How to Spend Money

Money is both a luxury and a scarce resource. Mismanagement is another reason why a proportion of firms hit trouble. New cars for the sales team, prime time television commercials, or another administrative assistant; all of these might do wonders for someone's ego, but they can melt the corporate cash reserves faster than the Sahara sun melts butter. And when it's gone, it's gone.

In the 1980s I ran a PC dealership; it's still open today and operated by my co-founder. A lot of people think he's tight with money. In fact, he's prudent. In good years he squirrels money away, in bad ones, he disgorges to keep staff on when competitors are laying them off. This provides him with a continuity of corporate knowledge and skills, which other firms can't afford. When it comes to spending money you should always ask, "Is it really necessary?" and "How is it going to benefit the firm?" If you husband the firm's resources consistently, your firm will be sound.

Note Just remember that when you eventually taste success, ifs no time to take your eye off the ball. People who have experienced success previously know that rewards are fine, but this new and far more pleasant situation brings its own challenges.

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