A Cash Cow Business

26 February 2012

Venture capital investments are great. It allows people to focus on the business instead of day to day cash flow issues. For some businesses, venture capital is the way to go. There is no way Steve Jobs would have had a consulting practice on the side to help grow Apple. He needed all in complete focus to succeed. However, one mistake I think many entrepreneurs make is they think they need outside investment to grow their business. They get so focused on raising money they forget to look outside the box. One approach I have used for years to fund businesses is what I call a cash cow business. This is nothing more than one business funding the growth of another more important business. Some businesses generate profits from day one - consulting business for example. Another example would be some sort of retail or service business. You mow someone’s lawn and they pay you. Profit on day one. Why not start one of these simple profit-at-day-one businesses to fund your dream business? I can illustrate this with two examples from my life.
Read the rest of this entry