I have the distinct privilege (or misfortune - depending on your vantage point) of heading two failed startups. In my adventures, one of the key ingredients of a practising freelancer or founder of a startup is having runway money for the company.
However, the common mistake which startups and freelancers repeatedly make is they confuse their own money with the money of the business. Startup Founders feel that if the company runs out of money, it's game over. Perhaps this is why startup funding is such a celebrated event in India.
The truth is far from it. Your startup won't fail because it ran out of money; it'll fail because YOU ran out of money. Startup founders are so keen to look into the finances of their company so carefully, that they forget to show the same introspect for their own money. And therein, as the bard would tell us, lies the rub.
Starting up as a business or a career freelancer is a lot like living in a bunker during a nuclear holocaust. Your bunker is your personal life. The world outside is your business. First and foremost, you need to ensure that you have all the vital supplies before you begin. You have to make sure that you are sufficiently fed, can support your obligations, and can survive - despite the savage torcher your business suffers every day on the outside.
The world is destroyed, and you are the last hope for humanity. However the world will keep turning, but you'll perish if you don't eat and drink. The world needs you to be healthy and alive to save it. So keep yourself prepped, and supplies in full.
It is common to see that the entire startup operation depends on the financial health of the founder. More often than we'd like to admit, a startup goes through severe damages (key employees quit, client defaults on payments, etc.) and the business needs time to recover. The founder needs to be prepared to hustle through the long haul and revive the business. It's situations like this where the founder's supplies get tested the most, and it is important for you to be ready.
The best way to ensure that you are financially afloat while heading your startup, or commencing your freelancer career is to plan and keep your finances in place in advance. However, if things are getting tight, then there are other ways to secure your finances.
There is no rule which states that your income should come entirely from your startup. Founders do all sorts of things to keep them afloat during the tough years of startup.
The founders of Airbnb decided to raise some personal money and so, they set out to the Democratic Convention in 2008. They sold boxes of scrumptious candy with fancy titles such as "Obama O's" and "Cap'n McCains" for $40 apiece. Their hustled helped them raise $25,000!
Personally, I wrote a book on Demonetization which worked in my favour every time the topic became hot in the media. I approached many public and college libraries to stock a few copies since it is a piece of India's history, and extremely relevant in the times we live. The royalties don't hurt one bit. I'm currently working on my next book!
Many founders build websites for others at a nominal cost. You can always go to sites like Fiverr, Freelance, etc. to sell your services. Go to co-working places and approach their team with your skills. Consulting gigs is typical as well.
Know when to stop. Never forget that every startup comes with an opportunity cost. If you hadn't left your job, how much money you would have made in 3 years vs how much money did your startup make for you the same time - this is a critical question to ask yourself.
Some problems do take longer to solve - and this is an absolute fact of many startups. If you are mentally prepared to pursue the journey of hardship - then the longer you can keep yourself fed, the more time you'll have to solve the problem. It doesn't matter if you are the only one in your business - sometimes there needs to be someone present to figure out what the next step should be. In any situation, you should not lead your company to a cliff and throw it into the abyss because you can't afford to show up anymore.
-- Written by Shobhit Dixit. The author works for a startup called "Albert Pinto" (#ProjectAlbertPinto) which is under development. The app offers financial advice to reach your goals. Follow the updates on Twitter and Facebook