How do you make sure you have money in the bank so you can eat and pay your rent while you build your startup?
Learn to invest.
Yes, that’s right, LEARN to invest. No simple tips or tricks, just a journey that will take you many years but is well worth embarking on.
“Hang on a minute,” I hear you say, “I’m an entrepreneur, not an investor.”
You need to be both.
- Investing uses the same skills, analysis, and mindset that you will need as an entrepreneur. The skills you need to spot a good business opportunity are the same ones you will need to find a good investment. You might as well hone your skills in both areas.
- Investments can give you cashflow and remember “cashflow is king.” Startups take time, they are not always cashflow positive from day one. Having cashflow can pay your bills without you having to work for someone else. This buys you the time your startup needs to grow without you starving or running to look for a pay packet.
- Investing diversifies your risk. Starting a business is risky. If you have investments, you won’t have to start from scratch in 1, 2 or 5 years time if everything goes pear-shaped in your business.
- Knowing you have cashflow for your personal life will take some stress off you, especially in the early days when the business doesn’t have any. This will lead to better decision making.
- And when your startup makes it big, like you always knew it would, and you sell it for 25 gazillion dollars 🙂 you will know what to do with all that money – if you have learned to invest.
Take one step today to learn more about investing. The learning is a lifelong journey.
If it is a new one for you, here are some good places to start:
- Read Rich Dad, Poor Dad by Robert Kiyosaki
- Play the Cashflow game for free online
Join the ConversationWhat resources have you found invaluable for learning about investing? Share with us in the comments. Or use them to create a little bit of extra motivation and accountability to get your action task for today done. And I would love you to join me on Facebook or Twitter. Image used under Creative Commons license courtesy of TaxFix
Investments can give you cashflow and remember “cashflow is king.” Startups take time, they are never cashflow positive from day one. Having cashflow can pay your bills without you having to work for someone else. This buys you the time your startup needs to grow without you starving or running to look for a pay packet.
I dont agree start ups are never “cashflow positive” from day one. I can be done and i have achieved it. This should read “not always” cash positive day one.
just a thought
You are correct Tim, as usual :-). I’ll change that bit.
You are an exceptional entrepreneur who has a huge amount of experience. Do you think starting a legitimate cashflow positive venture requires a reasonable level of skills, experience and knowledge or do you think even a newbie can do it?
There is no doubt in my experience that you need to have suffered to learn how not to do it. I think what is missing is fundamentally education at the high school level. We are taught maths at school, how to swing a hammer at work, but no-one teaches us how to run & fund our businesses successfully early enough in our lives to make a difference. Most just stumble along in the fog & mist. I am working with two clients with huge ambition but just need guidence on how to start without a bank rolled cash flow….just my opinion
I like the idea of investing, but in my case I invest in myself. Not stocks, et all.
I put 75% of my money into my main business and then 25% into a secondary start up (usually my own).
At least then, I’m not putting all my eggs in one business/basket so to speak!
And if some how both businesses turn out to be duds – then its probably best to go and work for the man.
Great advice – except that I disagree with the Rich Dad Poor Dad recommendation. I’ve seen a bunch of people go bankrupt trying his real estate strategies.
Exactly. “Rich Man Poor Man” is one of the worse financial advise you can get. It’s all unverifiable anecdotes and at times not accurate. Real estate is no longer what it used to be anyway…
I put Rich Dad Poor Dad in there as I think it is a great introduction for people who have never invested or been in business before. It is inspiring and delivers broad concepts about wealth creation in a digestible and easily understandable way. I know it has been the catalyst for many people’s wealth creation journeys, including mine.
However, you do need to get more learning from lots of sources and really know what you are doing BEFORE you invest. The same rule applies as starting a business – do your due diligence thoroughly first and you are less likely to go under.
And keep in mind that the real estate market is not the same everywhere around the world or even everywhere in the same country or city. Certain parts of the US might suck as RE investments at the moment, but there are plently more places where people are doing well out of RE.
As both an entrepreneur and avid investor, I wholeheartedly agree that entrepreneurs need to learn how to invest. It’s much easier to operate when you are pulling start up capital from your portfolio rather than a loan or a credit card. At a bare minimum, even the most aggressive entrepreneur should be maxing out their Roth IRA each year provided they are not over the income limit.
Couldn’t agree more. In most countries bootstripping entrepreneurs can’t find anything within their portfolio to invest in.