Founder Mode is a weekly newsletter for builders—whether it’s startups, systems, or personal growth. It’s about finding your flow, balancing health, wealth, and productivity, and tackling challenges with focus and curiosity. Each week, you’ll gain actionable insights and fresh perspectives to help you think like a founder and build what matters most.
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Why Conservative Cash Management is the Key to Startup Survival
Published 7 days ago • 4 min read
The Psychological Price of Bootstrapping: Being careful and and extra conservative with cash
Welcome back to Founder Mode! Today, I want to talk about bootstrapping and why we must be careful with cash.
Happy 4th of July for those in the US
As many of you know, bootstrapping a business doesn’t come with the luxury of a big cash buffer. Every dollar counts, and there’s no room for careless spending. It’s more than financial discipline. It’s a shift in mindset. This change helps you thrive. It lets you build a sustainable business, not just survive.
This week, I met with my Executive Assistants (h/t Athena). We talked about why tracking cash flow is important. Understanding the hidden risks in your cash flow became a key topic. When capital is limited, being proactive is key. It helps your business not just survive but also grow steadily over time.
The Constant Vigilance Required in Bootstrapping
Without external funding, it can be tough to keep track of every dollar. Only spend money on what your business really needs to grow. Proactive cash flow management is crucial here.
Don’t just check your bank account balance and wish for good luck. Instead, look closely at your finances. It's important to know where your money comes from and where it goes. This helps you control your business better.
We’ve all heard the phrase "cash is king." In bootstrapping, that’s truer than ever. You need to be aware of every incoming dollar and be strategic with how you spend it. This doesn’t mean you can’t invest or take calculated risks—it just means you need to do so mindfully.
For tools we use Mercury Bank and Xero for accounting. With 10+ companies it's simple to have common setup for each to save time but also ensure we can share resources like bookkeeping.
What We Talked About This Week: Understanding the "Dark Side" of Cash Flow
This week, during my discussion with my EAs, we touched on the concept of the “dark side” of cash flow. I mean looking past the obvious numbers. Focus on areas in your business where money is leaking or not flowing as fast as you want.
Are there subscriptions or tools you pay for but don’t use fully? Do slow-paying customers create cash flow delays? These areas are often missed, but ignoring them can cause big problems. Knowing these gaps is key. It helps you change your strategy and make better forecasts.
In my business, I noticed that our cash flow was good. We had trouble with some expenses. This caused a bottleneck. We built systems to see where money goes and find any inefficiencies. Fixing these issues fast helped us manage our finances and stay calm.
The Importance of Being Extra Conservative
Being smart with cash doesn’t mean you ignore risks or growth. It means you think about your choices. You consider how they affect your long-term money goals.
We’ve all felt the urge to grow fast. This could mean hiring more staff or spending on marketing. In the early days, it's important to be extra careful. Make sure every expense aligns with your business’s core needs. Every penny you spend should help your company succeed in the future.
This level of conservatism requires constant attention. Make financial forecasts and update them regularly. Stay disciplined in tracking your cash flow. Monitor both the money coming in and the money going out. Here’s how to stay stable and grow without outside funding.
Six Strategies That Work
I found a great video titled "Unlocking Cash Flow for Startups - 6 Ideas to Improve Profitability" by Eric Andrews. Startups can boost their cash flow on their own. They don’t need to rely on venture capital.
From my own experience, here are three strategies that work:
30-Day Payment Incentive: Get a 2% discount if you pay within 10 days. Result: 60% of clients now pay early.
The Quarterly Business Review: Every three months, I look over all expenses over $50. Businesses evolve—your spending should too.
Emergency Fund Formula: I keep a reserve for three months of my operating costs. Always. It's not only for emergencies; it's also for chances.
The Psychology Behind the Numbers
Managing cash flow as a bootstrapped founder is tiring. Every expense feels personal. But here's what I've learned: The stress doesn't come from spending money. It comes from not understanding where your money goes.
When you have clear systems, the stress disappears. Make choices based on confidence, not fear.
Key Takeaways
Cash flow management is key for your business to grow while bootstrapping.
Knowing the problems in your cash flow, such as customers who pay slowly and extra costs, helps you avoid bottlenecks.
Conservative spending isn't about avoiding risks. It's about making wise choices that align with your goals for the future.
Keep a close eye on your cash flow. It's vital for success when you’re just starting out.
Plan your growth wisely. Make a solid plan and check your finances often to stay balanced.
Final Thoughts
Bootstrapping can be challenging. However, it offers valuable lessons. You learn to manage resources well. Stay disciplined and focus on long-term success. Keeping an eye on your cash flow can be tough, but it helps you steer your business's future.
If you're bootstrapping, watch your cash flow. Track where your money goes. It’s the best way to stay in control and make the smartest decisions for your future.
Alexandr Wang isn't your typical prodigy.
Born to physicist parents working at Los Alamos (yes, the atomic bomb lab), he was immersed in tech and national security from day one.
By 19, he'd dropped out of MIT to build Scale AI.
But what is Scale AI?
Founder Mode is a weekly newsletter for builders—whether it’s startups, systems, or personal growth. It’s about finding your flow, balancing health, wealth, and productivity, and tackling challenges with focus and curiosity. Each week, you’ll gain actionable insights and fresh perspectives to help you think like a founder and build what matters most.
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