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How a cup of latte taught me to bootstrap my companies.

Posted by Xue Mei Rhodin on 13 July 2014

How a cup of latte taught me to bootstrap my companies and why financial education will effect your attractiveness to investors.

 

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The status of financial education is catastrophic.
I mean, Ptich Black sci-fi monster cave kind of scary and dark.

Most people get no financial habits from home to help them understand money. And school does nothing. NOTHING. Learning to calculate does not equal being able to understand the risk of buying an apartment, how to save for retirement and study the market.

People don't even know how they spend their money a regular month.

The debt from completely useless loans like consumption textmessage-loans etc have skyrockeded the last couple of years.

Why you should learn to bootstrap your personal finances.

I did an experiment when I was still at the university.
This was before we had all of these fantastic tools to help us out. I thaught myself to see what I actually spent money on and what consequences it had.


I counted everything I bought for three months. the result? I spent 414 USD (305 EURO/ 3000 SEK) a month on LATTE. Over-prized coffee. As a student. It chocked me.

An experience that stuck with me through out the years. I sat every day at my favorite café, studying. And I loved it. But the experience was not worth that much money. Not to a student. It was a learning experience. That kind of shock-moment you need for something to stay with you for the rest of your life.

I think of it as "Latte Money". Irrelevant consumption that is not evergreen and that doesn't provide anything for the long perspective. I look at something I want for my company or myself and then I ask myself "do we really need this? Will it make my company or myself money or is it just consumtion for the moment?". Is it just Latte Money?

I did a lot of experiments around income and money during that time. To challange myself to see the value of things around me. I read a lot on personal finance books and learned what the experts knew to avoid. I felt it was important for my development as an entrepreneur to really understand money around me as a person, so that I could expand my context in terms of money as an entrepreneur too. To understand what old myths about money that I'd learned and needed to un-learn.
It's helping me every day to see things others don't see and to design my life in a smart way.

Why bootstrapping experience matters to your startup and to investors.

I managed to bootstrap all of my companies. Actually non of them ever lost money. And I've had companies since I was 18 years old. Something that I can tell you will impress an investor. They want to see that you as an entrepreneur can manage the money they risk by putting them in your company, and effectively, in your hands.

What it tells the investors is "if this person can do this with a company without any invested money, imagen what he/she would do if I put 100 000 USD (73 560 EURO) in their hands." Probably a lot more than someone who never had any experience from bootstrapping before.

By having bootstrapping experience, you have the skills to make money work harder for you.

Have you challenged yourself in your views about money? What did you parents teach your or didn't teach you about money? And can you make it work for you or a company?

Recently I sat at a pitch event in Stockholm and the investors on stage where asked what they thought startup-founders where lacking the most. Their answer was "financial knowledge". And as CEO of Cedarwood, where we help startups and companies not only with business advice but with financial strategy and CFO's specfically, we see the need.


Start educating yourself. Here are 4 apps teaching you how to bootstrap your personal finances.

 

 

 


xuemeirhodinphotoXue Mei Rhodin is a multi-entrepreneur, founder/CEO and business strategy adviser at Cedarwood.co and several other companies. When she’s not speaking to an audience, sketching roadmaps for her clients or building new companies, you’ll find her with the bulldogs, the newest FPS games and the champagne.
Follow her on Twitter, LinkedIn, Meetup.com, AngelList, f6s and Google+

 



Got your own story about boothstrapping lessons? Comment below!

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