Saving while building ?

[Michael Greene]

Hey guys,

I listen to a lot of speakers that talk about this but i was wondering how applicable it is to people who are still trying to build their career or business.

Does it make sense to save (follow the 70% / 20% / 10% rule from Richest Man In Babylon) while you're trying to build your business up? Or should you be putting all your money into your business?

Thanks

 

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[devine]

Invest 70% into learning, 20% into your business and save 10%.
Otherwise enjoy pennies.

(but why?)
Because smart 20% investment makes more ROI than 70% not so smart investment.

 

[MJ DeMarco]

follow the 70% / 20% / 10% rule from Richest Man In Babylon

Slowlane dogma will yield Slowlane results.

If you have a business that prints dollars, why would you redirect money into a system that prints pennies?

 

[Jesus]

I apologize for my ignorance but in a business. If you Invest 70% into learning, 20% into your business and save 10% where does ones income come from?

 

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[Andy Black]

Slowlane dogma will yield Slowlane results.

If you have a business that prints dollars, why would you redirect money into a system that prints pennies?

Our job as business owners isn't to make money, it's to build businesses that make money.

(Listen to someone that's already done it!)

 

[devine]

I apologize for my ignorance but in a business. If you Invest 70% into learning, 20% into your business and save 10% where does ones income come from?

From something that is unknown to majority of entrepreneurs: efficient investments.

 

[OldFaithful]

I apologize for my ignorance but in a business. If you Invest 70% into learning, 20% into your business and save 10% where does ones income come from?

The Richest Man in Babylon encourages you to get a JOB and merely save 10% for future prosperity. As @MJ_Demarco pointed out, that is the typical Slowlane dogma. On this forum, we turn that philosophy upside down.

Like @Andy Black said, we are focused on building "money tree" businesses and being the business owners...so our income comes from our businesses, which initially came from our customers.

 

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[Tiger TT]

OP's question also included "should we save 10% while building the business".

I'm not in a position to answer this since my current business doesn't require much money to build. Maybe we should save a little in case things don't go well?

 

[Envision]

What are you saving for?

Most people save cause thats what they think theyre supposed to do. I generally save then spend on something that will yield more to save.

 

[PaulRobert]

I believe an adequate amount of capital reserves is necessary but it all depends on the business and its situation.

 

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[lowtek]

so, many people here malign video games ( I get it, they're generally a waste of time ), but I think there are some strong parallels between real time strategy games and business. Not that playing Starcraft will make you better at business, but there are some lessons to be distilled.

For instance, in Starcraft you win by harvesting resources (making sales) and investing that money into technology infrastructure (to make your army of employees more productive), more units to harvest resources (sales people), and more combat units (employees to wage war against your competitors).

The top players in the game only save up enough to purchase expensive infrastructure that will facilitate one of the four goals above. The rest of the time they are balancing income with expenses to keep their money as close to zero as possible. If they allow cash to build up without using it for something productive, they fall behind quite quickly (because the opponent is keeping their money low).

The same rules apply to business. You should be creating a machine that prints money, and you use that money to make the machine run faster and more efficiently.

There are only two situations in which you should be saving money:

if you're afraid of a cash flow crisis, in which case you'd need a small emergency reserve to weather the storm.

Or if you are saving for expensive infrastructure to upgrade your machinery.

 

[devine]

The Richest Man in Babylon encourages you to get a JOB and merely save 10% for future prosperity. As @MJ_Demarco pointed out, that is the typical Slowlane dogma. On this forum, we turn that philosophy upside down.

Like @Andy Black said, we are focused on building "money tree" businesses and being the business owners...so our income comes from our businesses, which initially came from our customers.

I think he was asking about how a business could make money if only 20% is invested in business.
Like "How can I generate income if I don't spend 70% on product stock and advertising".

In reality it's much more effective to spend 70% to learn how to make your 20% investment work at 100% efficiency, instead of making 70% investment work at 1% efficiency, because you cannot even hypothetically know how to make it perform better.

 

[Michael Greene]

Slowlane dogma will yield Slowlane results.

If you have a business that prints dollars, why would you redirect money into a system that prints pennies?

Thank You Mj, and everyone else!

 

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[Yoda]

Or if you are saving for expensive infrastructure to upgrade your machinery.

Not enough Pylons.

Mine more minerals.

*you know you read it in that deep voice, didn't you?