It’s tempting to want to look to others for money to fund your business, to get more investors on board and give you some cash to maneuver with. But I thought I’d highlight a few reasons why you might want to think twice about this:

1. Money always comes with strings attached: Despite your best intentions, there are always expectations and conditions to receiving money. If you’re borrowing, that’s pretty clear: You have to pay it back, with interest, in the required timeframe. If you’re borrowing from a relative, often people will do this with a less rigorous contract. That’s dangerous, because then the emotional ties start taking over as time goes on and enthusiasm wanes. It’s easy to do permanent damage to family relationships because of borrowed – or even gifted – money. If you get an outside investor, you might have to relinquish some control of your company to them. Or there might be less structured ways that they could make your life miserable.

2. It creates another stakeholder to worry about: In addition to your customers, your suppliers, your vendors, and your partners, now you have an additional party who brings a different set of needs to bear. The broader your attentions, the less focused you’ll be.

3. It obscures the true state of your business: Outside money can appear as an asset or even masquerade as revenue, but that’s not the reality. You can easily fool yourself into thinking that you’re more profitable than you really are, which can cause you to make unbalanced decisions.

4. It weakens your core purpose: Assuming that your primary business isn’t to take money from investors, you should probably spend the bulk of your time worrying about how to deliver value to CUSTOMERS and build your revenue stream from that. Adding other work doesn’t help, and it confuses your employees to have to add another requirement to the list that usually doesn’t contribute to the purpose of the company.

5. It tends to make you greedy: Using others’ money seems to be an easy path to short term profit, and as you get better at it, it becomes more attractive. But you’re really sacrificing the long term growth of a healthy, customer-sustained business. “More businesses die from overeating than from starvation.” – as retold by David Packard

Now, assuming that you understand the implications of these points, and you’re still considering looking for outside money, think carefully. Only accept obligations for the amount of money that you really, truly need, and will have a profound impact on the survival of your business. No more.

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