17 Dec 2018by Chris Weir
Why is a business budget at startup so important? Less than 30% of new businesses last 10 years. Less than50% make it 5 years. And according to the SBA, one of the top reasons’ businesses fail, is financial struggle. Yet, I see new business owners every single day, take a 50%, 70%, or even 90% draw on revenue. Some take 100% of the revenue and pay themselves. They don’t have a financial problem, they have a short-term self-benefit problem.
In most cases, they have a lifestyle desire that supersedes their desire to be an entrepreneur. And that’s perfectly fine if that is how they want to roll. The part that is frustrating to me, is to then hear these same people blame the market, blame their inability to secure another round of financing, blame employees, clients, or anything else they can.
Starting a business is hard, and in the beginning, it may very well not produce you the paycheck you are wanting. When I started my first advertising agency, I had a full-time job that I worked on 3rd shift, just so I could spend the day on my agency. Every single penny we made went back into the business. I didn’t start working with a full-time income until after my first year, and even then, it was a very small paycheck.
However, we didn’t buy a new home, or new cars. We were renting our house and our cars were paid for. No credit cards, no student loans, no debt period. My agency was more important than my lifestyle.
If you want long-term success, you have to give up short-term benefit.