The difficulty in balancing a small business between keeping an eye on operations and raising capital is discussed on Forbes.com by Dileep Rao, PhD.
The author highlights the pitfalls of getting that balance wrong: "Mind the store without corralling enough capital, and you could go broke; spend every day wooing investors, and the store falls apart."
Helpfully, though, he provides this "shorthand version of how not to go astray":
* Fund your new venture on your own steam until you have a product that works and at least a few customers clamouring for it.
* Focus on profitability and building a sustainable business rather than one you hope to sell to a strategic investor at an early stage.
* Finance your growth in stages, as trying to raise too much money at once can take up too much time and you could end up diluting your operating stake and losing control.
* Always have a plan B to know that the business can survive beyond the investment of friends and family. Don't put the whole business in jeopardy.
The Small-Business Balancing Act
Dileep Rao, Ph.D, Forbes.com, 07/05/09
