Here’s Seth Godin with some of the best advice I’ve heard for drawing (finishing) lines. It’s especially relevant for businesses.
Q: I’m wondering about personal financing your company and where you draw the line if you’re funding it yourself?
Rule number one is you never put up your house. Don’t laugh. This means you can’t sign a personal guarantee on anything. “You want to rent this? Ok I’ll rent this, but I’m not signing a personal guarantee on anything.”
I have not signed a personal guarantee. I was bankrupt for eight years. I was this close from having to close down for eight years and I still never signed a personal guarantee for anything. That is a line I have chosen to never cross and I encourage everyone to do. The minute you do, suddenly there’s a 3-year-old at home who’s going to have to live on the street if you make a mistake. I just don’t know how to take risks when that’s at stake.
Then the advice that I give people is, if we’re going to be intentional about this, you need to write down a number and a period of time.
The number, it can be as big a number as you want, is the maximum amount of money under any circumstances no matter what that you’re willing to put in. And when you hit that number you can’t put in another penny.
People hate this. They say, “But what if something blah, blah, blah.” NO. There just has to be a number.
The second one is, “How much time before you give up?” And again, it can be 20 years. Fine. But you can’t say, “19 years and 11 months into it, but wait there’s one more deal that might come through.”
You just have those two numbers because if those two numbers are in place and your spouse is aligned with it, you never have to worry about it again. It’s off the table.
This whole situational thing, “I just need $2,000 more,” that’s lying to yourself. The discipline early on is so valuable because then you can spend 100% of your time focusing.
…So you raise more money than you think you need and you treat it like it’s the last money you’re ever going to have. It’s way better than always wondering where that next nickel is going to come from.
Seth Godin – Start Up School Ep 11: Cash Flow
From a transcript by Kevin Evans