Building your business without going broke

As a founder, it's important to consider your financial status before jumping into building your business. There’s a strong chance you’ll become obsessed with your idea, product, or service and may find yourself detached from reality while on this quest to bring something amazing to the marketplace.

Reality is going to slap you in the face with bills that don’t stop as your costs pile up. Launching a business is exciting, but without financial planning, it can quickly become overwhelming. I’ll walk you through how to assess your financial health and start knitting a safety net together—whether or not you’ve got financial reserves on hand.

Decide whether to keep your job or go all in

A universal question every entrepreneur faces is: should I keep my job while building my business, or go all in?

I prefer having cash flow so that I can pay my bills and I’ve taken both approaches. When I first took the plunge, I went all in and had no plans of looking back. But things got challenging and I realized that even though I’d chosen to become an entrepreneur, I needed another source of income.

A lack of funding doesn’t mean a lack of opportunity. You can still make things happen—on your own terms

Jasper Smith

So I took a job. Within a year, I started getting that itch for independence. Unfortunately, my employer at the time didn’t want to grant me the flexibility I needed, so I left. That experience taught me that having a job wasn’t the answer for me. But continuing to seek income did appeal to me.

From that experience, I began to seek out contracting opportunities. These would pay me the income I desired (or enough income where I could cover my fixed expenses each month) and I wouldn’t be an employee. I didn’t have to devote all my time to their causes and I would know the level of commitment needed to fulfill my contractual obligations. This was the perfect way for me to juggle building my business and also ensuring that I didn’t become homeless.

Some will judge you for not going all in, while others will say you’re ridiculous to leave a steady paycheck. Try your best not to worry about what everyone else thinks about the choice you make here. Unless someone is truly invested in seeing you and your business flourish, it’s just their opinion. Everyone’s got an opinion, but if that opinion isn’t connected to some type of financial or other business related support, it shouldn’t hold much space in your mind. You have to do what you feel is in your best interest. If holding down a job is required and you can manage it and work on your business, do it. If leaving that job and going all in is what’s required, do it.

This is just one of the many financial realities founders need to consider before taking the leap. The reality is it’s not a binary decision and I know you’ll find your own happy medium.

Lay the financial groundwork before you leap

Sometimes, we need to hit the pause button before we jump off into the deep end. Yes, you should take the leap, but I also encourage you to seriously consider personal financial planning before doing so.

Starting a new venture is stressful‌. If you add financial challenges on top of that, well, your mettle will certainly be tested. But maybe you’re one of those founders who needs that struggle to keep you hungry—sometimes literally—and motivated. You decide.

So, where do you start? The first step would be to take inventory of everything you own and everything you owe. The tool to help support you in this first step is called the balance sheet. This will help you capture everything you own (assets) and everything you owe (your liabilities.)

On the assets side, ask yourself if you have enough ‌cash reserves to support your current lifestyle. It’s a good idea to know how much “runway” you have because your business might bring in zero dollars in revenue for an indefinite amount of time after launch. If money isn’t in cash, like a savings account, do you have investments that can be liquidated to generate cash?

I think about a good friend who opened a restaurant years ago. That industry is brutal, yet she pursued her passion, which was making authentic Southern cuisine. Prior to launching her restaurant, she worked as an attorney. That work can also be a grind, but she knew one day she wanted to open a restaurant. So, aside from the billable hours she was doing each year, she received a large bonus from her firm. Each year, she placed that bonus money into her “restaurant savings” account. By the time she walked away from her job, she had saved enough money to have close to three years worth of runway. Even if you don’t have such large payouts, reducing your monthly personal expenses and setting aside manageable amounts each month can provide a suitable cushion.

On the other hand, I have a friend who also had the entrepreneurial bug, but he didn’t have an extensive runway. He worked for years as a corporate warrior and on a whim launched a product that caught some initial buzz from day one. Tasting that early success kept him from acknowledging the fact that to be successful, you have to keep the buzz going—and generate revenue. His runway supported him for about five months and those months flew by faster than he thought. From there, he cashed out his old 401(k) plans—something new entrepreneurs often do—and took out some personal loans. This added pressure on him to deliver. He made it work, but his experience was night and day from my attorney friend.

Assess your financial resources and liabilities

When it comes to investments, consider mutual funds, stocks, exchange-traded funds (ETFs) and so on. Maybe you have an old retirement account you could consider cashing in to provide you with the money you need during your launch phase. It’s easier to make decisions as a founder when you know what you have to work with, versus having to scramble and figure things out on the fly. Again, how you proceed is up to you.

Launching a business is exciting, but without financial planning, it can quickly become overwhelming.

Jasper Smith

On the liabilities side, take stock of any outstanding debt. You’ll still need to make payments while running your business. Unless you plan to pay it off quickly, it’s important to know the minimum amount required each month to stay on top of your obligations.

Your credit might be a valuable tool if borrowing money is an avenue you need to pursue. Pay a visit to annualcreditreport.com and download your free credit report from Experian, Equifax and TransUnion. This website doesn’t give you a score but if you’re dying to know you can pay for it. I’m more concerned with you knowing what’s being reported about you versus the score. While this site is popular in the United States, I’d recommend anyone (citizen or not) to log on and check to see what any of those three entities are reporting about you. All three institutions have a global presence, and honestly, it never hurts to know. If your search comes up empty, then you’ll know they don’t have data on you.

Once the balance sheet is complete, the next tool I would recommend is the budget. I recognize that budgeting isn’t the most exciting activity, but it’s necessary. As a founder, you have to know what your fixed and variable expenses will be each month. Knowing these numbers will help you determine what level of income you need to earn each month.

This activity might be easier if you’re a single person with no kids or if you're single and have the luxury of living in a situation where you have minimal bills. But what about the founder that’s married and has a family to support? The budget is definitely going to be more challenging for you.

The key is knowing the minimum income you need to cover expenses. Completing your budget will also help you trim some of the excess spending you might find yourself doing. Any extra money you find could be saved or applied to the business.

Starting up without a financial safety net

Not every founder starts with cash reserves, investments, or a partner bringing in steady income. If you’re building your business without a financial cushion, don’t let that stop you. Here are a few ways to move forward:

• Find alternative funding sources: You don’t need a pile of savings to get started. Look into microloans, crowdfunding, grants, or startup competitions. There are plenty of organizations out there offering funding without requiring you to give up equity or take on massive debt.
• Bootstrap with a lean approach: Get creative. Pre-sell your product before launch, trade your skills for services you need, or keep a side hustle going while you build your business. A little extra income can go a long way in keeping things afloat.
• Start with a low-cost business model: Not every business needs a big upfront investment. Digital products, service-based businesses and passive income streams (like content creation or affiliate marketing) let you start small and grow over time.
• Tap into free and shared resources: Don’t overlook the power of community. Co-working spaces, incubators, mentorship programs and free online business tools can help you build momentum without draining your wallet. There’s a lot of support out there if you know where to look.
• Set realistic expectations: Building a business without a financial safety net takes time and patience. It might take longer to gain traction, but that doesn’t mean it won’t work. Stay adaptable, manage risk wisely and keep pushing forward.

A lack of funding doesn’t mean a lack of opportunity. With the right approach, you can still make things happen—on your own terms.

Bottom line: as a founder, the money is and always will be important. As your business grows, money may not be the main focal point. But, when you reach higher levels of success, you’ll be able to reflect on how having a strong financial foundation from the start, fueled your success.