Entrepreneurs are typically so focused on saving enough cash to stay alive that you don’t see them blowing money. It’s rare to see fat expense accounts or even market rate salaries. While spending too much isn’t the problem, spending on the wrong thing at the wrong time often is. Here are eight common mistakes:
-Spending too much too early.
If you don’t have a product yet, don’t spend much on anything other than developing the product.
-Not spending enough.
When the flywheel is really going, it might be necessary to spend money on increasing sales and marketing to grow even faster. In other instances, it becomes essential to spend more building the architecture and systems to stay ahead of the growth.
-Hiring a sales team early on.
If you have an enterprise product under development, having a big sales team before you have a product is a mistake. Salesforce.com, where I am a board member, is a great example of a company that did not invest in sales until it was necessary. Instead, it invested its resources in developing a great product. And the founders and early employees pitched the service wherever they went—including while waiting in line at the supermarket.
-Beefing up on administrative matters in the beginning.
Building HR or finance teams too early is not prudent. Initially, those can—and should—be outsourced.
-Falling for office space.
Most entrepreneurs are frugal, with one exception: some become enamored with office facilities. While many entrepreneurs start in a garage, apartment or the dorm room, there are others who fancy a cool location or space to grow into—that’s something that can be very costly.
-Paying full salaries.
Offering high salaries at an early stage is a recipe for burning cash. Everybody should be taking a risk. Compensation should be a combination of salary and equity.
-Underutilizing all of the available resources.
If you need help, ask for it from your advisers and board. Don’t think of your board members just as people who tell you what to do; put them to work. The best entrepreneurs know how to leverage their network and are not shy about asking for advice and introductions.
-Wasting time.
Time is just as valuable as capital and managing it well is just as crucial. You have to do as much as you can every day, week, month and year—utilizing time effectively is one of the most important skills in an entrepreneur’s arsenal.
Wasting Time Is like“Wasted Money”
Some people might say, “Well, that’s a waste of time.” When I hear that, I simply recognize that the person is saying that an afternoon of playing games with friends is not something that they value. Because, in the end, that’s all a “waste of time” is: time spent doing something that you don’t really value. The same is true of money.
What Isn’t a Waste of Time (or Money)?
On the flip side of that coin, what things aren’t a waste of time or money? I identify two groups of things that are not a waste of time or money.
First, things that provide genuine personal value to you are not a waste a time or money. Playing board games forces me to think deeply and it also provides a powerful avenue for socializing – those things provide genuine personal value to me. Others might find board games boring and a pretty poor avenue for socializing and thus they might view it as a waste of time.
The difference is in what provides genuine value to me, not to you. We are all different, with different skills and talents and different interests and different personal values.
Second, things that provide genuine value to others are not a waste of time or money. I’m referring to work here, but also to volunteerism and to helping friends. If others value what you’re doing (and are willing to compensate you in some way for it), then it’s not a waste of time.
I keep thinking of that young man finishing that skateboard. It looked fantastic. Skateboarders would pay well for that type of skill.
A wonderful ideal is finding a way to do something that falls into both groups: it provides value to you and to others. For me, writing falls into this category.
Success Comes From Being Alert and Minimizing the Waste
Successful people attempt to minimize the time and money they spend on things that do not provide genuine value to them or to others. They also look for ways to spend their time and money on things that provide more value to them or to others than whatever it is they’re currently doing.
This requires focus. You have to evaluate everything you do in a given day. “Why am I doing this?” “Is it something that I really personally value?” “Is it adding value to my life?” “Is it adding value to the lives of others?” “How much value am I really getting from this in terms of personal growth, financial gain, or relationships built?”
Asking those questions will lead you to some surprising revelations. For me, for example, I found that spending twenty minutes with my eyes closed in a dark room while trying to focus on clearing my mind of all thoughts was far more relaxing (and thus valuable) than an hour spent watching television. I found that making dinner for my family (and often with them involved in the process) added far more value to my life than the time spent going out to dinner with them. I found that getting adequate sleep each night was far more valuable than cutting an hour of sleep out to “get more done.” I found that practicing the piano was just as relaxing and far more valuable (for me) than that same amount of time spent playing World of Warcraft. I found that spending some time each week reading and some time writing a short story or two was more valuable than spending that time forcing myself to write something strictly based on personal finance.
And, yes, I found that playing board games with some close friends, alternating between focusing on how to win and focusing on good conversation and exchange of ideas, is an extremely valuable way for me to spend my time on occasion.
When someone tells you that what you’re doing is a waste of time or a waste of money, don’t be afraid to rethink what you’re doing. At the same time, don’t assume that it actually is a waste of time or money, because that definition depends on you, not them.
