words of wisdom from the greatest minds
As an entrepreneur/business owner, staying on top of your finances is paramount to the success of your business. Money can’t buy happiness, but it’s what the economy of our world revolves around, so the better you are at managing it, the less trouble you’ll have.
You’ve probably already read or heard a lot of advice on money management. Saving half your salary, investing 20% in the stock market, having an emergency fund… While these are all fair points, these are things we’ve heard over and over again, plus they’re not always actionable . away (for example, many people can’t save half of their salary).
In this article, we’ll discuss money advice you’ve probably never heard of before, which give a good insight into how money works as a business owner. For each quote, I’ve included some of my personal experiences as a content creator.
“The darkest time in a man’s life is when he sits down to plan how to get money without earning it”
— Horace Greeley
There have been many different phases in the “hustle community” over the years. First, people like Gary Wee or Grant Cardone started telling us that if we wanted to make a ton of money, we had to work 70 hours a day, not see our kids, skip the weekends, and work every day at 5 a.m. Gotta get up Then at around 50-60 years of age, we can enjoy the fruits of our labour, if we are lucky.
Then, on the other side of the spectrum, there was the 4-hour workweek movement. Tim Ferriss & Co. began by telling us that really, you don’t have to work very hard, you just need to work smart. You can work only a few hours a week and still make a ton of money. All you need is a virtual assistant and a dropshipping business.
These days, it seems we’ve found some middle ground. The pandemic struck and we all had time to reflect on our mental health. YouTubers like Matt D’Vella or Joy Schweitzer (from the Better Ideas channel) remind us that chronic stress and anxiety need not be a part of entrepreneurs’ everyday lives. You can make money, hustle and still be happy and healthy, but it’s not easy. Most people fail in this and get burned.
While all of these options are different and come into play at different times, they all have one thing in common: they require you to work. There is no such thing as a free lunch in this world.
I’ve always wanted to make my own money, but often as a young “good entrepreneur” I was tempted by some quick-with-dues method rather than taking the time to develop a viable business. Selling codes on forums instead of building an online store for it, or building an online store for physical products but no inventory… Every time, I would make a few hundred bucks and run out of steam.
Always remember that money should be earned fairly, not easily. It may take you a long time to achieve it, and you may face many obstacles before you can make it, but it is part of the journey. No man (or woman) has ever made an honest fortune without hard work.
“It’s not what you don’t know that gets you in trouble. It’s what you know for sure isn’t.”
– Mark Twain
When I was a teenager, every time I would tell my parents to pay my bills, struggle with paperwork, or call the bank, I would say to myself: “It all looks like a waste of time. , when I can afford it. Call an accountant to take care of my money.”
Years later, my business started making enough money to afford accounting services, so I didn’t hesitate and signed up right away. The first few invoices they sent me for their services were not very expensive. I thought to myself: “I hate accounting, I don’t even know how to do it, so of course it’s a great use of my money because it saves me time to spend on more content creation.” Is.”
As the business grew, so did my accounting fees. The whole time, I was sure it was worth it. Then one day, I got an invoice for a lot more than I anticipated. It wasn’t that I couldn’t afford it, but it was a ton of money, and now it was too late not to pay because the work was done. I paid the invoice and cut all ties with the accounting firm. I told him that I would figure it out on my own.
The next year, I taught myself the basics of accounting and do all my reporting myself. It takes me longer but it saves me a ton of money, and it’s really not that complicated. I was 100% sure that I needed an accountant for 10 years, and it turned out that I was completely wrong. Then, as Mark Twain says, it got me in trouble, and I had to pay a lot of money.
As a business owner, it is very important to keep an open mind and always be on the lookout for scenarios and situations where you can go wrong. It goes beyond operating costs like accounting, it’s also about the world of tomorrow, as we’re going to see with the next quote.
“Stock prices have reached a level that looks like a permanently high plateau”
— Irving Fisher
I’ve included this quote here because it shows the importance of thinking outside the realm of what you think is possible. Irving Fisher was one of the most respected economists of the 1900s. In 1929, when the stock market was facing its biggest crash in history, he didn’t foresee how it could rise above the 1929 peak. It seemed impossible that the economy would recover and then overtake it. Until the day of his death in 1947, Irving Fisher probably thought he was right as the stock market reached its peak in 1955 again in 1929:
Today, the Dow Jones is up 340% from its 1929 high. Irving Fisher will never know, but he was wrong. Throughout history, there have been many examples of companies and individuals who were wrong about possible outcomes and paid a price for it. In Irving Fisher’s case, it didn’t matter as much because he died before he was proven wrong, and even he had the chance to enjoy the gold market rush from 1932 until the end of his life. found.
Kodak thought digital photography was a fad in the 2000s, so he didn’t invest in it. They were making $11 billion in 2005, now they barely make $1 billion a year, and have been on a steady decline for the past 2 decades.
Kodak’s Worldwide Revenue (US$ million) from 2005 to 2021 — Source
Other examples include the coronavirus pandemic, the energy crisis, the 2008 subprime crisis… Very few people saw these events coming. 20 years ago the median home price in the US was $179,331 (inflation-adjusted 2020 dollars). Today it is $336,900, and in 20 years it will likely exceed $700,000. It sounds crazy, but only those who open their minds to the possibilities of madness move forward in life. Always be on the lookout for the unimaginable as a business owner. This is the best way to identify opportunities and avoid crises. As former British Prime Minister Benjamin Disraeli once said: “What we anticipate rarely happens, what we least expect usually happens.”
“Expenditure increases to meet income”
– Parkinson’s second law
I have written in the past about how companies like Snapchat have a market cap of $17 billion but lose hundreds of millions every month. His CEO gets millions of dollars as bonus while his company is bleeding money. The goal is to pump as much money as possible into growth, reinvesting all profits, so as to hopefully one day become a capitalist giant that can hold onto any future competition. The problem is that maybe 0.1% of companies are successful just like that. This was the standard business model in Silicon Valley for the past 20 years, but it’s starting to lose steam.
I also wrote about how my CEO, who sold his company for $30 million in the middle of the pandemic, ran out of investors’ money a year before that. His company was making millions in annual recurring revenue, but between salaries, office costs and other expenses, we were still negative.
I just started making my first serious money online about 3 years ago. Since then, I’ve focused on expanding my business, and that means investing the money I make back into growth. The problem with this approach is the same that faces Snapchat or my CEO’s business, albeit on a lesser scale: If you’re not careful and cover expenses with income, you’re not making a dime.
Later, I came to know that it is about risk management. Like your personal finances, you don’t have to spend everything you own as a business, you can set up an account to keep some money, to reward yourself when it’s worth it, or simply. Trade to increase your value. I always ask myself if I really need something I want to buy or not. It’s all too easy to justify any purchase as a “business expense” when you make a lot of money through your business. A computer here, a tablet there, a new phone…
The more people earn, the more they spend, but the secret of wealth is just the opposite:
Remember to spend less, earn more and enjoy the journey.