Unless you’ve been there, and been there with your money, it’s hard to imagine the feeling. One of the reasons entrepreneurs get frustrated with people trying to give them advice is, if you haven’t had the experience of what it feels like to be on the brink, it’s difficult to imagine.

There were about ten times during the history of IncentOne that I wondered whether we would make payroll. I remember one instance when one of our healthcare customers owed us $700,000 and the thought crossed my mind to drive to Connecticut to collect the money because we were desperate. Think of how ridiculous that would have been—me walking into a national health plan like it was a local check loan operation and saying—“Hi would you mind cutting me a check for $700,000?”

When we don’t have cash, it is difficult to make good decisions, and even more difficult to make strategic decisions. When cash is the central driving factor, we make inappropriate decisions such as not paying dedicated people, pushing vendors to the brink and creating imbalances in relationships. Our judgment is constantly clouded by what to do tomorrow to survive. This often goes too far:

Randy and I were looking for office space near New York City in New Jersey. The least expensive spot we saw would have been generously described as a basement. I was excited about the space because it was inexpensive and gave us what we needed. All I could think about was cash. Fortunately, Randy talked me out of it because he said if we worked in that dungeon, we would develop lung disease and that would cut into our productivity.

He was right, but all I could see was how were we going to pay for it. There are many bad decisions I made because we didn’t set up the business with the right amount of capital. Time after time I would hire people that were less qualified than what I needed for a business of our complexity. Spending another $25,000 per year for an employee seemed like a fortune at the time, but not doing it was one of the biggest mistakes I made. The lack of judgment that comes from a lack of cash can be debilitating.

Recognizing the impact this has on you does not put cash in the bank today, but it certainly allows you to think more clearly about your decisions.

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