London bound, one bright weekday morning, I was hitching a lift onto the M1 when a passing car jammed on its brakes and pulled over ahead of me onto the empty slip road. The smart-suited driver from Leicester was going my way. Within 2 minutes we were doing 90+ in the outside lane of the motorway.
Proud of his shiny motor car, my twenty something companion also loved his job in sales. I forget what he sold, but he was quick to share his salary status – £20k plus perks. In 1984, that was moving towards ‘loadsamoney’.
Being 18 and unemployed I distinctly remember being impressed by my flash friend, but it was his brutal honesty that really appealed. Having spent 15 minutes bigging himself up, he then declared in a slightly depressed tone that he was practically broke. He was good at earning money. He was even better at spending the stuff.
Put yourself last
Entrepreneurs who excel at spending money on themselves typically don’t last long in the job. Fast cars, designer labels and posh restaurants undoubtedly make us feel better; but they are all unnecessary costs especially in the early days of running a business.
Richard Branson may now spend every sixth week on his own private island in the Caribbean, but it certainly wasn’t always that way. For several years he lived on an old barge and drove a car that regularly ran out of petrol, such was his desire to keep the money in the business where it was really needed.
It may feel counter intuitive, especially if you’re employing staff, but the secret in the early days is to put yourself last when it comes to spending money. If you look after the goose, the golden eggs stand a much better chance.
Does money motivate?
Stacks of studies have been compiled that examine the question ‘What motivates entrepreneurs?’ If this is an area of particular interest you’ll find lots of scholarly research right here.
But if detailed analysis doesn’t float your boat and you want some quick definitive answers from practising entrepreneurs, then the following short film may appeal. Produced by ‘Tech Cocktail’ the results clearly suggest that successful entrepreneurs are motivated by such things as people, ideas, following dreams, making a difference, creativity and achievement. In the film you’ll find that the ‘money’ word is hardly mentioned.
So when it comes to money, successful entrepreneurs it seems are patient, unselfish and self-disciplined. Moreover, they are motivated by deeper needs and are able to defer reward rather than seek instant gratification (a subject worthy of its own HHGE blog). This attitude of mind makes businesses more sustainable over the long term and ultimately, as a bi-product, also makes the entrepreneur far richer.
Key Learning Points: Careful cost management is essential for any start-up business. Entrepreneurs who are prudent with their own spending in the early days and are motivated by deeper needs, are more likely to be financially successful in the long-term.