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How to Survive Your Startup…Financially

By: Susan Solovic


One of Steve Martin’s best jokes on Saturday Night Live went something like this:

“How can you be a millionaire and never pay taxes? First, get a million dollars…”

Every small business owner sets out hoping to make good money, but it doesn’t always go that way—especially in the beginning. So the question becomes: How can you survive while your business gets on its feet?

We could take Steve Martin’s advice—first get a million dollars—but aside from some trust-fund kids, that’s usually not an option. However, many start with a significant savings and plan to burn through some of it. You need to know how much of that you’re willing to spend to underwrite your startup.

No single answer fits everyone. If you’re young, you may want to take the balance down to zero; you have time to rebound. If you’re at a later stage in life, you need to play it much more conservatively.

When I left my first corporate job to start a boutique PR and advertising agency, I was single and carrying a significant burden of monthly payments. I had several clients lined up…or thought I did. A few dropped out. That leads me to the first item on my list of ways to make it through your first months:

Get a part time job. I worked part time with a meeting and event planning company. Between that work and my business, it kept enough cash flowing to pay bills.

Don’t quit your job. A time-honored way to survive a startup is to start up before you quit you current job. Folks, successfully piloting a startup to profitability is a time-consuming ordeal and your willingness to hold down two gigs at the same time is a good measure of your commitment.

Simplify and downsize. Reduce your overhead. Take a cold, calculated look at your monthly expenses and cut anything that’s not a necessity. Rent out your spare room. Move to a smaller apartment.

Sell assets. Can you survive in a smaller, less cool car? If you’ve managed to gather significant assets that you’re willing to unload, there are local places to sell and at least one online source, Borro, will lend against or work with you to sell your luxury valuables.

Loans. Family and friends are traditional sources of startup funds, but many entrepreneurs prefer to stay away from these entanglements. Much has been written on crowdfunding, and other new nontraditional ways of getting funds are springing up all the time. Your local bank will probably offer business loans underwritten by the Small Business Administration. Local agencies may also kick in some money. Check your state, county and city governments. Finally, I know a lot of startup owners who end up borrowing from their credit cards. However, that’s not where you want to start your entrepreneurial journey.

Bring a partner onboard. Often a person with an idea and know-how will find someone else with the money to fund the project. There are a lot of ownership issues to iron out, but it can work.

If you scan this list one more time, you’ll see that several of these strategies can be combined. Do that and there’s a good chance you’ll survive until the cash flow begins to meet and exceed expenses.

Oh, by the way for the second part of the question I started this with – How can you be a millionaire and never pay taxes? – Steve Martin suggested saying two simple words when the guy from the IRS arrives at your door asking why you haven’t paid your taxes: “I forgot.” (Don’t try this at home.)

This article was originally published by Susan Solovic

Published: August 27, 2014

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Susan Solovic

Susan Wilson Solovic is an award-winning serial entrepreneur, New York Times, Wall Street Journal, Amazon.com and USA Today bestselling author, and attorney. She was the CEO and co-founder of SBTV.com—small business television—a company she grew from its infancy to a million dollar plus entity. She appears regularly as a featured expert on Fox Business, Fox News, MSNBC, CNN, CNBC and can be seen currently as a small business expert on the AT&T Networking Exchange website. Susan is a member of the Board of Trustees of Columbia College and the Advisory Boards for the John Cook School of Entrepreneurship at Saint Louis University as well as the Fishman School of Entrepreneurship at Columbia College. 

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