Whether it's long hours, late nights or surviving off just the most basic of staples -- we've all heard the stories of startup founders working toward Ramen profitability. Although these tales are popular, and sometimes even glamorized, are they a necessity for anyone looking to start up?
I don't think so. After all, I'm an entrepreneur. My startup is less than a year old. Yet, I live in a good-sized apartment in a nice area of Toronto. I have an iPhone, a couple of computers and an iPad. I have patio furniture and I host dinner parties. I rarely buy groceries, choosing instead to eat out or on the go. Recently, I made a five-digit investment in fellow entrepreneur Katherine Hague's startup, ShopLocket. And despite the fact that university cost me $100,000, I've been financially independent since I moved out at 18.
Is it luck? Partially. But most of it comes down to being financially savvy. Here are three tips to help you pursue entrepreneurship without having to resort to Ramen:
- Start young I started working at McDonald's the day I turned 15, and saved half of every paycheck I ever received. I also saved at least half of what I earned at the summer jobs I held while at university. In high school, I applied for dozens of scholarships, and received several. Despite the fact that university cost me a boatload, I still graduated with over $30,000 in the bank. That's a good starting point for any young person looking to avoid the corporate handcuffs and pursue entrepreneurship. (Of course, I spent most of that cash on a 15-month journey around the world, but that's another story.) If you're a university or college graduate, it's too late for this piece of advice to be helpful, but it's not too late for you to share with young people the importance of graduating without debt. It is the thing I credit most for the lifestyle I have today.
- Lengthen your runway When I arrived back in Toronto after 15 months travelling, my savings had whittled down to about $4,000. Since my family isn't from Toronto, moving downtown also meant taking on the responsibility of paying rent. So, I cut corners. I lived with roommates, and I found a corporate gig that would help me save some cash. It was a year before I had saved enough to even think about moving on. Basically, never stop looking for ways to lengthen your runway — that is, the time you'll need to get your business idea off the ground -- even when you're working on your startup fulltime. I am always open to taking on interesting projects and freelance work, and usually have two or three projects going on at a time. I have a friend who rents out her apartment on AirBnB explicitly to lengthen her runway. There are lots of ways to make extra cash -- keep your eyes open for them.
- Live lean To me, living lean isn't about not spending money. It's about spending money on things that you value. It takes time to figure out what these things are. Despite what I wrote above, you'd be surprised by how low my monthly expenses are. And when I do spend money, I'm happy to do it, because it's typically on something I value highly. For example, I pay a premium in exchange for the opportunity to live alone. But my home is my office, and I care about it being a place where I can come and go as I please, and where I won't be interrupted.
Of course, if you really want to sustain your Ramen noodle-free lifestyle beyond a few months or a year. You have to figure out your business model. No one expects you to get it right the first time, but all startups eventually have to find a sustainable way to generate revenue and profit. That's the real secret to entrepreneurship without the Ramen noodles.