Cheap Entrepreneurs

[j]

P.s. you didn't answer my question.

 

[P. Bateman]

Originally Posted by robbie

Warren Buffet drives an '06 Toyota Camry IIRC.
Actually, he drives a 2001 Lincoln Towncar Signature Series (fake soft-top, nice!) and his license plate reads "THRIFTY." This is a stupid thread.

 

[oceans11]

Originally Posted by j

are you for real?


And that's the best you can come back with? I'm done. Thanks to the guys who had some "real" input.

 

[globetrotter]

Originally Posted by oceans11

I don't know maybe I'm from the old school but I believe you need a little "want" or "need" or bills in your life in order to keep you motivated. If all you need to get by is a few hundred bucks a month then why do you need to be a millionaire? If you don't need or care for the finer things in life what do you need to be a millionaire for?

how is that "old school"

 

[j]

Originally Posted by oceans11

And that's the best you can come back with? I'm done. Thanks to the guys who had some "real" input.
I don't need to "come back" to you. And you still haven't answered my question.

 

[crazyquik]

Originally Posted by oceans11

Really? So as an entreprenuer we're all suppose to just sock all the money under our mattress. Live in a box, walk or ride a bike & then die? I'm not saying your idea is wrong I just don't see the enjoyment of becoming self made & having an abundance of money & not using it "once in a while".

I know this may sound marsupialed but IMO lavishness, abundance, opulence & overtop things like mansions, Lambo's, yachts, Rolex etc. etc. are here for a reason. Those companies are surviving somehow aren't they?

I mean, I do see your point & it appears the majority who responded back all have the same frame of mind or thinking but it just seems a bit boring. Make money......save it.....die.

You've misconstrued my post. An entreprenuer will reinvest the money saved back into the business to grow it. It's much easier to fund growth through retained earnings than diluting the equity or taking on debt. In fact, retained earnings are the #1 source of corporate growth.

A huge failing of start-ups is that they take on too much overhead, to be flashy and prove they've made it, and end up having a cash flow crunch.

Companies that build mansions, exotic cars, yachts, and watches survive because they buy low and sell high. They buy input parts, assemble them into something desirable, and find buyers. It's no different than what people who make yo-yos or suits for J.C. Penny do, just the buyers are different.

 

[Piobaire]

This thread has delivered.

Debt for depreciating, consumer items = good.
Reinvestment of retained earnings = bad.

I mean, where can living below your means get you?

http://www.amazon.com/Millionaire-Ne.../dp/0671015206

 

[Real estate]

Originally Posted by hopkins_student

It sounds like there are things that he wants, but he's choosing to sacrifice in the short term. Willingness to sacrifice is a pretty useful trait for successful entrepreneurs.
Entrepreneurship is willing to live a few years like others won’t, so you can live life later like others can’t. Creating wealth is all about owning assets of value. Assets can range from stocks, business, real estate, information, bonds, trademarks, etc. Assets are considered anything that puts positive cash flow into your pockets. The key is that YOU have to OWN something and that its value continues to increase because its cash flow is able to be made to increase (you can expand a business, develop a property, your stocks dividend can increase etc) Entrepreneurs tend to be cheap as their consumption bills are not purchasing valuable assets, which don't contribute to greater wealth. The smaller you can make your bills, the more money you are able to save. The more money you save, the more opportunities you have to purchase assets. Its critical to being cheap in the beginning and sacrificing some comfort in the short term, so you can have capital to purchase cash flowing assets. Once you get over the initial hurdle and own things of true value, then you are able to finance your operations with other people's money (ie bank loans, venture capital etc). But it is still critical to continue being thrifty as every dollar you spend on consumption is a dollar sacrificed that could be put towards purchasing assets.

 

[v0rtex]

Originally Posted by whusurdadi

When I was an intern while at law school, I worked for a sole practitioner who was doing very well for himself ($600+K a year and working ~20 hours a week) - and he shared office space with another 2 attorneys - each worked 50-60 hour weeks and were making >$200k! So I asked him what his secret was - "You gotta spend money to make money" If you cheap out on advertising, experts, etc, you're ultimately hurting your bottom line!
Spending money on your businesses is not the same as living large in your personal life. Each dollar you take out of your business to spend on frivolous crap is a dollar which you have thrown away, never to be seen again. Each dollar you put in (or spend on the business) helps to build it up and will eventually be returned to you many times over. If you spend $1 you take from your fledgling business, you're really spending all the other dollars it could have generated too. This is why many successful entrepreneurs are pathologically cheap, and why the majority of people (who blow their paycheck every week and max out their credit cards) do not accumulate wealth. Highly recommend "The Millionaire Next Door" which another poster has mentioned, along with "The Richest Man in Babylon". Your friend has the right idea of minimizing his outgoings and sounds like a smart guy.

 

[globetrotter]

I used to work for a company that "lived large" - the senior execs did cool stuff with their money, for company parties we had top name entertainers, etc.

5 years later, the ex-CEO is hiding out in an african country because the FBI is looking for him, and a half dozen other top execs are in jail. market cap went from 16 bil to less than 2.

my present CEO drives an old toyota, and lives in a regular house in the subhurbs. his company has never had to lay off a single person due to economic trends or drops in sales.

who's smarter?

 

[anonymouschris]

Originally Posted by globetrotter

I used to work for a company that "lived large" - the senior execs did cool stuff with their money, for company parties we had top name entertainers, etc.

5 years later, the ex-CEO is hiding out in an african country because the FBI is looking for him, and a half dozen other top execs are in jail. market cap went from 16 bil to less than 2.

my present CEO drives an old toyota, and lives in a regular house in the subhurbs. his company has never had to lay off a single person due to economic trends or drops in sales.

who's smarter?

your cheap current ceo is smarter if he lives longer. on the contrary....there is no guaranteed tomorrow and if either ceo were to die tomorrow perhaps the one that lived it large was smarter

 

[Piobaire]

Originally Posted by j

are you for real?

J, after reading this thread, with a little help from Oceans, I have come to realize you are just a small timer.

 

[VKK3450]

Its amazing how people learn absolutely nothing from history or even current events.

K

 

[CTGuy]

Originally Posted by oceans11

Now that's what I'm talking about!!

I think you are missing the point. He reinvested money in advertising rather than taking money out of the business to spend. THAT is how people make money. Far too many people, including on SF mistake know how to SPEND money for knowing how to MAKE money. The two generally are unrelated.

 

[oceans11]

Originally Posted by j

I don't need to "come back" to you. And you still haven't answered my question.
Okay I'll bite. I guess I can't resist. First of all I apologize for sounding like a schoolyard ass. Maybe you're right, maybe I didn't clarify my point. Because I see a lot of posts answering as if I'm saying my friend needs to drive up in a Ferrari in order for me to see he's a true entrepreneur. And that's absolutely not what I'm saying nor getting at. I understand perfectly that in the end the assets you OWN are the most important & investing the majority of your earned dollars back into your business is the smart thing to do. I have no argument with that at all. My question has always been whats the motivation or maybe I should say what drives a person to keep going if there isn't any "fruit" along the journey? That is the reason why I through in a few luxury items. For some there are legitimate benchmarks along the path on their business journey. And just because they see fit to spend a little to reward themselves, kind of like patting themselves on the back as to say, "Good job" it doesn't mean they'll be broke in 5 years. I hope that's better clarification for all.