Personal finance for startup founders: Segregate expense accounts, keep buffer, make first sale quick | FEMYM | The Financial Express

Personal finance for startup founders: Segregate expense accounts, keep buffer, make first sale quick | FEMYM

About using savings, Radhika Gupta recalled how she used around 95 per cent of her savings while starting off. “It is not something I would recommend,” she added.

Personal finance for startup founders: Segregate expense accounts, keep buffer, make first sale quick | FEMYM
The panellists were Naiyya Saggi, Co-founder, The Good Glamm Group; Priya Mohan, Partner, Venture Highway; and Radhika Gupta, MD & CEO, Edelweiss AMC. Image: PTI

Keeping business and personal expenses separate from the beginning, keeping enough buffer amount so that it does not affect your mental health, and making the product market ready as a priority, are some of the key things to mind for startup entrepreneurs, said industry leaders at the recent edition of FinancialExpress.com’s ‘Manage Your Money’. The panellists were Naiyya Saggi, Co-founder, The Good Glamm Group; Priya Mohan, Partner, Venture Highway; and Radhika Gupta, MD & CEO, Edelweiss AMC.

Watch full conversation: Personal Finance for Startup Entrepreneurs

Manage Your Money - Startup Life : Juggling personal & business finances

Plan living expenses, initial cash flow into the startup

Speaking about the planning of the initial cash flow while kickstarting a venture, Radhika Gupta, said, “Firstly, you should know the money you need to put into the business.” About using savings, Radhika Gupta recalled how she used around 95 per cent of her savings while starting off. “It is not something I would recommend,” she added. Radhika Gupta recommends parking the savings into more conservative instruments rather than volatile assets such as equity investments. She also recommended planning living expenses and using up savings for the startup venture to an extent where the pressure of lifestyle does not affect the founders’ mental health.

Also Read: Founder’s salary, moonlighting, importance of domain expertise – things to know for startup entrepreneurs

Where to spend money in the beginning, where not to spend

Talking about the most necessary expenses when starting the business venture, Priya Mohan suggested giving first priority to analysing how close the business is to being market ready. “The primary priority is knowing about these aspects, which in our investor lingo is called the product-market fit scenario. How much you know your customers, how ready your product is.. is something to focus on,” Priya Mohan said. “The money becomes the length of your leash. So what you need to do here with the money is to be able to experiment and get closest to the product-market fit scenario. Keep fixed expenses as low as possible,” she added.

Also Read: Raising funds vs bootstrapping your startup? Zerodha’s Nithin Kamath, Droom’s Sandeep Aggarwal discuss | FEMYM

How to allocate reserve funds when starting up

Naiyya Saggi explained the allocation of reserve funds to allocate to business and personal expenses. “Having between about a year to a year-and-a-half of basic coverage including your rentals and personal expenses is crucial to factor in,” Saggi said. In addition, Naiyya Saggi noted that having a health care cover for yourself and your family is also necessary. She further said that one must have these funds in a format that is easily accessible.

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First published on: 06-11-2022 at 15:01 IST