Does Money Truly Motivate Entrepreneurs?
I’ve looked at my checkbook about three times since quitting my previous job back in May 2014. Fortunately, my wife handles the finances at home — a particularly stressful job when household income briefly plunges to near $0 during startup mode.
As you may recall, Amy Katz and I co-founded After Nines Inc. in September 2014. We bootstrapped the company and we didn’t take any money out of the business until around March 2015. Every dollar After Nines Inc. earned during the first few months flowed back into the business.
HOPE IS NOT A STRATEGY
So what’s our financial plan — and what motivates us day to day? In some ways, those two questions are related. But in other ways, those two questions are completely separate items of discussion.
What motivates us? A few random answers:
- Creative freedom.
- End-to-end business control.
- The ability to partner on ideas with each other — taking reasonably good concepts and then shaping them, polishing them, and nurturing them into something great.
- The ability to say “I’m done” for the day because of family commitments.
- The ability to say “I’m working 24 hours today” because I’ve got a creative itch that needs to be scratched right now — and everything else must move to the back burner.
- The opportunity to speak with the world’s leading I.T. entrepreneurs — to learn what makes them tick.
ENTREPRENEURS: MY SPIN
Somewhere within the mix, money is a motivator. But in the age of “instant gratification,” building a business is decidedly different. Being an entrepreneur often means:
- Pride of ownership from the ideas that begin to percolate in your head.
- Backed by those ideas, rapid satisfaction from the things you build.
- But building a business also means delayed satisfaction on the financial front.
The first check I received from After Nines Inc. arrived in Q1 2015 — about four months after our launch. It covered some of my expenses from 2014 — about $2,000, I think.
It was the sweetest $2,000 check I’ve deposited in quite a long time, because it represented positive cash flow at After Nines Inc. Thanks to Amy’s planning and financial management, we’ve essentially been cash flow positive since day one. But again, the cash flows back into the business and not to us in any significant way. At least not yet.
THE FINANCIAL PLAN
Amy worked up a financial plan right as we launched this site.
Plenty of people are good at building top-line revenue models and forecasts. But Amy dives deeper and really wrestles with the expense models — and plugs any margin leakage before it ever has a chance to occur.
A prime example: We once took a business trip to Orlando, and visited Disneyworld together with a client. I purchased tickets at the gate for the three of us — because I hadn’t proactively purchased discounted tickets online. Amy would never have made such a mistake. Not in her personal life. And not in our business.
Margin leakage like that adds up quickly — especially as a small business begins to navigate more and more financial transactions. Avoid the margin leakage and pump your initial revenue back into the business, and suddenly you’ve got a decent war chest to build something even bigger. Something with impact. Something with staying power.
STATING THE OBVIOUS
Like just about every other startup in America, we’re obsessed with several well-documented trends:
- Recurring revenue from subscription services.
- Data gathering, analysis and true business intelligence from the data.
- Influence the influencers.
- Any-to-any communications — thanks to cloud and mobile computing.
We’ve now got the cash flow to invest in those trends — and cover them here.
If our R&D and financial plan come together as expected, Amy and I should receive our first official payroll paychecks around January 2016.
In the meantime, our own day-to-day satisfaction building a company carries us forward. Call us crazy. But please, call us entrepreneurs.