ENT 601 Week 7 Blog Assignment -There is Good Money and There is Bad Money


Investing for Growth  Wow, this may make you think, money is money, does it matter where I get the money? However, you need to realize that out there, “there are some investment capital may help you succeed and some may be the kiss of death”, said the authors. Not all money is alike. You need to shop for money like you shop for a car. Check out all the banks.

Money for new growth ventures is different than for an established business. With an established business you can always consider selling stock if your set up to do so. Will it be a bank you look for? Possibly an investor and if so will you offer an interest rate for a return or a percentage ownership of the business? Silent partner or working partner? Does the business have a tangible product or more a service or high tech idea? So many factors to consider.

Is the money going to sustain your company or inventory? Is it expected to grow the company? If so you need to grow it the best you can keeping in mind what your goals are and not to run short on capital while trying to grow. Also, if you get a large order in because of an instant success will you have someplace to go to fill the ticket and fulfill your order in a timely manner. If not, you will risk losing this or future orders if the buyer does not see that you are efficient.

Money can also be gotten from public money, private capital, friends and family. If the money is for a new venture it will be a slow growth. If there is a product with quick growth, then there is a quick profit and usually management will accept putting out a better return for this quick money to quick profit scenario.

If it is stock you are dealing with and you need to value to increase then a CEO will often elaborate or even exaggerate on the success of the business. This brings the stock value up and allows for more funds to work with but now the company must work on closing the gap between realism and what values then creates. If a CEO is not willing to do this then an enterprising manager might.


The Innovator’s Solution: Creating and Sustaining Successful Growth – by Christensen, Clayton M. and Michael E. Raynor, 2003


11 thoughts on “ENT 601 Week 7 Blog Assignment -There is Good Money and There is Bad Money

  1. Mary,
    I agree not all money is good money. However, in actuality, it is not the figurative money but the people behind the money. For instance, churches have become big business. Members who are for all intensive purposes are “giving unto God” with high dollar amounts now want a say in how the money is being allocated to run the church facilities and payroll. I am not saying they are wrong to want to be aware of how the money is spent, but when you want to overtly manage it, I think that’s where there start to be some issues.

    The same goes for starting a new business. Your silent partner is no longer silent and wants to take on a more active role. Or family and friends constantly bring up the fact that they invested into your business for freebies. Contracts can help, but litigation can cost money and time. Shopping around is one’s best better, it’s not fail proof, but at least you’ve weighed your options.


  2. Mary this is where your management skills of the money comes in to play. I do agree with your post that you may not want to take everyone’s investment simply because of what may come with that deal. It is a good Idea to take your time and think of the best option before making the final decision.
    I prefer to build my business slow and wait for the right timing.



    • Eric,
      Slow and easy is a very good plan but keep in mind that its hard to say when is the right time. Is it today, next year? What if someone else does it first?
      I would love to open a Vietnamese restaurant in my small town but am waiting for the right time. If another one opens first then it is not a big enough town for 2 of these kinds of restaurant so I might be out of luck.
      Thanks for the thoughts.


      • Mary, I love this idea! I hope you get the chance and don’t wait too long – if that is what you really want. You should be able to find funding and grants. I wish you well in this endeavor and would definitely bring my family to try your mountain top Vietnamese spot! Great post! Very true. Thank you.


  3. Hi Mary,

    Certainly there are good and bad deals. Some are too good to be true while others will simply be deals not in your favor or in best interest of the company. In terms of expanding an existing business, the authors of the book i’ve read for this class describe change (expansion in this case) via the following formula. Challenge = Resources. To summarize the idea, the challenge that you or your company is undertaking (merger, acquisition, new product release) should be roughly equitable to the resources that you have. Resources, in this case, equate to time, personnel, capital, as well as many others. Change and growth is a good thing. It helps you keep pace with a dynamic market and keeps your customers in anticipation of new services or products. However, it takes time and it takes money. Making changes to quickly may consume too much of your time or resources and doing it too slow may lead to the market passing you by. Good post.


  4. Hi Mary,

    Great post! That really does get me thinking. Plus, so often our original ideas and inspirations are so high that we need to pace ourselves one step at a time. We don’t have enough money to do everything at once! It takes time to grow, and growing is necessary if we want to have the funds available to reach our lofty goals.



    • Austin,
      Lofty Goals, I like that. It is a positive way of thinking about an end.
      Pacing is good and as long as you keep rolling all back into the business the best you can the business will grow. This has been a great class and I enjoy all of the people I have gotten to know. Will miss each one as they or I some day graduate.


  5. I like this article. The author’s are right, all money isn’t good money. Startups seeking financing should have an attorney read all agreements to make sure the deal is what the entrepreneur is seeking. I also feel that many entrepreneurs prematurely seek funding before they’ve actually figure out if they have customers for their idea. Many also don’t do financial projection to know when they might need funding and how much in order to grown their business.


  6. Does this book talk about down rounds in the context of venture capitalism? In the HBO show Silicon Valley, there’s an episode that has the characters getting offered a ton of money by VCs to fund their company. But a friendly advisor tells the main character that taking that sort of money will set expectations so high that a few quarters down the road it will create unreachable expectations. Is this the sort of thing Christensen is talking about when he mentions the “kiss of death”?


  7. Mary,
    This is a great post- sends a powerful message. I like the information about shopping for a bank the same way that you shop for a car. I agree that first we must understand the needs of our business and then find a bank that will compliment our business needs. I think everyone involved in the building foundation of a business – everyone must be on the same page- or the business will not succeed.


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