Hey, Everyone! Let's Waste Some Money!
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Huh? Did I really just suggest that you waste money on your business? Isn’t that about the most counterintuitive thing you’ve ever heard? Especially for the entrepreneur trying to grow a business and make as much profit as possible?
Related: Why Risk-Takers Make the Big Bucks
Despite what you might think, I have a theory that, in business, it’s sometimes a good idea to “waste” some money if you want to experience serious growth. It might surprise you even more to know that I think this is especially important in startup businesses that aren’t yet cash-flow positive.
Let’s be clear right here at the start: I’m not talking about a “rainy day fund” or "emergency fund.” You may want to have one of those, too. No, the fund I'm proposing is totally different and should never be used on a "rainy day.”
As business owners, we all work on budgets that include lots of expense line-items, including rent, payroll, telephone, insurance, travel and entertainment and others. But, now, perhaps you should consider a line item called “waste money.”
This category is reserved for doing something totally outside the box of conventional thinking. Call it risk-taking capital, investment capital, money to be used to open up new opportunities for your business.
Depending on the size of your company, the amount you put in this expense category will vary. The good news is that it’s entirely up to you how much you allocate to this portion of your budget. For example, when I started my first business, I allocated $1,000 to this category. As your company matures, this expense item will increase exponentially.
Next, let’s review some ways to use your “waste money” fund: Attending that trade-show or conference you thought was just too expensive is one idea. Another is visiting a client or a prospect in person (much more impactful than a Skype meeting or conference call!). Or: trying radio advertising for the first time, or executing your first pay-per-click campaign. There are so many uses for this money. Let your imagination run wild and I’m sure you'll think of many others.
Don’t be discouraged that many times you'll experience these “waste money” fund investments being a bust. Maybe that trade show wasn't all it was cracked up to be. Perhaps you won't land that prospect you went to personally meet, after all.
Yet, when I look back over my own career and my use of that “waste money” fund, I know that overall it’s provided a positive return on my total investment. That’s because not every wild idea is a bust, and it might just take one “winner” to catapult your business to the next level. You just never know, and having this money already allocated for this use gives you the opportunity to find out.
I want you to understand that it’s important, if at all possible, to keep some money on hold -- just for the oddball opportunities that will pop up along the way in business, from time to time. There’s going to be a moment when you feel in your bones that an opportunity -- one that seems totally unrelated to whatever it is you ordinarily do -- is actually a perfect fit.
And if you don’t have at least some money you can employ for that purpose without worrying about seeing a return, you can’t give it a try. You might not, for example, attend a trade show or fly off to meet an important potential client, one-on-one.
Since developing the concept of this “waste money” fund, I've been surprised by how few people I talk to have ever considered having one of their own. Almost no one seems to think of putting some money in the budget to use for ideas and opportunities that might on the surface appear “out of the box,” but also just might kick back an ROI many times the amount you've spent.
The point is that you want to always make certain you’re in a position to take advantage of unpredictable, possibly risky, opportunities when they show up -- and make sense. These funds make it possible to truly think outside the box. That “waste money” fund is the key to that box -- the key that can let you in -- to the place where potentially huge, hidden profits might reside.
So, whatever you do, keep pushing the envelope. Look for new opportunities. In the words of a famous maker of athletic products, “Just do it” -- to which I’d like to add, “and never look back.”