Whether you are talking about a plant, an animal or a business…if you starve it, you stunt its growth. This is not a new concept. Any farmer can tell you that if any organism does not have the food and nutrients it needs, it can not grow.
It’s been said by many, from philosophers papers and economic treatise to Broadway Musicals and through the magic of Hollywood. No matter how it is delivered the message is always the same.
“Money is like manure, of very little use except it be spread.”
Francis Bacon (1561 – 1626)
As an entrepreneur, an investor, and an executive throughout my career, I have seen it time and time again. Great ideas, inventions, and opportunities are lost because we cash starve them to the point where we stunt their growth. This results in the business, the opportunity, or the benefit of the potential innovation being lost.
This hit home to me Monday of last week when I was speaking with a group of entrepreneurs at Stealthmode Partners FastTrac® TechVenture™ class in Tempe, Arizona. A young entrepreneur shared a great idea. He was explaining what he needed money for and the first words out of his mouth were “to pay myself”. I held up my hand – “Don’t say that,” I injected. “you won’t get funded.”
Mid week, I was at a board meeting. Afterwards we were talking about yet another biotech company that was in danger of closing its doors. It was not a new story. I had been hearing them all year. And each time I did, I wondered if this was the company that would have brought out the drug, the new treatment, or the new solution to a problem that would someday directly affect the way we live. But now, it wouldn’t.
Other conversations throughout the week were with friends in the investment community. Over and over I heard the same thing. “I’m parked.” That’s investor shorthand for “I have money, but I’m not moving it.”
The bloggers and the ‘experts’ keep writing posts and articles about bartering, collaborating, and bootstrapping. Heck, I even wrote one myself. But the harsh reality is that you can not launch or grow a business without cold, hard cash. Look at it like this…
- To Grow, you need talented people and they expect and deserve to be paid. If you do not pay them, you do not keep them.
- To sell a product you need inventory. And vendors eventually need to be paid. As a matter of fact, try getting a credit line of any material value with a vendor if you don’t have money first.
- Then there is research, product development, marketing, legal services, and sound financial advice. These professionals devoted years of their lives to gain the knowledge and experience that allows them to do what they do. And if you want to move quickly you need the most knowledgeable and the most talented. And they rarely work for free.
As I sit here reading the job reports and articles about our new Knowledge Based Economy and the coming Jobless Recovery, I can’t help but think that the reason we are not recovering the jobs that are so desperately needed and that more and more entrepreneurs are turning to less capital intensive service based businesses is simple. All of us in the investment community, myself included, have been unwisely rationing the manure – I mean money. There are some notable exceptions. Lynn Tilton puts her money where her mouth is – into product based businesses that create local jobs. And she is vocal about it. But of late she is a definite exception to the rule.
In all the hullabaloo about healthcare, we seem to have overlooked that the funds coming out of our government to fund job creating research at places like NIH are slowing to a trickle. NASA, a long time catalyst for the development of new product technologies, is facing crippling cuts. Oh, and the SBIR program, the life line for many start up technology based product companies, is again at risk.
And the banks will not be coming to the rescue where small and medium business is concerned based on the latest report from the Department of the Treasury as quoted here in an article by the NSBA.
If we want to get our economy on track, the answer always comes back to money. We (not just Uncle Sam but you and me too) need to take the ‘manure’ out of the bag and start spreading it around. Not as handouts but as investments in companies that make and sell real products to real people. That creates jobs. People with jobs buy stuff and pay taxes. Taxes fund education and other programs that allow us to maintain a viable work force and a strong economy. Investing in things that were not real got us all into this mess. Investing in things that ARE REAL will get us out of it. I guess it’s time to pull out of the parking lot. What do you think?
Thanks for stopping by. Stay Tuned…
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FTC compliance information: Joan Koerber-Walker serves or has served in a leadership capacity for the ASBA, NSBA, biotech companies that have benefited from SBIR and NIH programs, product based companies, and in entrepreneurial ventures in the for-profit and not-for-profit arena. For more information view her LinkedIn Profile.