I met wtih a young entrepreneur this morning who is trying to answer this very question. And he's trying to do it quickly. The business has about 100K in cash, is burning about 20K per month, and is broadly in the marketing services for twitter space. He's closed a couple customers that are paying him but he's really trying to fgure out two things:
- What can generate short term cash
- What is the best business for him to be in in 12 months
He's a smart capable entrepreneur who has already learned a lot about bootstrapping. He's taking immediate action on #1 -- and is both trying to sell services and to run some interesting tests on twitter. I think that's smart -- the challenge of these two competing tensions (above) in a small company is that the entrepreneur will end up going where the market is today and miss the opportunity 12 months from now. That said, cash is king and doing tasks for the market and collecting payment allows you to be in business in 12 months. It's simple strategy -- but effective :-)
I've seen various forms of the tension of these two directives in our portfolio. The nice thing about focusing in on what generates cash is that it forces the young company to find out where the market is now. The thing to watch out for is getting too scatter by different needs and thus missing real market trends.
