Asked on 03 Dec 2019
How much would founders set aside at the beginning stages for their startups? What is a good amount that would help me to mitigate the different risks?
I don't believe in those emergency fund stories. You ask 10 startup founders about how much they pay themselves and how much savings they have you will hear stories of poverty and extreme bootstrap.
Mark Zuckerberg maxed the credit card limits of cofounder Eduardo Luiz Saverin to start facebook try telling them abt the benefits of keeping 6 months emergency cash and buying adequate insurance.
Your question require more details. How much manpower do you need? how much development do you need? How much marketing do you need?
I give an example of a business I started years ago. We used abt less than $8000 in the first week. Before 1st month we realised its going to be profitable as an ecommerce store. I borrowed whatever I can, bootstrap by doing collection, delivery on my own car, no deliveryman, storage at where I can find cheap or free storage.
Within 1 year, I was close to $100,000 in debt.
Tell me again about startup keeping 6 months in emergency cash.
Fastforward to today, I am starting another business. It was estimated at first to cost me $10,000 per month. By 4th month I was burning $17,000 a mth, a gross overestimate of what we need.
So you really need to sit down and calculate
bare minimum what cofounders need to survive. BARE minimum
minimum staff needed be it technical guys, marketing guys, operations etc.
salary, try to have 1 month in advance for their pay haha sounds easy? :)
office rental. good news cosharing office is big now
marketing bills- or how to bootstrap. go read how carousell founder go around DIY promoting carousell to everyone
It is going to be a tough financial journey but I promise you- its worth it.
Top Contributor (Jan)
Firstly, understand our personal cashflow. All things considered, we must have a clear picture on our own accounting. This is how I do mine: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
From there, have at least 12 months expenses as emergency fund. This is to ensure sufficient liquidity so that we will be able to focus on our business needs.
Depending on the scale of the business, I will have at least 12 to 18 months of business expenses available in my business account. This allows sufficient liquidity to improve my business strategy and to focus on building a successful business.
Here is everything about me and what I do best.