Tropical MBA: Entrepreneurship & Founder Lifestyle

#760 - The 7 Most Common Money Mistakes for Bootstrappers

Jun 20, 2024

Dan and Ian explore common money mistakes among bootstrappers, emphasizing the significance of personal money attitudes and owner compensation. They discuss the importance of starting early, avoiding being under-invested, and the need for stable cash flow. Practical insights include setting a salary cap, focusing on client revenue, and investing in oneself before entrepreneurship.

51:42

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Quick takeaways

Craft a sustainable financial model to avoid startup spending mindset.

Understand personal money attitudes for healthier financial approaches in business.

Develop solid financial structures aligning with business goals for better decision-making.

Compensate owners based on market value to ensure balanced financial models.

Deep dives

Avoiding Startup Spending in Bootstrapped Environment

Spending like a startup in a bootstrapped setting can lead to failure. To sustain bootstrapped businesses, it is crucial to determine the spending style and stick to it, avoiding characteristics of startups that may not align with the current business model.

Finding Success in Tapping into Ancient Rivers of Money

01:18

Set a salary cap based on labor efficiency ratio

01:30

Intro

2min

Influence of Childhood Experiences on Money Attitude

9min

Discussing the importance of creating valuable content and stable cash flow in a business

2min

Mastering the Art of Cash Flow: Startup vs. Bootstrapping

15min

Mistakes in Building a Job Board for Remote Companies

3min

Common Money Mistakes by Bootstrappers

21min

Dan and Ian discuss the biggest money problems they’ve seen in their own business and hundreds of other bootstrapped businesses.

Learn how to craft a sustainable financial model, the importance of owner compensation, how to avoid being under-invested, and more.

Dan & Ian’s Stuff:
Our book: Before the Exit
The Newsletter
“The DC”
DC Accelerator
DC Black
Global events
Hire remote talent
Find a remote job
Listen on YouTube
Follow on Instagram
@TropicalMBA
@AnythingIan

Chapters
● (00:00:45) Introduction and Setting the Stage
● (00:01:13) The Importance of Money Attitudes and Metaphors
● (00:16:08) The Startup Spending Mindset in Bootstrapped Businesses
● (00:29:39) Focusing on the Wrong Problems
● (00:31:25) Strategies for Affording to Start a Business
● (00:34:28) Starting Early and Investing in Yourself
● (00:38:18) The Importance of Owner Compensation
● (00:41:15) Setting a Salary Cap
● (00:45:12) Avoiding Being Under-Invested

Links:

Past guests on TMBA include Cal Newport, David Heinemeier Hannson, Seth Godin, Ricardo Semler, Noah Kagan, Rob Walling, Jay Clouse, Einar Vollset, Sam Dogan, Gino Wickam, James Clear, Jodie Cook, Mark Webster, Steph Smith, Taylor Pearson, Tommy Griffith, Justin Tan, Matt Gartland, Travis Jamison, Ayman Al-Abdullah, Tynan, Lucy Bella Simkins, Brian Balfour, Nick Huber, Mike Michalowicz, Greg Crabtree, Jordan Gal

Additional episodes you might enjoy:

Unlock Wealth Through Financial Fluency

The Secret Weapon for Pricing Power

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