In my
book that’s coming out next month I talk quite a bit about how executives who want to become entrepreneurs need to change their
relationship with money because, when you’re in business for yourself, it doesn’t flow quite as easily as when you’re working for the man.
That got me thinking about the stupid sh*t I squandered money on in my pre-entrepreneurial days. Figuring that if you’re about to take the entrepreneurial plunge you can learn from my spending mistakes and save your money to help fund your survival in business, here’s a list of some of the dumb things I have spent money on. I wasted the money so you don’t have to!
I’m not saying you shouldn’t spend your own money on these particular things: your wasteful spending may be different from mine. But you’ll get the point.
- MONEY PIT #1. We put in a pool when we moved here seven years ago. It’s not a fancy pool: 16-x-32, semi in-ground with a deck around half of it. Total cost with deck around $25,000. Add to that the annual cost of having the pool guy open and close it, and chemicals, and we’re up at around $32,000 (not including forsaken risk-free appreciation I could have had in a CD). In seven year I estimate we have used the pool 70 times for a total of 35 hours. Let’s see, what else can I buy for $900+ an hour! (Eliot Spitzer, any suggestions?)
- MONEY PIT #2 and #3. When I was younger, I kept thinking that if only I had a bigger house, like the other senior executives in the company, then I’d be happy. My wife was happy with our 1200-foot, three-bedroom house on a fifth-acre. Had we stayed there (my wife always described it as her dream house) the mortgage would have been paid off about 10 years ago. But no, I kept wanting more. Soon it was a 4,000-foot house in the same town, then a bigger house in another town. I never felt so stupid as the day I closed on that house and had to write an unexpected check to New York State for $10,000–a “millionaire’s tax” for buying a house that cost over $1 million. We hated the new town and moved back to our old town less than two years later, around the time I started self-employment. Our house (and this is the last one!) is half the size, half the cost, easier to clean. (Still paying off the mortgage, though.)
- MONEY PIT #4. Like any exercise equipment, my treadmill was totally useless all the years I had it! One thousand dollars wasted. How about eating less and walking more? My happiest day was when the basement flooded and I finally got to drag that thing to the curb. Forget treadmills, forget health clubs. Tie some $10 weights to your ankles and get your butt outside!
- MONEY PIT #5+ I long ago gave up buying pens that cost more than $2; suits from anywhere except Men’s Wearhouse; any kind of collectible, like Playboy magazines from the Fifties and Sixties (for the articles, of course), which lost value faster than a Zimbabwean dollar. And so on.
So, now that I have thoroughly embarrassed myself, I ask you, entrepreneurs-in-training: what are your dumbest money-wasting activities you plan to give up when you start your business? Or if you’re well under way with your business, what changed in your spending habits. Don’t leave me hanging here…admit you’ve been as dumb as me.
If you’re an executive who has become an entrepreneur in the last few years, you will relate to this post. If you are thinking of giving up your pinstripe suit, you’ll want to read this closely.
Once you become an entrepreneur your relationship with money changes dramatically. Back in my executive days I had a very impersonal relationship with money. My paychecks and commission checks were direct-deposited. I never opened the stubs the company handed out twice a month, and never checked to see if my commissions were accurate. They were large numbers, and that was nice. Every two weeks for the paycheck, every month for the commission check. Predictable. Never changing.
Fast-forward. I am in business. No paycheck. No commission check. Bank balance going down instead of up as I spend wildly on–I mean, invest in–my new business. At first I spend as if my paychecks and commission checks will somehow keep coming even though I am no longer employed. Just out of momentum.
After a while a funny thing happened. I started to notice how very beautiful $20 bills are, especially when there are a bunch of them all together in a nice pile. What craftsmanship, what art! Why, that’s Andrew Jackson on the front. A great president, got a bit of a bum wrap after the war. I started to think I’d like to hold on to my Andys a while longer. Andy, what do ya say we cook dinner tonight instead of going out? Name your dish. Beef stew? I make a great beef stew! What wine do you want to go with that, Andy? What’s that you say? A $7 bottle is often as good as a $14 bottle? Can’t be…well, if you say so. HEY! You know, this ain’t bad! Say Andy, the kids’ spring vacation is coming up. We usually go to Club Med. Say what? You never heard of Club Med? Maybe we should do what? Stay at home and play games together and do other things close to home to bond as a family? Wow, that’s a 19th century idea, but I guess I can give it a try. Hey Andy, Scrabble is really fun!
Wake up and clip the coupons, people. As an entrepreneur, you need to learn the Zen-like joy that will come from saving money and postponing gratification. When you finally fix that hole in the ceiling and remodel the bathroom, you will admire sheet-rock like you never have before. So here you go, executives who are turning entrepreneurial–the start of a list of ways to improve your relationship with money. (More will be coming in future posts.)
1. Have a Money Buddy: Before you spend more than $500 on anything for your business or home, consult a buddy. Do you have to spend it today, or can you wait six months? Get a reality check.
2. While You are Spending Less, Work on Making More: Like a Fortune 100 business, your small business can’t cost-cut and save its way to growth. You have to create more sales for the business even as you think frugally. Skip Amazon.com and go to the library (the building with all the books in it–and they let you borrow them for free!) and check out The Secret by Rhonda Byrne. If Rhonda were an ice cream flavor she’d be tutti frutti, but she has an important message. While I can’t promise that if you close your eyes and imagine checks arriving in the mail your wishes will be answered, I do think that you can behave in a way that promotes sales even while you are sober about spending. Get the audio tape rather than the book, and listen to it twice. The first time you will be put off by her strange Australian accent and even stranger ideas. The second time (I’ve listened to it about eight times) it starts to have meaning.
3. You Don’t Need to Have it All Right Now: Our front door was a mess. The lock was busted, the paint was chipped all over. I hated the front door! I wanted a new front door. A contractor said we could have one for $6,000. It was really nice in the catalog. A few years ago, new door! Now….a can of paint cost $20 and a locksmith was $200. And you know what, I really like that new color. I love our front door! For the Boomer generation that is used to having it all, it can be a hard turn to fix rather than replace. But try it. That applies to home repair, cars, appliances, any big ticket item. Get just one more year out of them and you will be thinking like an entrepreneur.
