Extend Your Runway With These Money Saving Tips
The toughest thing to manage if you ask me as a startup founder is money. You might think that you have enough, even if you try to run lean, but every now and then as you drive forward relentlessly to get your startup off the ground, you think “wouldn’t it be nice if we had someone do this” or “wouldn’t the office be nicer if we had free lunch”. Plus, with all of the dire warning that the bubble we are in might just be about to burst, its probably a good idea to try and stretch out your cash as much as you can.
The issue is, I think, is that most startup founders that you hear about in the startup media aren’t totally dirt poor. They typically grew up in a middle class – more like upper-middle-class – family, where they had time to – and were encouraged to, in some large or small way, to follow their dreams. They have the spare cycle to devote to working on the thing that they were good at. For example, Mark Zuckerberg didn’t tie up all of his spare time in a part-time job – giving him the freedom to code and further enhance his skills. Most startup founders still have that upper-middle-class mentality – their parents or families bring home the bacon, so they can be free to pursue their entrepreneurial dreams. As it was so well put in the TechCrunch piece, one of the reasons why these people are successful is that their families are already moderately successful, and they can leverage both their families money and connections in order to run a successful startup.
But what about the rest of us – those who are running a startup – but can’t get the family backing in money, time or connections? For us, at all about the hustle, and running lean. In fact, The Lean Startup is our bible, but sometimes, in this world of extravagance, where almost all of the media in the world focuses on the lifestyles of the rich and famous, the draw to be with the in-crowd is too great, and you are drawn to spend money when you don’t have to.
This could be the difference between life and death. That little bit of extra runway could be the difference between shutting down and the win you need to survive and thrive.
How do you do this? For one thing, you have to “think poor”. Despite being surrounded by all of this wealth, you simply can’t partake in it. Even if you have money in the bank, you have to think of every penny as precious: do you really need to pay for that conference? Do I really have to take Uber to that party – could I walk instead? Do I really need to give my employees free lunch – is there something I can do instead which won’t cost me anything? To be truly lean, IMHO, you have to “think poor”
Coming from an upper-middle-class background, you may have trouble thinking poor. If that’s the case, create systems which force you to be poor:
- Put most of your money in an account you can’t readily access. Give the keys to someone you trust
- Call the bank and lower your withdrawal per day/week numbers
- Get a credit card with a really low limit
- Every time you are about to spend anything on anything, ask yourself two questions
- Do I really need this in order for my startup to move forward? For example, you may not need to buy Ad Words if your product is enterprise software – you may need social selling
- Can I get this cheaper or free some other way, or can I barter for it
- Do I really need to hire someone for this, or can I or someone else on my team learn how to do it? Take sales, for example. While the best of the best salespeople do perform better, asking others on your team to put themselves to reach out and pitch your product to their networks might not be that much of a stretch and could bring you in enough sales to extend that runway as long as you need it.
There’s a lot more you can do, but these are the one’s I’ve found have served me well – been able to extend our runway as long as it needs to be extended. Of course, sometimes you may just have to pivot, or shut down, but at least “thinking poor” will help you stretch out your runway as long as possible.