“Money is the root of a thousand and one evils” from Bushido, Samurai Ethics and the Soul of Japan, Inazo Nitobe. Although this book is written more than a century ago, we could not agree more. Just recently it was announced that Karhoo, a company offering similar services to UBER closed down after having a spent $250M!.
If you are starting a company because you want to be rich, you might want to think again. Until you become rich as you dreamed -we don’t want to be pessimistic but there is a high chance that you will never be- there might be a very long road, during which you need to go through uncertainty, dilemmas, decisions and perhaps poverty. If you cannot cope very well with stress and if you are used in a life of luxury (what is a luxury is completely subjective and depends on our life standards and experience) and if you do not have capital of your own or secured from someone else, you might NOT want to start your own company.
Anyway… Back to our subject; money. It might be a good idea to write down your expected expenses till your company starts trading. It is actually a very good exercise for the rest of your every day expenses. Before you write something in that spreadsheet, think;
* Photo by Kstudio – Freepik.com
We guarantee that if you answer these questions sincerely after you have done your research, you will probably save A LOT of money. Also people or companies you want to borrow money from, they will ask for this spreadsheet. They call it “cash flow projection” or something -that sounds equally important- among these lines.
But how much money do you or your investors need to spend till you have your Minimum Viable Product (MVP)\your demo\your office\your store? The answer might give you a rough idea of how much money needs to be spend in order to start your company. Despite that writing down your expected expenses is a wise move, and in spite of the fact that you did the best financial planning you could think of, that does not mean that you will manage to calculate exactly how much money you will end up spending. If you do, please get in touch with us. We need to talk. And the spreadsheet you made and update frequently will only give you a rough idea of your expenditures because as you will experience, expenses just come up.
When we started Academous, we tried to keep it simple. The question was how much money is needed in order to launch the website. The answer was easy; the minimum. Our shopping around indicated that we needed about 15K to 20K, most of it to be spent to develop a fully functional website. Not a lot of money one might think. But… we were working full time on the Academous project. So if you work full time on your company, you will probably need to add your living expenses on top of the expenses for your demo\MVP\office\shop\. Still not a lot of money but the big question is;
Where do you find the money?
We will answer this question in our next post. Otherwise this would have been a long, boring post.
Thank you very much for reading! We hope you enjoyed it!
* Post copied from Academous blog.