At the beginning of this month, I read another book on personal finances, and decided that same day to put some of the advice to practical use. Some of the stuff might make you laugh (using envelopes to control my expenses), but before I get into that in one of my future posts, I’d like to say how much I feel the personal finances impact your business and especially your startup!
I see personal finances as a set of habits. Do you:
– Measure something or not
– Plan something or not
– Stick to your goals and decisions or not.
Going broke, or being without money is a habitual pattern, nothing more. Unfortunately I will also have to skip the importance of habits, will power, goal setting in life and personal finances for some other time, because that’s too broad of a topic.
Maybe you know someone who is really lazy, undisciplined with more than a few bad habits (smoking, alcohol, drugs) and still very successful under some definitions. Let’s say he has a great business, a lot of money, a great wife, great body, whatever. He is winning in a certain field. Here’s the problem with that, when it’s going great, people think it’s going to be great forever. When it’s going bad, people also think it’s going to be bad forever. But that’s not how it goes. Every recession, depression and war had an end. Ever economic boom, revolutionary product had either an end, or a major slow down. A lot of people are so successful in certain fields, but so remarkably unhappy in other parts of their life they go so far that they commit suicide. Remember Curt Cobain? You don’t have to go so far, I am sure you know Robin Williams. All the money and success in the world didn’t mean anything that day when he decided to commit suicide. Then again, if you ask 99% of the people what is their biggest problem, they’ll say, money (so it’s a personal finance problem, a set of habits). Money is not the problem. I’ll say that again, money is never the problem. The problem is you. To paraphrase George Carlin: “The money is fine. The people are fu**ed …”.
Those same people spend more than they earn. I am sure you heard this in the movie Fight Club, they: “Buy stuff they don’t need, to impress people they don’t like”. So what happens when someone starts a company? Well, in the beginning it’s just them (or perhaps one or two partners), and their habits and their personal finances have a major influence! Their ability to do budget planing. Skills to do personal finances. It’s the management that decides to buy a new chair, instead of investing in the product. It’s the management decision to buy a new car, instead of investing in research. It’s the management decision to go to a conference instead of doing real lead generation.
When a startup is failing it takes some guts to admit that it’s the management problem. In startups there are so few people that you have no one to point to, then yourself. But many people don’t. They point their fingers at the market, the problem they are solving, the money they don’t have, the people that surround them and so on. It even gets worse. You don’t only “transfer” your habits to your startup, but since you are personally spending more than you are making, you have to suck out the money out of your startup! In return, that more than cripples the startup that maybe had a chance if you didn’t have to buy cigarettes, travel, party, party, party. Who’s going to pay for all that? The fledgling business!
Amazing how so many people start “changing the world” and try to solve a huge problem in the world, and they don’t even know where their personal money is going! I know, I was certainly guilty of this. Right now, I am just mad at myself for being so stupid in the past. But just a little bit, because I know that it’s not important what happened to you, it’s important what you decide! You have to make a decision that from this day you will change your habits, which will have a strong impact on your personal finances, and ultimately on your startup! Yes dear reader, I admited my mistakes, I sucked it up, and now changing my habits.
Start small, start anywhere!
Skip one coffee per day. Skip one candy bar per week. Skip one dinner in a restaurant. Skip here, and a skip there.
Make one more phone call. Do one more interview. Make one more sale. Send one more newsletter. Little bit here, and a little bit there.
Repeat each month, and add just one more. Just one.
Make it a golden rule to spend less than you earn! No matter what! If you make this your habit, so will your startup. Ultimately, that means that you and your startup are making more each month, which means that all you now need is time to pass. If there’s one thing you can be certain of, is that time will pass. Ten years from now, you will still be here. There’s a good chance that 50 years from now, you will still be here! The medical / biomedical, technological, psychological advances will surely improve people lives, and increase the longevity. So start now!
Don’t be that guy or gal who has to suck the money out of startup, and because of that, pay more taxes. What happens next is that they complain about high taxes, and how the government is the problem. Taking the money out of a business in order to buy junk? Not really. Hey, if you want to buy expensive toys, you better be ready to cough up some dough. I heard the new iPhone 6+ is out, with a nice smartwatch.
Don’t fail. Don’t spend, more than you make. We need more people like you. We need people who build startups, who fight, who create instead of consume. Will you be that person?
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