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  • Starting Up: You Better Read This

    What happens when your paychecks stop and your business isn’t bringing in steady cash flow or locking in meaningful investment? You live on personal savings. To give your venture the best shot, prepare for that reality before you quit your day job.

    What happens when your paychecks stop and your business isn’t bringing in steady cash flow or locking in meaningful investment? You live on personal savings. To give your venture the best shot, prepare for that reality before you quit your day job. You can get started with this checklist.

    1. First determine how much you will need to cover personal expenses while launching your startup. Mint.com has a good monthly budget calculator. Budget for 18 to 24 months without a salary, to be safe. That length could vary, depending on how quickly you earn a profit or get a round of financing.

    It took Sally Jones and Jill Friedman 18 months to raise $425,000 from friends, family, and angel investors for their first venture, Giddy, a manufacturer of kids’ snacks in San Francisco. They each invested $10,000 and dipped into personal savings to cover living expenses before getting that first round last November. “However long you think it will be before you can start drawing a salary, double [the amount of time], and then add some more,” says Jones.

    2. Be sure to include your business partners in the conversation. Discuss not only the amount of capital they are planning to invest in the startup, but also how long they can go without drawing a salary. Their financial well being is as relevant as your own.

    3. To make sure you can last until cash starts coming in, get lean. Start by making a list of expenses for the past three months; most credit cards offer detailed payment activity that can be downloaded to Excel or QuickBooks. Scrutinize expenses one by one, identifying those you can do without. Jones renegotiated her rent, cut back on restaurant dinners and beauty treatments, and canceled her gym membership. She also deferred her student loans.

    Read Full Article in Bloomberg/BusinessWeek.com

    Good luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals
    calvin.wilson1@verizon.net
    http://twitter.com/Upstart__Nation

    Filed Under: Startup/Entrepreneur

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