Keeping options open forever is not a strategy. Building a company requires commitment. The aim is to make that commitment without allowing one delayed payment, funding round, supplier or founder to decide the company’s future by default.
Use this principle when: raising capital, taking on a dominant customer, entering an exclusive partnership, making a long-term commitment or considering an acquisition or IPO.
What to do
- Start from the next meaningful evidence or commercial milestone. Estimate the time and cash to reach it, the time to secure the next funding source and a reasoned allowance for setbacks. Identify when a fallback must begin to remain workable.
- Discuss the desired company and outcome among founders and capital providers. Compare financing choices on growth expectations, future funding needs, control and who receives value in different outcomes.
- Keep essential rights, contracts, financial information and responsibilities understandable. Document decisions as they happen. Be explicit about product limitations and material deviations from promises.
Evidence that changes the decision
Proceed: the commitment has a credible route to completion and a downside the company can bear. Critical counterparties can deliver, and the founders understand the dependencies they are accepting.
Change the plan: the milestone slips, funding takes longer, concentration increases or a partner becomes unreliable. Act while a smaller plan, different funding route, partnership or sale remains possible.
Stop the commitment: it would consume the remaining ability to respond without a credible path to a valuable outcome. Renegotiate, reduce the scope or change the route before choice disappears.
Where founders misapply it
Cash conservation alone cannot rescue a venture that never tests its central claim. Nor is dependence always avoidable: young deeptech companies may rationally rely on external capital or specialised suppliers. Make the dependence explicit and monitor the event that would make it untenable.
Sarasvathy’s affordable-loss approach and Graham’s funding-dependence question inform this principle. An acquisition or IPO adds its own readiness requirements; neither is the compulsory destination of every startup. [15][13][16][17]
Connect it to the whole venture
BOM’s Foundation building block also asks whether ownership, governance, essential assets and stakeholder trust can carry the venture’s next step. Resolve ambiguity while there is still room to act. Separate intended impact in the mission from impact actually delivered: name the outcome, a baseline and how you will check it after execution. [18]
Next decision: identify the earliest trigger that would require a different plan, and the latest date at which that alternative can still work.