1. What you will learn
This lesson helps you set three measurable funding outcomes for the next ninety days and run a diagnostic of your borrowing and ownership habits. You will score six areas, find the weakest, and write outcomes that improve your understanding and control without committing you to any particular source of money.
2. The idea explained
Funding outcomes are easy to set badly. Statements like raise money this year or get a loan for expansion describe an action, not a result, and they push the owner toward a decision before the facts are gathered. A better outcome describes a state you want to reach that makes good decisions possible: a debt register that matches lender statements, a repayment calendar for the year, a stress test showing how the business copes if sales fall by a stated amount, a cap table that matches company records, or a written agreement for an informal loan. These are measurable, they are within your control, and each one reduces the chance of a costly surprise whichever funding path you eventually choose.
The diagnostic asks about six habits. Do you know exactly what you owe, to whom, on what terms? Do you know what the business generates each month to pay it? Do you know how long the business could last if income fell? Do you know who owns what and what has been promised? Are your agreements, including informal ones, written and checked by a professional? Do you review these facts on a schedule? Score each from zero to three: zero for never, one for sometimes, two for usually, three for always and written down. The total out of eighteen is a conversation starter, not a rating of your business.
Evidence keeps scores honest. Next to each score, write the document or date that supports it. If the debt register exists, name the file and its last update. If not, score zero. Ask your co-founder or accountant to score you independently on two of the areas; differences show where your picture diverges from others. Most owners overestimate their score on ownership and informal agreements, because verbal understandings feel solid until someone remembers them differently.
Then choose outcomes that fit your size. A one-person business may need only three: a full debt register, a stress test and a written record of any informal loans. A firm with several partners and staff will add a cap table reconciliation and an agreed process for approving new borrowing. Remember that better records do not make a business succeed; most new ventures do not. They make your decisions clearer and your advisers' work faster.
Apply it
3. How to apply it in your own business
Write the six habits on a page and score them with evidence. Add up the total and date it. Pick the three lowest and turn each into an outcome with a baseline, target, owner and date. For example: by day sixty, every loan and informal advance will appear in one register that matches statements or written confirmations, and the accountant has reviewed it.
Test each outcome against your time and information. Which documents do you need? Who else must be involved? Where will you need professional help, and have you booked it? Adjust the targets so that they can be finished in the ninety days, and be careful not to include a decision to borrow or to raise money as an outcome. The outcomes should improve your position to decide, not decide for you.
Share the page with your co-founder, partner or accountant, and put review dates at day thirty, sixty and ninety in the calendar. At day ninety, redo the diagnostic and compare. Write down what improved, what did not and why, and keep both versions. If your score does not move, ask what blocked you: time, missing documents, disagreement between partners, or fear of what you would find. Naming the block is progress.
Worked example
4. Worked example
Take Preeti and Ashok, who own a small catering and banquet business as equal partners. They score the six habits separately and compare. Preeti scores: know what we owe 2, know what we generate 2, know how long we would last 1, know who owns what 3, written agreements 1, review on a schedule 0. Total: 2 plus 2 plus 1 plus 3 plus 1 plus 0, which is 9 out of 18. Ashok scores: 1, 2, 1, 2, 0, 0, a total of 6 out of 18.
The gap of 3 points is informative. On ownership, Preeti gave 3 because their partnership deed says 50 per cent each, while Ashok gave 2 because his father put in 300,000 rupees at the start and was told he would get a share, which Preeti did not know. That single fact changes their picture: the deed does not record it. They list it as a task for a lawyer.
They choose three outcomes. First, one debt register covering the bank loan, the equipment lease and Ashok's father's money, matching statements or written confirmation, done by day forty-five. Second, a stress test showing debt service cover if monthly bookings fall by 25 per cent, done by day sixty. Third, a written record of the father's advance, prepared with a lawyer, by day ninety.
Baseline numbers: the bank loan instalment is 21,000 a month and the lease 8,000, so payments total 29,000. Cash before loan payments averages 70,000, giving cover of 70,000 divided by 29,000, about 2.4 times. If bookings fall by 25 per cent and cash before payments falls by 40 per cent, it would be 42,000, and cover would be 42,000 divided by 29,000, about 1.45 times. They record these as first-pass estimates. They agree that neither will make any new borrowing or promise until the three outcomes are done, and they book a lawyer meeting for week eight.
5. Common mistakes and how to fix them
The first mistake is setting outcomes that are actions such as raise money. Set outcomes that make good decisions possible.
The second mistake is scoring yourself high without evidence. Attach a document or date to each score.
The third mistake is scoring alone when there are partners. Score separately and compare, since differences expose hidden assumptions.
The fourth mistake is including a decision to borrow as an outcome. Improve your position first and decide later with advice.
Key takeaways
6. Board summary
Score six funding habits from zero to three with evidence. Turn the three lowest into measurable outcomes with owners and dates. Compare partners' scores to find hidden assumptions. Do not make borrowing or raising money an outcome. Better records support decisions but do not make a business succeed.
Check your understanding
7. Practice and self-check
- Why is raise money a weak outcome? Answer: it is an action that pushes a decision before the facts are gathered.
- Name one good funding outcome. Answer: for example a debt register that matches statements.
- How many habits are scored, out of what total? Answer: six habits, total 18.
- Preeti's scores are 2, 2, 1, 3, 1 and 0. What is the total? Answer: 9.
- Ashok's total is 6. What is the gap? Answer: 3 points.
- Why did the ownership scores differ? Answer: Ashok knew of his father's advance and promised share, which the deed does not record.
- What are their monthly payments? Answer: 21,000 plus 8,000, which is 29,000 rupees.
- What is cover at 70,000 cash? Answer: about 2.4 times.
- What is the stressed cover at 42,000? Answer: about 1.45 times.
- What did they agree to avoid until the outcomes are done? Answer: any new borrowing or promise.