The common secret weapon of successful startup entrepreneurs…manage personal spending to reduce cash pressure.
In the very early stages of a startup, cash is always in short supply. And, regardless of how the company is financed – through large customer contracts, friends and family money, angels, venture capital, or all of the above, more cash on hand is always better. And it is almost never enough.
But, the one consistent finding about entrepreneurs is that they can successfully manage the burn rate at home. In addition to successfully building a business, they have the ability to limit their personal spending and take salary pressure off the nascent venture. Until things start to accelerate, this skill provides months of cushion.
Early on this means saving to be able to forego salary for the exploration phase; sometimes it means working on the venture at night and on weekends. Modest salaries are usually next.
The result is that the entrepreneur is in a much stronger position from every point of view - customers, employees and investors.