Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

Spending Before Earning? Why This Mistake Could Sink Your Business!

30 Nov 2024 · 1 min

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In this concise advisory segment, the speaker emphasizes a core financial principle for startups: avoid spending money before you have reliable income. He advises entrepreneurs to keep expenditures minimal, recommending the use of free or already‑owned tools such as an Excel spreadsheet for early financial tracking. He warns against adopting costly investor‑management platforms or feature‑rich services too early, noting that such expenses can accumulate monthly while revenue may not materialize for six to twelve months. The overall message is to postpone non‑essential spending until the business can sustainably support it, thereby reducing the risk of cash‑flow problems that could sink the venture.

Chapters

You know, the rule is don't spend money until you have income, right? Or spend the minimal amount of money you can until you have income that can support it. And so if you start out using an Excel spreadsheet, that doesn't cost you anything if you already have Microsoft Office. But if you start out using an investor management platform, or you go over one of the ones that has all the bells and whistles, you could end up spending a lot of money a month. Before you ever have income, and it could take you 6 or 12 months to get income. So don't start spending money on expensive things until you need them, and in the meantime, keep it low-key.