A few years ago, my sister and Greenovate Construction co-founder Catalina Campos got to have dinner with FUBU Founder and ABC’s Shark Tank star, Daymond John. She asked him one question, “What’s the number one reason entrepreneurs fail?” Without a second thought, he responded, “You have too much money.”
Mr. John knows something most entrepreneurs don’t want to admit: when you can rely on your parent’s/spouse’s/your own dripping salary, you don’t need to grow quickly. Our product is the main focus, right? Nothing is more important than scalability and authenticity.
Business Is Simple—You Have to Make More Money Than You Spend
I’ve been studying millionaire and billionaire minds by living in one of the top 10 most expensive zip codes in the U.S. over the last six months.
Successful entrepreneurs understand why “broke” is good:
- Focus. You prioritize around revenue-generating activities. Good, you should. If you’re the CEO of a company, you should care about this one.
- Speed. You move fast and break things. Mistakes can no longer take five months to bleed out. Hire quickly; fire quickly. Facebook Ads? Run a 24- hour test and pivot. There’s no room for 18 month runways.
- Freedom. Most things don’t matter when you’re broke. Only money things matter. Someone picking your brain is not a money thing. Spending six hours optimizing your bank’s 3% fee is a waste of time. Distractions disappear overnight. You need more sales.
- Restructuring. You can’t take bad deals anymore. The client that once paid you $200 total over the entire relationship (LTV) should now be restructured into a deal that pays a $25 per month subscription for a Facebook or Slack group. This snowballs into a healthy, $20,000 /mo recurring revenue model much faster than scaling 100 unique sales at $200 each per every month.
Running low on funds is a blessing and a curse. I’m not trying to say that broke is good. But I definitely am saying this:
Broke Is an Advantage, If You Choose to See It That Way
Well-off is soft. It can trick you into a fall sense of security.
Well-off is not caring about money first.
Well-off is five-hour-long meetings about the product.
Well-off is 10 emails about customer experience.
Broke is growth and retention.
Broke is the spark that lights a business.
Broke is necessity turned into money.
Broke is utility utilized.Opinions expressed here by Contributors are their own.