The Art of Frugality
If you had 24 hours to spend $1 million dollars, do you think you could do it?
Now, what if you had 24 hours to make $1 million dollars. Do you think you could do that?
Money is hard to make, but easy to spend.
So, what does it matter?
From the perspective of a company, cash is oxygen. Money is what gives your company life. The second your company is out of cash, it dies. If you are a founder, it is your job to ensure your company never runs out of oxygen.
So, how can we best do this?
Here are 3 steps.
Think like a frugal person.
To become a frugal person, you have to think like a frugal person. A frugal person is not the same as a cheap person. They use their money intelligently. They do not spend their limited cash on frivolous things. Start looking at your own behavior and ask yourself “Is this a smart purchase” or “Is this purchase 100% necessary?”
Don’t spend your money on stupid stuff.
It is a lot easier said than done, but in most cases, companies, especially early-stage companies, should only spend money on things that lead to a direct increase in profit or revenue. Always question the purchases you are making and make sure that the capital you are allocating is going to the most effective means. Early on, companies tend to waste their money on ineffective flashy campaigns, like sponsoring festivals, print ads, parties, and other low-lift high-cost tactics that do very little other than inflate the egos of the company’s founders.
Lose your ego.
This is perhaps the most difficult of the 3. Most of us don’t want to seem broke. We get invited to a dinner with our friends, and we are going to attend. We don’t want to be rude so when they get drinks, we get a drink. They get a dessert, we get a dessert. Suddenly you spent $60 on a dinner. We don’t want to be the person who says “I’ll just have water” out of fear of what our friends will think. But, here is the truth. If your friends think down on you while you are trying to save money so you can chase your dreams then they are not your friends. Anyone who does not support you in your journey to attain the life you dream of is not your friend. Don’t be afraid to order water.
Being frugal is a skill. And like all skills, you get better with practice.
