Be Proud of Profit

Silicon Valley has built an archetype of a fundable business. But unfortunately, the "fundable" business profile has been a growth at all costs mindset and uncontrolled losses in pursuit of market share. 

For example, Forbes recently published a list of "The Next Billion-Dollar Startups" who shared a shared love for fast growth and incinerating cash (on average, these future Unicorns were spending $4 to generate $1 in revenue).

In the shadow of these headlines, entrepreneurs have been left feeling it's more important to conform to that Silicon Valley ideal over everything else. Unfortunately, this has translated to sloppy business operations and a generation of founders who perceive that profits can hurt the ability to access capital. However, there's nothing wrong with having a profitable business. You don't have to gamble away earnings for a chance at outside funding.

Although equity investors like to talk about metrics, and lenders want to talk about ratios, the heart of a financial partnership is the belief that the team and company will execute. Your reputation as a management team inspires confidence in financiers. The best display of solid business management is positive cash flow. Your profits are nothing to be ashamed of. They should be treated as a badge of honor.

Even if your business or management team doesn't fit the desired profile of VC or another funding source, cash flow will always provide options for your business. Financiers will view your business as less risky and open up less costly, non-dilutive possibilities that others without cash flow don't have. 

A company may depend on investor capital because it wants to invest as much money as possible to grow. But sooner or later, every company will have to become profitable. 

Generating a profit is the highest level of business mastery because it's not just maximizing revenue; it's also about managing costs. Knowing how to grow the top line and control the bottom line in concert to generate cash is the strongest signal you can send to any form of a prospective financial partner, and it's nothing to be ashamed of.

If you've already proven this superpower in your business, you have optionality that many others don't.