid as possible. One could also argue if that cash is the result of operational success/failure; but it is also essential for sustenance, this is critical parameter for your enterprise to function. People look for this source from - savings, family, friends, partners, angels, VC, banks and borrowings.

All these are sources are sources of income, but the issue is of which one of this is the best source. Of these mentioned above which one is an indication of a successful business?

While all of these borrowing are an indication that you have been able to sell your concept to the lender in return or without a favor, the unexplained part is, has it been enough to claim the success of your company.

My take on this is - not yet! The only positive sign that any startup could celebrate would be when its customers pay for the product. That money is really the cash that every start up needs to work towards. It is that cash that gets everything in confidence. It is the certificate the market gives for the product and its utility. When one goes to an investor like the angel or VC with something sold their confidence soars in the venture. Look to get to this cash in the earliest possible stage.

While the initial cash from savings or family or friends are critical to start up, if we don’t get to what sells in the market - you are in the red. Work perpetually towards getting this "good cash" - the cash that has been earned form the product. Listen to your costumers they are broadcasting all that they want all the time.

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