Who is funding your startup dreams?
Get your money foundations in place as you build your business.
Do you have enough money to support yourself whilst you launch your business? Do you even know how much money you need to do it?
A rarely discussed topic in the world of entrepreneurship is finding the funds to get started. I’m not referring to whether or not you can raise VC funding to scale, but whether you have access to the money you need to actually pay yourself in the early days. At first, your business may not bring in revenue or you might spend every penny it brings in on operational costs. During these times you have not ‘failed’ as an entrepreneur you just need more time to see the fruits of your labour.
So let’s explore how startup founders can, and should, be thinking about money at the start. Because there is no amount of manifestation that will pay the bills for you, I’m afraid.
MONEY IS ONE OF THE BIGGEST OBSTACLES RO STARTING OUT.
As a Coach I’ve heard all the common money objections to launching a business. There is a delicate balance to strike between being bold enough and betting on our future selves, and not putting ourselves (or perhaps our family’s) livelihoods at risk.
And it’s no secret that women tend to have it worse when it comes to money.
By the age of retirement a pension gap of 56% between men and women can be common thanks to periods of lower pay and time off for childcare during a women’s professional life, source.
So whilst we have no less ambition than our male counterparts, our starting points are different.
My own journey was born from similar experiences. I quit a job in December 2019 without a back up plan, not long after taking out a mortgage as a solo homeowner.
Despite no bank of mum and dad to fall back on, I stuck to my guns and vision to build my own coaching business. The Ask® had its first business birthday in June 2021 and I’m so grateful that I held off looking for a traditional job and backed myself to build a company.
How did I do it? And how do other women navigate the mental, and practical hurdle of building a business from a financial perspective?
Here are solutions that I’ve seen other women use to support their business building.
- Saving aggressively first. If you’re ready to start a business but don’t have a 6 month runway of savings, then make that your focus first. With some security in place you’ll be in a better mental position to focus on your business. So learn to live modestly. It’s good practice as there will be times as an entrepreneur that you’re strapped for cash.
- Freelance or consulting work. I’ve lost track of the number of people I know who freelance alongside building a business. This might seem like one and the same thing, but think of freelancing as working on someone else’s business. You want to build your own. You can set yourself up as a sole trader or Director of a Ltd Company and find organisations to pay you for your skills. (Likely whatever job you’ve had before you can do freelance). Doing this part time creates mental space to build a business as well, and gets you into the habit of charging for your services. Set a decent rate and become your own investor as you can channel the money back into your business. ‘The leap’ which does not have to be so binary in terms of being fully employed or fully self-employed. There are shades of grey in between.
- Get support from coaches and mentors to speed up your path to financial stability. I’ve saved a lot of time and mistakes by working with a business coach. Sometimes they’ve given me playbooks of what has worked for them and other times just helped me to think more clearly and avoid the pit of despair new founders can find themselves in. I’ve no doubt my business has been a bigger success due to working with someone objective and experienced. Cliched as it is, sometimes you gotta spend money to make money. But never work with a coach if it’s going to be a choice between the coach and paying your bills.
- Build on the side of your day job. Side hustling is so common precisely because it allows you to have your cake and eat it too. So if you’re going to do this in your spare time outside your day job, just consider your energy levels, and try to cut down your hours if you’re serious about making it work. Then set a timeline for when you’re going to go full time so that it gives you momentum and fuel to grow.
- Research grants, stipends and government funding. Certain schemes are available especially for technologies or innovations, marginalised groups or certain types of ventures. Do research and see what you are eligible for. Check out Egbe Manton’s piece here for more.
So whilst there is no one silver bullet, there are many workarounds.
The key is to be patient, act sensibly, and trust that the money will come. In the meantime don’t put yourself into sticky financial situations with loans or credit card debt and get external funding if that’s what your business really needs.
Manifestation jokes aside, a good money mindset is key.
This is about tools more than anything. Knowing your financial runway, financial health and using services that can support you to get in control. Work with a financial advisor or educate yourself on money management properly if this is a gap then start here.
Funding yourself to build your business in my opinion is one of the most empowering and fulfilling ways to do it and keep complete control of what you create.
Liked this post? Check out more from me at The Ask newsletter where I share ‘career advice for entrepreneurs’ weekly such as choosing your idea, building confidence and scaling.
Where you can find me
About your author
Ellen Donnelly is Founder and Chief Coach at The Ask. She provides early stage founders and startup communities with coaching, workshops and content so that they can build businesses doing work they love. She’s a Londoner with a decade working as a talent consultant for tech startups before training as an ICF accredited coach and building The Ask.
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