Revolutionary Industries Presents: Startup Finance Fridays where we get into the nitty-gritty of how real-life startup entrepreneurs get their ventures off the ground and we discuss how startups pay for things. This is the first in our series that we present for bootstrapping startup entrepreneurs. Really an introduction.
New Startup Entrepreneurs learn real fast that if you want something done: you’re going to have to do it yourself. That also generally means: if you or your startup want something, you – the entrepreneur – are going to have to pay for it.
I’m talking to you – the entrepreneur that has an idea, maybe a business sketched out or a Web site (or maybe just a domain name). Or maybe you saw someone who was running a business and you thought to yourself “yeah, I could do that”. And you’re serious but you’re not sure of the next move. That’s a lot of you, by the way. A lot of people know the major milestones, but are unaware of the steps and stairways to slowly get you there.
Some things happen fast in the startup world – especially if you’re dealing with a fast-growing and evolving market like cryptocurrencies and blockchain technologies that are constantly evolving.
Regardless of your business type or market, you – the startup entrepreneur – are responsible for everything.
So how are you going to pay for it all? It can get expensive. Investors often ask entrepreneurs what their “burn rate” is. If you don’t know that…you’re not getting funded. A Startup’s “Burn Rate” is basically a sum of the monthly overhead. The “nut” the startup needs to cover each month to continue (and not go bankrupt/have massive layoffs/cost-cutting measures/down-round fundings or other not-so-nice things that happen in the startup world).
Startups operate at all kinds of levels. Maybe you’re a college kid in a dorm or your parents’ house. Or maybe you’re a mid-career professional with a network, some savings, a real plan and likely customers – you’re going to be at a different level. Or maybe you’re a programmer with an idea and you don’t want/need any product help – you got that. But you want a salesforce and marketing strategy put in place to monetize the heck out of it.
Startup Entrepreneurs at all levels have one thing in common: it’s all on them. They need to pay the bills from their own cash. Or put it on their own personal credit cards. It’ll be a while before the startup can build enough credit to have credit cards in its own name without the Entrepreneur’s personal guarantee. So just know that.
And that’s how it will always be for Startup Entrepreneurs. You need to buy a lot of stuff to start a business. Even more to make it successful. And if you don’t have the cash/credit yourself – or an early customer or investor – or the ability to create and offer your product service yourself – starting a business may not be such a good idea for you.
But it depends on your goals. Are you trying to run your startup full time and make tons of cash – enough to retire on? Then be prepared to go all in and be willing to lose it all (that’s all – pretty simple, right?).
But if you’re just looking for a part-time supplemental/passive income stream from a blog or a side gig or an online business or you just want to hand it off to someone to do the work and you just want to market it: look at it more strategically. With immediate ROI in mind.
At the end of the day, Startup Entrepreneurs need to pay for everything themselves. With their own cash or credit. There is no way around this. This is the risk all entrepreneurs take. If you want to be an entrepreneur and start building value in your venture: make a move. Create a business. Start selling. See what you can do.
Because if you don’t: you’ll stay right where you’re at. Also: Someone else might come in and…
And if you want some advice on what you need to put together to bring investors on board and to see your vision and get them to start funding things: get in touch.
Happy Finance Friday!