Sometimes, people who aspire to be business owners have this idea that they’ll pitch their idea, get millions of dollars in funding and start spending money like pro athletes. But, if they’re anything like the average American, they'll have an average $1,000 in savings (if that). They’ll also have $17,000 to $137,000 in debt. If these numbers describe you, then borrowing money, applying for a loan, relying on credit cards and finding an investor may not be your best move. Instead, you should bootstrap your business. My co-founder Dan Foley and I bootstrapped Tailored Ink back in August 2015. We spent a combined $1,000 to get it off the ground and kept our costs low. Flash-forward to today, two years later, and we’re swiftly closing in on the $1 million mark. We still haven’t maxed-out our credit cards or applied for a business loan. Want to know how we did it? Here are some financial habits we learned on our way to becoming successful business owners.
1. Spend within your means. When I was making $40,000 a year, back in 2012, I was eating frozen TV dinners every single night. Aside from my desktop computer, which cost only $300, there was no furniture in my apartment to speak of. I even slept in a $25 inflatable bed. Most of my friends and colleagues who had tons of college debt and were making about the same as me were literally pissing money. When they ran out of cash, they would max-out their credit cards. Despite everything you may have seen on TV, this is not how to behave if you want to become successful. You’ll never accumulate wealth if you spend it as soon as you get it. Debt and loans do not equal wealth. How do you keep yourself disciplined and spend less money in a credit-dependent and debt-ridden culture? By practicing delayed gratification. It’s the key to financial success. You need to believe that your short-term sacrifices will result in long-term gain. And they will.
2. Save way more than you spend. With that in mind, you should aim to save as much as possible. Some people will tell you the exact opposite, as in, “Don’t worry about saving until you’re 30.” These are the same people who'll work until they’re 65 and wonder why their savings accounts are so small. There are plenty of secrets to growing money, but there’s no secret at all to saving it. You just need to tuck in your belt and control your spending. Many financial advisors recommend saving at least 10 percent of income per year, but that’s not enough.
But if you dream of owning your own successful business one day or becoming a millionaire before you retire, you’re going to have do some soul searching. Are you willing to delay your gratification and make some sacrifices in the near future so you can reap the rewards down the road? Will that sacrifice be worth it to you?