When you're just starting off a microISV (micro Independent Software Vendor), every dollar counts. Every dollar keeps you in operation that much longer. Every dollar makes it more likely to be able to earn the next dollar. Without money you can't pay the bills, you can't focus on the code and more importantly, you make bad decisions. Ian Landsman recently noted:

A few years ago when I was starting UserScape there were a bunch of other MicroISV’s starting up. There were blogs all over about it, so many people getting into it. The fact is that I don’t think any of them are still around at least not the ones I followed. Can I really be the last man standing? Where the heck is everyone?

Without sharing private information, I know of a handful that went down because they weren't charging enough, they didn't have enough customers, they didn't know their market, etc, etc… but what these all boil down to is:

They ran out of money.

When you're just starting off, almost every decision you make has a direct impact on the bottom line. If you take the afternoon off, your launch may be delayed or you could miss that important call or you could clear your mind enough to resolve that last annoying bug that allows you to ship. No, I'm not kidding, the impact of any given decision could be good or could be bad… but you will never know all of the implications in advance. Regardless, almost every decision you make will be based on or cause an impact to the bottom line. And here's the worst part:

Almost every decision you make will be colored by your bank balance.

When you're not sure about how long you have, you're going to make bad decisions. Even worse, you're going to make decisions based solely on the money. You will have opportunities to compromise your values, take bad side projects because they have a tiny potential of big success, and not ask the hard questions when the time is right. You're more likely to go down dark alleys that divert you from your goal, aren't worth the time or energy, and are (occasionally) with some of the scum out there.

The good news is that once you hit that magic number for revenue/reserves, everything changes on two counts:

First, you can start thinking strategy instead of in terms of rent. Yes, the money still matters but it becomes a secondary concern as opposed to the driving factor. When you start measuring your reserves or accounts receivable – you know the difference, right? – in months or quarters instead of weeks, it has a powerful effect. You can choose to spend a day or three on more long-term planning and figure out what the next version (or first version of the next product) looks like. It's a tipping point.

Second, you can decline those deadend/silly or even underfunded projects. Being able to say "no thanks" to someone is a stunning experience. There is absolutely nothing like it. I'm regularly contacted about these sorts of projects. For the handful that sound possible and are reasonably funded, I refer them to a handful of trusted individuals. For the rest… I politely decline.

Finally, when you combine the two, it's even more powerful. When you cut out or decline the least beneficial* products/projects, you free up your mind for other things. You can take a moment and enjoy your success. You can go have a bit of a life. You can take care of things that you didn't have time for. Most importantly, if that that one golden idea comes up – as a product or project – you have the ability to jump. That alone is the single most important thing that could happen.

Earlier this year, CaseySoftware hit that magic moment. Instead of measuring its lifetime in weeks, measuring in months started to make sense. It has allowed me to focus fulltime on a pair of products for an upcoming August release in addition to fun things like sponsoring BarCampDC. More than anything, it's allowed me to take some time off and focus on the important parts.

* And for the record, "beneficial"normally means profittable, but could also mean strategic, enjoyable, or satisfying.

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