When we launch a new company or project, we usually analyze how much money we are going to need short-term, make an initial budget and get started. The issue is that most often than not, things tend to take more time that we initially planned and if we didn’t carefully save some extra money, we might find ourselves on the road to hell.
Much like in our personal life where our capacity to save can be the difference between getting rich or poor, it is crucial when starting and operating a business to have the habit to save some money for later. Most people who manages their finance intelligently can usually afford to create large war chest for the future when its most needed. It’s true that some startups need a lot of cash and a strong capacity to spend money rapidly as they might operate in a market where being the leader will pay big time dividends in the future. Still, most companies get wiped out because they went too fast and not because they went too slow.
Being able to balance between intelligent investments on the future and cash conservation is a crucial ability for managers today. We never know what opportunities or challenges are in front of us and having financial discipline can help us avoid difficult situations and those unexpected sharp turns. This is more an art than a science as different situations call for a different way to manage the money and different strategies to be executed. But it is always crucial to have a good mindset when it comes to finance as sometimes what could become a successful company might fail because it blew all of its resources too fast by being overly optimistic. Having cash in the pocket will always give you more power than having to run after it.