“The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality: that is, waste neither time nor money, but make the best use of both. Without industry and frugality nothing will do, and with them everything.”
― Benjamin Franklin
This habit is usually an easy one for a small businessperson to adopt, as soon as the realization sets in that everything related to the business and its expenses is done with your money. The key is to instill this message into the thinking of all of your employees. There is no question that it is much easier to spend someone else’s money. Frugality needs to be part of your company culture no matter how much money you are making. In small business you can never anticipate future bumps in the road. It is so much easier to react to those bumps when you are running lean as possible.
In the late nineties, my husband was employed at a start-up company that got off to a great start. The owners were able to secure a good source of financing which gave them a great cushion in the event of a “rainy day”. However, these were the days of excess. When a company was doing well they needed to flaunt it. I will have to say that it was nice being part of the ride. The Christmas parties were spectacular! The little German sports car my husband was given to drive was also nice. They burned through money all the way to the Initial Public Offering (IPO), which almost exactly corresponded to the big tech stock crash in 2001. Within six months they went from fully funded to bankrupt. Eventually, the assets were sold to a competitor for pennies on the dollar. That ride came to an end very quickly.