A Sure Way to Go Bankrupt
I was at Ad Tech San Francisco yesterday and I met a company that was developing a product in an exciting space. When I asked for a demonstration of their site they explained that they had launched their site but deactivated it because they wanted to fix the GUI (graphical user interface). They had heard complaints so for the past few months they have been trying to solve their problems. They did not have a set re-launch date. They went on to describe themselves as pre-revenue company. I would like to think of them as a pre-bankruptcy company.
This made me think of the world we live in. This company was incurring untold amounts of money to build their site, staff the company and travel for a trade show. They had angel funding at best and they were looking for venture capital funding to effectively launch their service for the next year.
The folks at the company did not feel a sense of urgency to relaunch their site and start generating revenue even though they had (what they must consider) a significant cash burn.
I may not know everything about how to run a business, but I do know that if you continue to spend money while not generating any revenue then this is a sure way to deplete all of funds and end up in bankruptcy. As an aside, I hope the venture capitalist's share these concerns.
So the lesson that is reinforced for me by this company is that you need to launch your business as soon as you can. Try to avoid waiting until you have the perfect business model, website or business plan. In most instances, your first idea will need revisions and the best way to determine whether you need to make any chances is get feed back from your audience base. You may also generate much needed revenue.
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