When it comes to startup entrepreneurs, most work at keeping their costs down in order to make their finances last. But most entrepreneurs have a different mindset than those that work at jobs, or even some business owners that still have the job mentality. Entrepreneurs think thrift, economical, and frugal, but not cheapskate or miserly. Let’s take a look at the definitions first.
- The definition of being thrifty: |ˈθriftē| adjective ( thriftier , thriftiest ) (of a person or their behavior) using money and other resources carefully and not wastefully.
- The definition of miser: |ˈmīzər| a person who hoards wealth and spends as little money as possible.
- The definition of a spendthrift |ˈspen(d)ˌθrift|a person who spends money in an extravagant, irresponsible way.
Now, what’s the difference in their view of money?
There are two perspectives in how you see money:
- Save money or spend money to make money.
- Save money only.
What sparked this post was having a conversation with a fellow entrepreneur. The discussion was around spending money, specifically spending $5,000 just to watch another highly successful business person at work, no discussion or asking questions.
Would you spend that $5,000?
A person that has a job mentality or only saving money probably will not. Sometimes a business owner that has not mentally switched from job thinking to business ownership thinking would not either. You know, these “business owners” just switched from earning a paycheck to a higher paying job with more responsibilities. No business owner thinking here.
The business owner in our discussion that spent $5,000 stated that within five minutes of watching the more successful business person at work saw how he could save $2,500 right away in their own business. That’s a business owner thinking.
So, next time someone asks you to pay for their advice, let’s say $60 (or $1 a minute) for an hour worth of advice, ask yourself this:
- Will I save at least $60 or more in time and money with the advice I’m being given? If less than than, no, if more than that, pay the person.
- For every $1 invested to get at least $1 in ROI is not bad, but don’t short the advice giver either. Why? And here’s the kicker: is that a one time savings, i.e. a one time investment of money, or is the savings over many weeks and months? How many times will that savings pay off? Five times? 10? 100?
- If I charge $120 an hour to do something, do I save at least 30 minute worth of my time or more? How many times do I save these dollars over the course of a week? Month? Or year?
Never be a spendthrift, a person who spends money in an extravagant, irresponsible way, or a miser/piker/scrooge who will keep the money to themselves, because what reputation will you gain from this?
A great entrepreneur will pay for the savings realized, so let’s invest our money as good entrepreneurs, especially those that give us good advice by paying them for that advice.