Why Spending Too Much Money In The Beginning Is Stupid If You Plan On Starting Your Business
OK, understandably, as a business person, you're excited about starting a business, and I was, too, when I first started off, but there's no need to spend recklessly when you have absolutely no money coming in.
I remember hearing a story one time about a guy that was leaving the corporate world that he's known for around 20 years or so, to start a newsletter business. He had around $250,000 to work with and figured that that would be way more than enough to start his business.
So what did he do?
He went to lease office space, he bought office fixtures and equipment, he hired employees and was paying their salaries, and he hired a professional copywriter to write a sales copy for his newsletter, the whole nine yards this person went. The first three months of the newsletter came out, it was actually on time. It was really good content. Then, the fourth issue arrived a week late, the fifth issue arrived three weeks late, and then the sixth issue never was sent out. By the end of the sixth month, he was all but brOKe, and by the seventh month, he filed for bankruptcy for his company.
Now, an important lesson to learn there, that even if you have all the money, or even if you have a wide variety of money, or access to a lot of money, you still need to understand that you can't spend recklessly. Spending too much on things that you don't need to build up your business can obviously cause you to fail.
This guy figured that he could spend his money recklessly because he had a lot of money to play with, a lot more than a lot of people have when they're starting off their business. So, a lesson learned there, don't spend your start up cash on things that aren't necessary. You don't need to lease an office or hire employees. What you do need to do is worry about getting cash flow positive in your business.
So, spending too much time in the early stages of your business is something that you don't want to do. I started my business with $50 or less and I'm doing very well right now. A lot of other people have started their businesses with less than $50 and are doing very, very well right now. It's not the amount of money that you start off with, for the most part, it's the decisions that you make in the early stages to help build your business.
If you do happen to have a lot of money to start off with, good stuff, but use that money wisely and, again, like I said and like I stress, don't spend recklessly.
I remember hearing a story one time about a guy that was leaving the corporate world that he's known for around 20 years or so, to start a newsletter business. He had around $250,000 to work with and figured that that would be way more than enough to start his business.
So what did he do?
He went to lease office space, he bought office fixtures and equipment, he hired employees and was paying their salaries, and he hired a professional copywriter to write a sales copy for his newsletter, the whole nine yards this person went. The first three months of the newsletter came out, it was actually on time. It was really good content. Then, the fourth issue arrived a week late, the fifth issue arrived three weeks late, and then the sixth issue never was sent out. By the end of the sixth month, he was all but brOKe, and by the seventh month, he filed for bankruptcy for his company.
Now, an important lesson to learn there, that even if you have all the money, or even if you have a wide variety of money, or access to a lot of money, you still need to understand that you can't spend recklessly. Spending too much on things that you don't need to build up your business can obviously cause you to fail.
This guy figured that he could spend his money recklessly because he had a lot of money to play with, a lot more than a lot of people have when they're starting off their business. So, a lesson learned there, don't spend your start up cash on things that aren't necessary. You don't need to lease an office or hire employees. What you do need to do is worry about getting cash flow positive in your business.
So, spending too much time in the early stages of your business is something that you don't want to do. I started my business with $50 or less and I'm doing very well right now. A lot of other people have started their businesses with less than $50 and are doing very, very well right now. It's not the amount of money that you start off with, for the most part, it's the decisions that you make in the early stages to help build your business.
If you do happen to have a lot of money to start off with, good stuff, but use that money wisely and, again, like I said and like I stress, don't spend recklessly.
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