Being a Financially Wise Business Owner

I recently read an article for ESPN Sports that had a statistic: 80% of all NBA players file for bankruptcy within five years of joining the team and getting a huge multi-million dollar salary. While there is no exact statistic for rappers, the number is probably close to 50%. Some of the biggest names in the game have gone totally broke and don’t even make records anymore due to financial issues.

Aside from the NBA and the music industry, another place you see this trend is lottery winners. Roughly 80% of lottery winners are completely broke within five years. It’s interesting that the amount of time for both lottery winners and NBA players is five years, and also that the vast majority are effected by this.

It goes to show that being financially savvy is extremely important to the overall long term success of your business, even if you happened to stumble upon a few million dollars out of nowhere (which is unlikely as it is). But one cool thing about finances is that you can hold a small nut and feel rich while at the same time you can be given millions and be broke just a few short years later without anything to show for it.

You can make just $3,000 a month and feel rich, though, if you’re financially stable. Let’s say all together your bills, including groceries and household expenses, end up being around $1,500 per month. At that rate, you have an extra $1,500 to spend every month to spend and if you put half of that into your savings and spend the rest, you’ll find you have plenty of money to go around.

The trick with financing though is to take into consideration every single thing you pay for. If you write out a budgeting plan and haven’t included monthly expenses such as tooth paste, mouth wash, deodorant and other household items, then you aren’t financing properly.

At the same time if you don’t include investment money every month for your business, then you will find that you don’t have nearly the same amount of success in your financial future than if you did. Sometimes living with your parents for a few months while you get your business off the ground is even acceptable, as long as you end up succeeding and working ten hours a day to make it happen.

This is exactly how I started my business. I turned 18 and had basically no job and no money except for the “side money” I earned here and there from my website. I say “website” because I certainly was not a business owner yet, I hadn’t had a business license and I wasn’t pulling in any more than $100-$300 a month on average. This isn’t enough to live off of and certainly not enough to continue paying the bills.

At 18 years old my dad basically told me I better get a job, get in school or get out of the house. Pretty typical parental advice I think once one has turned the golden age of 18. But I wasn’t quite ready to start my business off yet and I knew that. I needed just a little bit more time, because let’s face it I had just got out of high school and I FINALLY could invest all of my energy and time into the business… But I wouldn’t be able to do that if I immediately was in college of working a 9-5.

So I did the only thing I knew how to do. I decided to call my mom and move in with her, even though she lived on the other side of the country in Miami, FL. I did this because I saw it at my final chance. I told her I wanted to live there for half a year (6 months) and she was working at the time so I didn’t need to worry about paying bills. That gave me six months to come up with a plan, engage and succeed.

I used the first two months figuring out my plan and trying to come up with a budget for how much money I would need to make this happen. After doing my budget on paper I realized that, realistically, I needed about $1,000 to begin. So I held a sale on beats for exclusive rights at only $50 or 5 for $200 to earn the money necessary. Using just a single Twitter account and software I was able to land myself the sales I needed to earn the $1,000 in 2 months. I kept every bit of that money and didn’t spend it on anything, I hoarded it.

Finally on the third month, I started spending. Now, a full six years later, my business is still going strong, I own a car and a house and have a family I am proud of. This is the commitment I made to my finances. Lately I’ve been cracking down on finances even more to enable my business to progress faster. Roughly I’ve been able to spend twice as much money per month on investments for the business and it’s showing in my constantly rising Google rankings and sales.

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