Starting a business brings an added challenge to CEOs and Founders of start-ups
As a CEO or Founder of a start-up, you will know you have to manage spend tightly. You also need to ensure you get value for money spending your start-up investment on. Even when your business is profitable and cashflow positive, you still need a disciplined approach and keep a close eye on your cost base.
That requires a focus and discipline with managing your finances through initial bootstrapping phases and spending your investment you’ve raised carefully. It also means that your cost base, from people costs, office set up, marketing costs need to be creative ‘ you might never need a plush office, but most certainly in the early days overspending on these like a larger company will shorten your cashflow runway or push the point of profitability and cashflow positive back further.
It is quite normal for start-ups to be very comfortable with their early stage label, whether bootstrapped or having raised seed capital. As a CEO of an early stage business, you are backing yourself and your business plan. And that requires your business living within its means and being creative.
As you forecast a cashflow runway for your business, you should do the same exercise for your personal finances. It’s a challenge on your business cashflow if you undercalculate your personal cashflow. Either that or you are living a lifestyle beyond what the business can afford to pay you at that point in time. Given the risks of starting your own business, it is not ideal to be looking to increase your own remuneration before the business had projected it or indeed increasing your short term or credit card debt to cover your personal cashflow shortfalls.
With one eye on the prize and the business you are building, for most it’s a commitment and discipline that comes easy. It is also a motivation to deliver the planned launch or growth so the business can afford to pay you more.
The same applies to your personal finances. Like your business, you need to lock in your own lifestyle, not someone else’s. And lock in a lifestyle which your business can afford and you are content with.
Living beyond your means whilst your business is in its early stages might over stretch your personal financial position. Your business and personal cashflow live and breathe together.
Back yourself.
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