Bet­ter Boot­strap­ping

Set your startup-salary ex­pec­ta­tions long be­fore launch

Inc. (USA) - - MONEY -

RIGHTSIZE YOUR TIME­LINE

When you’re get­ting your com­pany off the ground, you may be squeez­ing in time at night and on week­ends, be­yond your reg­u­lar

9 to 5. But even af­ter you’ve quit your day job, don’t ex­pect to be mak­ing any­thing off the bat. “If some­one is boot­strap­ping, they are go­ing into their cash sav­ings, their re­tire­ment sav­ings, their in­vest­ment ac­counts,” says David Ehren­berg, CEO of Early Growth Fi­nan­cial Ser­vices, a con­sul­tancy for star­tups.

BUILD A CASH CUSH­ION

Re­ly­ing on sweat equity alone won’t keep the lights on. Ehren­berg rec­om­mends hav­ing at least six months of sav­ings on hand be­fore quit­ting full-time work. The Univer­sity of Chicago’s Ellen Rud­nick sug­gests sock­ing away closer to a year’s worth of sav­ings to cover a half-year of work with a firm buf­fer in­tact, in case the busi­ness flops. And check in reg­u­larly: At a cer­tain point, “if you haven’t made any progress with the busi­ness, you might need to go out and look for a job,” she says.

DON’T BE­COME A MAR­TYR

While build­ing up your busi­ness from scratch may re­quire some sac­ri­fices, you can’t work for free in­def­i­nitely. “Busi­ness own­ers who want to be suc­cess­ful some­times say, ‘Hey, we’re mak­ing money, but I haven’t paid my­self in three years.’ Then you’re not mak­ing money,” says Far­ris. “Pay­ing your­self a fair wage is a way of mea­sur­ing your progress and mak­ing sure the busi­ness is pro­vid­ing for you ad­e­quately.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.