Figure out your small handful of true core values, follow them in whatever you do, and they’ll always lead you to success.
-Spending too much too early.
If you don’t have a product yet, don’t spend much on anything other than developing the product.
-Not spending enough.
When the flywheel is really going, it might be necessary to spend money on increasing sales and marketing to grow even faster. In other instances, it becomes essential to spend more building the architecture and systems to stay ahead of the growth.
-Hiring a sales team early on.
If you have an enterprise product under development, having a big sales team before you have a product is a mistake. Salesforce.com, where I am a board member, is a great example of a company that did not invest in sales until it was necessary. Instead, it invested its resources in developing a great product. And the founders and early employees pitched the service wherever they went—including while waiting in line at the supermarket.
-Beefing up on administrative matters in the beginning.
Building HR or finance teams too early is not prudent. Initially, those can—and should—be outsourced.
-Falling for office space.
Most entrepreneurs are frugal, with one exception: some become enamored with office facilities. While many entrepreneurs start in a garage, apartment or the dorm room, there are others who fancy a cool location or space to grow into—that’s something that can be very costly.
-Paying full salaries.
Offering high salaries at an early stage is a recipe for burning cash. Everybody should be taking a risk. Compensation should be a combination of salary and equity.
-Underutilizing all of the available resources.
If you need help, ask for it from your advisers and board. Don’t think of your board members just as people who tell you what to do; put them to work. The best entrepreneurs know how to leverage their network and are not shy about asking for advice and introductions.
-Wasting time.
Time is just as valuable as capital and managing it well is just as crucial. You have to do as much as you can every day, week, month and year—utilizing time effectively is one of the most important skills in an entrepreneur’s arsenal.
Wasting Time Is like“Wasted Money”
Some people might say, “Well, that’s a waste of time.” When I hear that, I simply recognize that the person is saying that an afternoon of playing games with friends is not something that they value. Because, in the end, that’s all a “waste of time” is: time spent doing something that you don’t really value. The same is true of money.
What Isn’t a Waste of Time (or Money)?
On the flip side of that coin, what things aren’t a waste of time or money? I identify two groups of things that are not a waste of time or money.
First, things that provide genuine personal value to you are not a waste a time or money. Playing board games forces me to think deeply and it also provides a powerful avenue for socializing – those things provide genuine personal value to me. Others might find board games boring and a pretty poor avenue for socializing and thus they might view it as a waste of time.
The difference is in what provides genuine value to me, not to you. We are all different, with different skills and talents and different interests and different personal values.
Second, things that provide genuine value to others are not a waste of time or money. I’m referring to work here, but also to volunteerism and to helping friends. If others value what you’re doing (and are willing to compensate you in some way for it), then it’s not a waste of time.
I keep thinking of that young man finishing that skateboard. It looked fantastic. Skateboarders would pay well for that type of skill.
A wonderful ideal is finding a way to do something that falls into both groups: it provides value to you and to others. For me, writing falls into this category.
Success Comes From Being Alert and Minimizing the Waste
Successful people attempt to minimize the time and money they spend on things that do not provide genuine value to them or to others. They also look for ways to spend their time and money on things that provide more value to them or to others than whatever it is they’re currently doing.
This requires focus. You have to evaluate everything you do in a given day. “Why am I doing this?” “Is it something that I really personally value?” “Is it adding value to my life?” “Is it adding value to the lives of others?” “How much value am I really getting from this in terms of personal growth, financial gain, or relationships built?”
Asking those questions will lead you to some surprising revelations. For me, for example, I found that spending twenty minutes with my eyes closed in a dark room while trying to focus on clearing my mind of all thoughts was far more relaxing (and thus valuable) than an hour spent watching television. I found that making dinner for my family (and often with them involved in the process) added far more value to my life than the time spent going out to dinner with them. I found that getting adequate sleep each night was far more valuable than cutting an hour of sleep out to “get more done.” I found that practicing the piano was just as relaxing and far more valuable (for me) than that same amount of time spent playing World of Warcraft. I found that spending some time each week reading and some time writing a short story or two was more valuable than spending that time forcing myself to write something strictly based on personal finance.
And, yes, I found that playing board games with some close friends, alternating between focusing on how to win and focusing on good conversation and exchange of ideas, is an extremely valuable way for me to spend my time on occasion.
When someone tells you that what you’re doing is a waste of time or a waste of money, don’t be afraid to rethink what you’re doing. At the same time, don’t assume that it actually is a waste of time or money, because that definition depends on you, not them.
Figure out your small handful of true core values, follow them in whatever you do, and they’ll always lead you to success.
No comments:
Post a Comment