Why it is important to master your personal finance before you startup or think of the idea of starting up. Here's why...

I have been talking about many things about #startupsucess and #startupfailures of late.

But today, I want to talk about the most important factor which should be taken care of before initiating the idea to be an entrepreneur.

Which is how to manage your personal finance before starting up.

Here, I will be talking about my experience and how did I make it.

After successfully running my startup since 2013[I deep dived in Feb-2022-full time after leaving my corporate job, till then I was running this startup consultancy firm as a side hassle] I learned a very important lesson which I want to share with you today to all my newsletter subscribers.

All these years, I understood explicitly that the success of your startup largely depends on how you manage your personal finance. When you finally quit your full-time job and deep dive into your business, your business finance will add to your personal finance.

I started this business in March-2013.

That was the time I was working, and I thought to use my skill of consultancy to help people find out the right career path and also consult SMEs and MSMEs to get clients and in turn grow as that came naturally to me thanks to my growth marketing background and the job which I was doing as Sales, BD and Marketing.

I did not know much about investment or mutual funds in those days. Firstly because I was not aligned to or I was showing laziness to learn new things and secondly, I had very less appetite for risk.

I used to think, all my money will go if I do not understand the market and blindly invest in it.

So, I opened 3 account-1in SBI, 1 in AXIS which was my salary account made by my company where I was working and one in UCO bank[where I met my GF; now she is my wife].

The UCO bank account was my savings account. In that account, I use to only do a credit and forget that the money ever existed.

I used my SBI account for emergency funds which can be needed in any kind of emergency. I used it to replace my credit card. I desist from taking any credit card.

Well, here is all about the technicality of the process.

Now let’s get straight to the point of why it is important to do it in this way.

Ever since I lost my first job, I made a mission in my life that I would create something which will help my country to eradicate unemployment.

The mission of our company is to impact 15 Crs' lives by 2035. We want to solve the unemployment problem and I will do whatever possible to make this mission successful so that these 15 Cr. Life does not sleep hungry at night, and they have a well-paid and secure jobs with them.

I started this journey full-time in Feb-2022, bootstrapped from the amount I had in my UCO Bank account.

The total sum was Rs. 3.12 Lacs when I quit my job and started this mission.

Now, why did I do it?

When you are living your life, the cost-of-living expenses are monthly. Rent, EMIs, Electricity, Phone bills, and so on.

One of the reasons why jobs are so attractive is because they pay a monthly salary and it takes care of the monthly bills.

That's why passive income such as rental income is so attractive because it yields a return every month.

Which I did not have.

When you become an entrepreneur, you will not have a consistent monthly income. Some months you will have a lot of revenue coming in and some months, there will not be any income. That will make you go on a rollercoaster ride in the beginning.

You have to pay yourself for your business and that also impacts the growth of the business. Many people cannot handle such kind of stress and that's why they never get out of the rat race. A good corporate job that pays more than your monthly living cost seems like a drug that you cannot withdraw from.

To make this work, you need autonomy in decision-making. You need to tell your friends and family that you have 100% conviction in the way you are approaching your finances and that you will make it work.

Many times, for most men, the "wives" are not going to allow such financial planning. Because "What if the business doesn't work?"

[Which was not in my case. My wife supported me with all her trust!]

There is a risk, yes, but it is a calculated risk and a risk worth taking. If you blow away 30-50 lakhs for 3-5 years and end up with a business that has failed, you can always get back to a job and nowadays many jobs will consider your entrepreneurship history as work experience.

The amount of experience you will gain in 3-5 years trying to make a business work is an MBA in itself. Top MBA colleges charge as much as 30 lakhs for a 2-year course and believe me, you will learn 10X more than an MBA course by running your own business.

You need to have conviction in yourself and the autonomy to make decisions. Do not ask your friends and family what they think about your ideas because if you don't have conviction in yourself, they wouldn't have it either.

Leave them out of it.

You are not only building a business for your own future but also your business can impact many lives and make them better and you have to take the risk, the responsibility, and the action to get you there.

You Can't Fail

There is no way you can fail in the first 3-5 years of the business because unless you stop working the business has not failed.

Businesses fail because the founder runs out of money and is no longer able to sustain himself/herself. Then he goes on to search for a job or some other opportunity.

If you have managed your personal finances well, you can keep going on. This is a marathon and not a sprint. Even if your business is struggling to make profits, and there are no employees, you can continue to work on your business and keep investing your time and energy into it, as long as you can sustain yourself.

And just in case things don't work out the way you expect them to, all you need to make is 50 lakhs in the first 5 years to sustain you for another 4-5 years. Just make sure you never give up and you will never fail.

That's the kind of mindset a warrior businessman has and you will be that. There are no easy ways out of this. In fact, if it was so easy, then everyone will be a successful entrepreneur, right?

Let me tell you one thing straight, in business-“the only way out is the way out”.