Financial Sustainability During the Start-up Months

Financial Sustainability During the Start-up Months
Mar 1, 2021

By Dan Boudreau

One important consideration when starting a business, is to clarify how you will pay your personal expenses while the business attracts customers and generates cash flow. No matter who you are, there is a core group of costs that never go away, such as food, shelter, electricity, medical, and taxes. Of course, if you own a house, you can add a cascade of other expenses to this list.

New businesses are rarely profitable in the early stages. It might be months or even longer before a new venture can pay its owner a wage. In the meantime, how do you pay your personal bills? How will you fund that Costco pallet of Kraft Dinner?

For those entering the small business arena with little or no cash, it is often problematic to assume that you will be able to pay for groceries out of your business cash flow. Unless you are in great financial shape already, you will need a plan.

The following are some of the ways entrepreneurs fund their personal expenses during the start-up phase.

Before starting your business, save enough money to sustain yourself until the venture can pay you a wage or salary.
Sell unnecessary assets or go without some conveniences to free up enough cash to see you through to profitability.
Get a job that earns enough to pay your personal bills until your business can pay you. Build your business during the hours you’re not at the job.
Get support from family or friends. Never will there be a sweeter deal than living rent-free in mom’s basement or grandma’s garage, especially if meals are part of the package.
A buy-out or severance package can keep you afloat while you get your business going.

Creative entrepreneurs each find their own way to mitigate start-up cash flow challenges. I’ve detailed a few of these in my new book, Pre-Launch Doodlepad: Self-Assessment and Feasibility Workbook for Small Business Start-ups, to be released on March 9th. Learn more at Amazon.