My father was an entrepreneur and like him, I always wanted to start my own company. When trying to build a business from scratch, one of the most important lessons he taught me is that you must spend every day trying to earn $1, not trying to save $1.
While I heard him growing up, I never quite understood what he meant until I started my own company.
After years of working for others in the burgeoning digital advertising space, I made the leap right after the great recession and launched PK4 Media.
After some contemplation, I made the decision to bootstrap so I would have complete control of my vision and destiny. As a result of that decision, I began to better understand what my father was trying to tell me.
When I realized how much personal risk I was taking on, I felt a heightened sense of anxiety. I did not want to squander a lifetime of savings I had acquired working long hours for someone else. The myriad of bold, game-changing moves I was planning to make started to feel risky.
That was exactly when what my father told me became crystal clear. To be one of the very few startups that succeed, you need to have self-belief, be willing to take calculated risks and seize opportunities when the time is right.
When I started PK4 Media, I vowed to overcome those fears and made a pact that I would never play with scared money.
If you decide not to speak at a high-visibility conference because there is a nominal sponsorship fee, you are playing with scared money; If you decide not to hire a great candidate because their salary requirement was a bit higher than you allotted, you are playing with scared money; and if you don’t invest in new technology that can transform your business and help you surpass your competitors, you are playing with scared money.
Spending every day trying to earn $1, not trying to save $1 means being hyper-focused on generating revenue and less focused on controlling costs and saving money.
To get a fledgling company off and running, you must always be networking, meeting with clients and getting your name into the marketplace quickly and in a meaningful way. It is critical to trust in the business model you've created and remember that revenue is the life blood of your company.
On the flip side, it is a huge mistake to waste time combing through an employee’s expense report line by line. The energy you waste focusing on whether to approve a dinner expense is time not spent growing your business.
It confirms a tried and true principle I recently highlighted in Forbes, which is that that 20% of your efforts will produce 80% of your results. Leaders must stay focused on the high ROI activities if the company is to succeed.
Yes, expenses can add up and some employees may be building up quite a tab. In the event it becomes clear that an employee is taking advantage without producing results, it is time to have a talk and maybe let that person go.
On the other hand, I have personally invested in sales people who haven’t closed any significant revenue their first year and worked with them to become the top sales person at our company. If I was solely concerned with saving the company money, we would not have seen the personal growth of this sales person or benefited from the enormous revenue they generated.
Bottom line, if the spending is strategically being done in search of revenue, those losses on your balance sheet can be recovered with a single new client signed. And betting big on yourself is the only way your business will ever grow to the point where it matches your original vision.
The key to being one of the very few entrepreneurs who “make it” is to identify a need, believe in yourself and trust your business model. When I find myself in a tricky predicament and I am feeling tentative, I always remind myself not to play with scared money and to spend every day trying to earn $1, not trying to save $1.
Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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