Successful, young entrepreneurs make things look easy. We hear about their glamorous rises to fame, see pictures of their shiny cars and expensive homes, and watch their stock prices climb. But rarely do we hear about the financial support they had from their parents, the countless nights they got by on 2 hours of sleep, the friends they lost from becoming workaholics, or their nutrient lacking diets of instant noodles and fast food. There’s a lot of sacrifice and sweat that goes into becoming an entrepreneur. And if you want to start a successful business and a new lifestyle, learn how to budget first!
Time and money have a sneaky way of disappearing on us if we let them. My parents have never been good with money, and it makes me sad that they are in their “golden” years still struggling with debt and trying to make ends meet. I’m determined not to let the same thing happen to me, and I strongly encourage all of you to take personal finance and retirement planning seriously. The earlier you start taking control of your finances, the more opportunities and freedoms you’ll have over the course of your life.
Identify The Fluff And Start Cutting Back
We live in a world that is constantly tempting us to spend, bust out our credit cards, and rack up debt. We see people on the bus with all the latest electronics, coworkers with trendy new clothes, neighbors with shiny cars, and friends with gorgeous homes, so we think we deserve all of that too. If you’re really serious and want to start a successful business though, you’re going to need to put blinders on and let go of your material desires. I used to throw away my money on clothes and random stuff until I got smart. It’s incredibly freeing to stop spending, simplify, and adopt a more minimalist lifestyle.
Sit down and look at your bank and credit cards statements for the last six months. I bet there are a lot of things that you can cut out if you are committed to saving money. Do you really need a gym membership, cable, dvd rentals, new shoes, drinks, dinners out, clothes, beauty products, a tablet, etc.? We all have different priorities, so you’ll need to identify what’s most important to you and what you’re willing to give up.
I gave up my gym membership because I realized I love hiking and going on bike rides for free much more than going to the gym. And even though I had a lot of fun going out for food and drinks each week with my friends, I cut back on that because it got really expensive. Now I meet them once or twice a month for potlucks and lounging at each other’s apartments instead which is much more affordable and still a lot of fun.
Get Smarter With Your Necessities
San Francisco is an expensive city to live in, and its easy to spend a fortune on the incredibly delicious food here. But it really bugs me how expensive food can get, and I’m working on decreasing my food expenses. We have to eat in order to function and survive, but there are always ways to save if we get smart about saving. Do I really need to pay $11 for organic vegetarian pho, $8 for six pieces of avocado cucumber rolls, or $7.50 for a burrito? No. I can make a healthy homemade vegetable soup or chili in my slow cooker for less than $10 that easily makes 6 servings. Or I can get Chinese takeout for $6.50 that has enough food for 2 meals. You can save money on food if you try, just don’t go overboard with $1 double-double cheeseburgers at McDonald’s or anything super high in fat just because it’s cheap.
Take a look at your spending on your other recurring expenses as well. Are you using flex spending towards your transportation, dependent care, and health costs? Have you setup a retirement account yet, refinanced your mortgage, or looked for ways to save on rent? And when was the last time you compared rates on health insurance, credit cards, cell phone plans, car insurance, or cable and internet packages? Chances are there’s probably some room to trim, you just have to be willing to put in the time and effort. If you’re not disciplined enough to stick to a budget, sorry but you’re probably not cut out for the sacrifices it takes to start a successful business and keep it running.
Companies are always competing with each other, so it’s also worth it to search for promotions and special offers at least once or twice a year. Sometimes all it takes to save some money is calling your current providers and asking for a lower rate. Threatening to quit or actually switching to a cheaper vendor can also work, just do your due diligence first and stand firm.
Review Your Spending Each Month & Set Goals
We’re all busy people and we can easily get caught up with running errands, family matters, work, and just getting through the day. When you’re trying to shatter the template lifestyle, not only is monitoring expenses is paramount, so is taking on even more responsibility and learning how to maximize your time. If you want to be successful in breaking out of your current routine, you’ll need to beat your TV addiction, harness the power of before and after, and learn how to make more time each week.
Get in the habit now of reviewing your spending each month and keep track of everything in a spreadsheet. Calculate how much income you’re bringing in, how much you’re saving for your future, and look at your total outstanding debt. Put together a plan for paying off your school loans, car payments, and stop accumulating credit card debt. Set budget goals for both the short and long term. Figure out how many months of living expenses you have in your current savings. You can’t keep a budget and plan for the future without using real numbers. Keeping it all in your head isn’t good enough. Get used to tracking everything in a spreadsheet and you’ll soon get addicted to saving and watching your wealth grow.
Stop Making Excuses
A lot of people are convinced they don’t have enough money to become an entrepreneur before even examining their personal finance situation, and that’s just silly. It takes sacrifice and a bit of creativity to bring change. And saying, “I’m too busy” is an excuse you’re going to have to drop asap. We can all find the time to do it all by improving our efficiency and focusing on the most important things first. If you fail, the only person you can blame is yourself. But it’s better to give yourself a chance and fail, than to never have tried at all!
