I’m the founder of a one-man company. It’s called Muterra, and we want to be the single best source of first-party digital autonomy in a world of third-party servers. Now, that last bit isn’t directly relevant, but it feels necessary to mention.
Actually, in hindsight, I shouldn’t have said it. It’s not contributing to my point.
I have writer’s remorse.
I should improve my editing.
Here’s the thing: until you’re paying someone to run full-time financial metrics on your company, that right there is the thought process that helps you stay lean. Keeping your corporate “books” healthy depends on your financial editing ability, and the best editors are the ones who constantly question — and quickly decide — what value is added by a given choice. To an extent, internalizing that process only comes with experience, but (at least for me) there is something that helps a lot: always keep exactly one reminder of your financial situation in mind.
Again, once you can hire someone to run business metrics, this changes. But until then, keep things simple: you have only so much mental bandwidth, and you’re presumably using most of it on your company already. By focusing on one (and only one) reminder, you have a real shot of keeping your finger off the trigger for long enough to better understand if you really need that Shiny New Thing. Or, as is more frequently disastrous, if you really need to hire that hotshot developer whose old company just went belly-up. It’s important to ask these questions before the situation gets dire: spending too much too soon will kill your company, but spending too slowly “only” slows your growth.
So what should you use for that reminder, for that financial totem? Ultimately that’s a decision only you can make. But I do have two suggestions:
- If you’re default dead, use runway. It’s what I use: it’s the date on your tombstone. Change what you’re doing by then, or die.
- If you’re default alive, net profit margin seems sensible in the startup context. For default alive startups, growth = life, and net profit margin is a reasonably complete estimation of how much extra money you can devote to growth.
That being said, what you choose to use as a canary in the fiscal coal mine is probably less important than the simple fact that you have one. With a small team, effectively going lean is more about managing your own psychology than your finances.
One final caveat: no matter how lean you are, dead is dead. Muterra’s monthly burn rate is currently around $3000, which is about as lean as you can get in the Bay Area. But for reasons I won’t go into here, I’m default dead, and I may soon be doing the one-man-bootstrap equivalent of contracting work as a last resort. [1][2] Living lean can keep you going in tight times, or accelerate your growth in good ones, but it’s no replacement for revenue.
[Footnotes]:
[1] Spoiler alert: nobody can predict the future. In a nutshell, I misjudged the timing on my departure from my last day job, and though I’ve stretched $5k cash, $7k retirement, and stellar credit for about 6 months, I’m hitting the limit. I’ve been in too weak a position to seek investment (read: no tangible MVP) and crowdfunding, as it turns out, isn’t a good fit for what I’m doing and how I’m doing it.
[2] I’m already working 80+ hour weeks, so this basically means finding a day job and cutting down my Muterra hours down to ~30/week.
