In yesterday’s blog, we discussed the need for business owners to spend their money wisely in order to properly grow and develop their companies into major successes. When entrepreneurs don’t put their money in the right places, it often spells disaster for the business.
Ivan Widjaya of Noobpreneur.com discussed this in a blog of his own last May. Citing such celebrities as Britney Spears, Mike Tyson and Antoine Walker as millionaires who went bankrupt, he noted that bad money management is the sole reason why success stories can inevitably flounder into failure.
Naturally, spending more money than you have or are making is simply a bad idea. Widjaya notes that with success often comes the assumption that you can spend frivolously. Ironically, people who appear to have the most money are often the ones that are the most likely to be in debt!
Spending carelessly results in the not having anything left over for rainy days, says Widjaya. You can run a successful business for more than 20 years, but if the business eventually becomes no longer profitable, you don’t want to find yourself in a position where you can’t pay for your everyday living expenses.
Widjaya mentions that he knows of business owners who have had to sell their homes to pay off their business debts. These same people, at one time, were spending crazily on luxury items that they didn’t necessarily need. Perhaps, if their money was more regularly put towards things that would help to grow their businesses, they would have never gone out of business.
This is where careless spending will lead you, insists Widjaya. He offers this piece of advice: “Do you want to be rich? If so, you need to watch your business and personal spending closely – this is what successful entrepreneurs have as their number one rule to financial independence.”
The moral of the story is to always consider your future. What you think you can afford today is not necessarily something you will be able to afford years from now. Is the expenditure truly necessary? Is the purchase something that somehow be profitable to you in time?
Invest in the right places instead of spending lavishly. Real estate and precious metals are two suggestions Widjaya gives. “Prioritize your businessa nd personal financial planning above anything else,” he writes, “Then you’ll see that you will reap what you sow.”