And you don’t need a fortune to start an entrepreneurial lifestyle either. Many people have started their own businesses with just $100 doing what they love. If you can learn how to budget and become financially independent now, your future will be so much brighter and you’ll have a lot more options!
Untemplaters, do you want to start a successful business or a new lifestyle? When was the last time you reviewed your expenses and updated your budget? What are your current short and long term financial goals?
Copyright. Original content authorized only to appear on Untemplater.com. Thank you for reading!
Great post. They do make it look VERY easy. I like the saying “Over night, success after 10 years” =)
“Or I can get Chinese takeout for $6.50 that has enough food for 2 meals.” Or for that much money, you can probably make enough stir-fry at home to feed you for a week!
Pretty much all of my financial goals these days revolve around getting out of debt.
Well written Sydney! If one can differentiate between need and want, the battle is half won already.
One common trend I see with successful entrepreneurs is that they are single. I’m sure this is not always the case, but once you’re married or have a girlfriend life just becomes more difficult in terms of the amount of risk that can be assumed.
That is a good point! Although, having a PIC (partner in crime) I think provides a HUGE boost to the chances of entrepreneurial success.
Steve from the last post is a perfect example of that.
Sydney … great advice. Especially the part about not spending! We so often think we have to have this or that for our lives and often we use spending as an alternative to getting things done! Instead of doing the work, we think we can accomplish something by buying some kind of “solution” which rarely turns out to be a solution.
Ya know, it can be really fun tracking your expenses and your lifestyle. As you said, a spreadsheet … this can paint a picture of not only your expenses but the type person you currently are. Do you want to make changes? If so, getting this picture of yourself is a huge advantage.
Especially for entrepreneurs and wanna-bes! Thanks, Sydney. 🙂
Things don’t always go as planned. From September to October a lot of things fell into place and I had a big surge forward, and I was thinking I could repeat the same for November but then something else didn’t work out as planned and overall it ended up being 5%.
Employees are really expensive once you add everything up (if an employee is getting $50,000 gross, he’s probably keeping $37,000 net or so and you’re spending $65,000+ depending on whether you need an office or not, equipment and so forth. Besides you’ll only get an entry level person for that price. Montreal is cheaper than SF, but not THAT much cheaper. 😉
I always make sure that I review my finances at least once a month to make sure that I am on track towards my financial goals. It is important to look into all areas of your finances and see whether you need to make adjustments. If you’re not tracking your spending you’re running a blind business.
I consider my blog just the beginning of my entrepreneurial aspirations. And to think it only cost $58! No matter what business I engage in, I will always be conscious of how much I spend and what I’m spending it on. More money out than in is bad on many levels.
Yes that’s the beauty of the online world, low start up costs!
Extreme desire or burning desire is must for anyone seeking to be an entrepreneur. I’ve found many unconventional ways to find funding for my businesses. I agree with you that lack of money ought not be used as an excuse.
I think a lot of people like the idea of becoming an entrepreneur, but lack the extreme desire as you mention that will drive them forward and keep them going month after month after month.
Budgeting is my strength, but it is also provides discipline and structure to reach your goals. Often, people look at budgets as a chore and then ignore it. Going through the process of figuring out what is necessary or not is a good process to help you reach your goals.
Yeah ignoring budgets is all too common and I hope more people, young folks especially, will start realizing the importance of making and sticking to budgets. Same goes for starting retirement planning early.
As things took off rapidly over the span of a couple months for me, I had to contain some of my enthusiasm. I was already thinking of an office, additional employees, but after you look at the income after expenses, you realize there’s not THAT much margin after all. What if the sales comes down by 30% from one month to the next? Wouldn’t be fun to get rid of the guy you just hired. I prefer to do things organically and not rush in to things too fast, and without the investor pressure things are great.
You’re exactly right. And there’s also taxes too which can be easily overlooked in all the excitement of making money until the nasty notices start coming in. There’s so much double taxation in the world of business, especially in states like California, and it takes careful planning to leave enough cash flow to get all the payments in on time.
I wonder how much of business failure is due to OVERSPENDING and not budgeting? I bet there’s a good amount of that as we believe so much in our product that we do whatever it takes to get our product out there. Only until we realize that our product isn’t as good as we think as demonstrated by a lack of sales do we have an “oh crap” moment.
I agree. If you can’t get a handle of your own finances first, then you will have an even tougher time getting a handle of your own business!
Sam
Yeah good point about overspending pre launch. Marketing is more important than a lot of people realize and without it products have a hard time selling. And nobody wants to get stuck with those “oh crap” moments.
Another common mistake is spending too much on overhead in the beginning. Business owners should really crunch their numbers before hiring employees and signing leases for office space. That’s why a lot of entrepreneurs do the vast majority of the work on their own from home or with contractors who can work remotely to keep expenses down.