Startup Decisions

When entrepreneurs startup a business they usually build up a team which shares the same vision and responsibilities but in case it is a sole proprietorship, then you are solely responsible for the major decision-making of your startup like what share of your returns should be kept with you and what should be reinvested back into the business. Though it sounds little scary but for entrepreneurs, starting a business is like a long-term investment which will give rewards in terms of wealth & equity so, he /she is ready for any sacrifice.

Some criteria on how to do decision-making for your startup as a sole proprietor.   

Tighten Yourself

Success does not come easily; it always demands hard work, patience and sacrifice. It becomes a little easier to get there when you have family members working for you, generous investors to back you or fat savings to get you through the financial stresses. But you may well have none of these. Without a safety net, business owners must be prepared to make the tough choice of compromising with their lifestyle by slashing down on personal expenses until the company turns profitable, which usually takes years. Kiran Nandkarni, CEO, Kaati Zone says, “You pay your employees first and if there’s anything left, then you get that. That’s life as an entrepreneur.” In the initial phase, some business owners rely on credit or loans, thereby piling up debt that delays profits even more.

Focus on Long-Term Growth

The most common mistake which entrepreneurs make while starting a company is having a distorted vision of making big money fast, and treats the business as a personal piggy bank. Overpaying yourself especially in the early years can surely drain revenue and contribute to the failure of your business. Seasoned entrepreneurs know it well that you either pay yourself or you reinvest in your business. You can’t do both. Rahul Mittra, CEO, Brandsmith says, “Being mindful of long-term growth is the difference between an employee and a true entrepreneur”. He further added that, “The business owner is looking for a longer term reward in the form of equity and wealth.” One should avoid the trap of comparing your salary to what you could make otherwise; that’s irrelevant when compared to sagging profits.

Alternative Means of Earning

Money is not always the only means of return. Your compensation can be in various forms. In order to defer earnings until your company turns profitable reward yourself with bonuses, stock options or commissions. And then there are costs that can be treated as business related expenses like leasing a car, phone and utility bills, a percentage of your rent or mortgage payment for a home-based business, and more. You should also focus on minimizing your personal taxes as that will add on to your savings which could prove to be a valuable investment.

Startup as a Part-Time Entrepreneur

A regular paycheck will help keep startup debt to a minimum and avoid cutting into profits that could be used to grow your business. Use your evenings and weekends to launch, and gradually build your dream.

If living without an income isn’t an option, set your priorities by thoroughly reviewing your personal spending habits and lifestyle. But be conservative.