The startup I was most recently working at just went bust. Along with it’s passing, I find myself trying to pinpoint the key reasons for failure. The first and most obvious reason:

Use of Funds

With limited access to capital, a startup must make judicious decisions with money. Every penny should be spent with caution. For a Web early-stage startup, the bulk of expense is likely development-related. And startups with out-of-house developers must proceed with extra caution as their development relationships may be contracted on a basis of time, meaning the work they give to developers must be well-planned.

What specifically went wrong at my former employer’s startup? Funds were spent on activities that did not have a near-term return. Such as travel to tech conferences even when the company was still in stealth mode. If you can’t discuss your product, having a tech audience is not valuable. While administrative assistants add significant value to an executive’s life, an early stage company with limited funding should forego such a luxury. This reiterates my point - find the most productive (return-bearing) use of each dollar.

It doesn’t matter if your a massively venture-funded company like Twitter or a small angel-funded shop, dollars matter. Liquidity is your ticket to survival and extends the life of your company, particularly in difficult times.