Forget drinking expensive wine or buying takeaway food; if you’re serious about building a successful business, “the smartest thing you can do as a new business owner is put your wallet away,” says Boost Juice founder Janine Allis.
Back in 2015, the Shark Tank investor took to her blog to explain why the quickest path to business failure is paved with excessive spending.
“If you’re starting a business and living by the mantra, ‘You have to spend money to make money’, you’re wrong!” she proclaimed.
“This mentality is killing Aussie businesses before they have a chance to grow.”
Allis said new entrepreneurs and business owners are often lured by the possibility of achieving overnight success – and they spend their cash accordingly.
“I have seen people who start a business with a flashy office, pay themselves a top wage and simply burn money,” she said.
“We’re living in an era of ‘now’. Everybody wants to have everything immediately and nobody wants to wait. But these businesses are often in the four out of five businesses that fail in the first five years.
“The reason is, this kind of thinking translates into how they manage their finances and how they want to run their businesses too. They want the sports car and the corner office but they’re not willing to invest in fundamentals like careful product development and good marketing.”
Allis admitted that those looking in from the outside might see Boost Juice as one of those cases of overnight success, but the brand’s success came from plenty of “hard slog” too.
“The reality is I worked from my house for the first two years, didn’t take a salary for three years and we didn’t take a cent out of the business for five years!” she said.
“We even sold our family home in year two to fund growth.
“To make a business successful you have to give everything: your time, your money and sometimes it feels like your soul!”
Take a good look at your budget
Patience is a virtue, said Allis, as is closely examining your priorities.
“Sit down and take a good look at your budget,” she said.
“When you really analyse it, you quickly start to realise how much money you simply waste on things you really don’t need.”
“How you feel about an ‘essential’ item right now is going to change over time. The more pressing your business needs become, the more it becomes like a hungry child.
“When that baby is crying for food and you have nothing to feed it, you’re going to be thinking, ‘Why did I spend $150 getting my hair done? Why did I get the expensive wine? Why did I get takeaway four nights a week for the past six months?’
“Suddenly a lot of the things you’ve been spending money on will make you sit back and think, ‘Really? This is what you wanted to do with the advertising budget this week?’”
Allis reflected that she could have spent more money on personal expenses in the early days of building her business, but that path would not have led her to where she is today.
“When I look back I think, sure I could have taken more holidays, spent more money on clothes, driven a nicer car – all those things. But if I hadn’t sacrificed them, I wouldn’t be part of the Boost phenomenon today,” she said.