ENTREPRENEUR TO MILLIONAIRE MYTHS #7 – TO MAKE MONEY, YOU HAVE TO SPEND MONEY… WELL, MAYBE NOT.

Does your business need to make more money? Would you like more cash, more profits, and more income? Wouldn’t your business be so much more fun, less stressed, and be easier to manage if it just generated more money every week and month? Of course, it would! Well, here is the most common adage in business that has been extolled for the last several hundred years: 

“To Make Money, You Have To Spend Money.”

See how easy that is to understand? What could be wrong or flawed with following that advice? It’s common sense, right? 

In this article, I’m going to share with you why that myth is so dangerous, damaging, and the number one reason you and your employees will never quickly become rich from your business. I will also share with you where this fable comes from, why it still exists, and what you must do instead if your goal is to really make more money faster, easier, and smarter. 

Warning! Even after you learn why this thinking is so dangerous, there is almost a 100% chance others in your company are following the old and stale advice and will argue with you and your new, superior thinking. 

WHERE DID THIS WEALTH-DESTROYING MYTH COME FROM?

Like so many dangerous business myths that leaders and entrepreneurs follow today, this one has two major cornerstones acting as superglue. First, it began in the early days of commerce thousands of years ago and has actually been true until the middle of the last century. And what’s worse is, it can still be true in a few situations today – but not many. And second, it works – to some degree. Let’s explore. 

“You must spend money to make money” is rooted in the “production or product-based economy.” The point is that because of “capacity or production constraints,” the owner would have to buy more raw materials, parts, and pieces or expand production space to increase income and profits. In other words, you have to “buy your way out of that tangible product creation ceiling.” No matter what you made or built, you couldn’t make more money until you spent more to buy more to create more of that something. 

And that premise is still true today – for those who manufacture or produce a tangible product. However, in the 1950s to the1970s, the economy shifted from “product-focused” to “services-focused” – from tangible goods to intangible services. Today, some argue that the total services economy is above 85%. This means there are still products being created, built, and manufactured, and you need to spend money to create those offerings. But there are few companies who actually still make things – in America. 

Almost 90% of the US economy is based on service, which is why “You Have To Spend Money To Make Money” is not only a myth but also the single fastest way to eat through your profits and destroy business wealth. Even worse, too many leaders have taken this adage out of context and now apply it to marketing and sales. 

In addition, there are millions of vendors, suppliers, and experts spending millions to convince you to spend multi-millions with them to make even more millions. But the millions you might make are top-line – revenue. What you spend making millions is too much of your profits and cash and limits working capital. 

This is the reason that 98%+ of entrepreneurs and small business owners struggle (many closing their doors) because of spending too much money to “try to make money.” They end up with little cash on hand, inconsistent cash flow, no working capital, and lagging receivables. That is not fun, easy, or sustainable. 

And even if your business might grow bigger, it won’t make a lot more money you can keep! What would you and your employees rather have – a big business or a big bank account? Take a vote. You and your team should read the Introduction section of my new book, Entrepreneur To Millionaire (McGraw Hill 2021), to make sure you’re not a victim of this flawed thinking – burning money to make a little money. 

WHAT SHOULD YOU DO INSTEAD?

First, if you must purchase raw materials or goods to create your offerings, then yes, invest the money. However, in all other situations, you must make sure you are investing – not spending – especially when it comes to marketing and sales growth. 

Over 67% of marketing and sales spend is usually a total waste, and in some cases, even destroys your brand. How can that be? Recently we met with an executive team, and they were spending a fortune on SEO and content marketing to drive growth. However, their content marketing copy was not engaging or connecting to a Perfect Client Profile (PCP – Chapter 5 in the above-mentioned book), and a high percentage of that effort was not producing engagement or leads (Chapter 9 Marketing Demand Creation). And the executives who were in their sweet-spot target, and read the content, which was quite technical, would never read it again or keep them top of mind – tarnishing the brand. 

CALL TO ACTION

First, understand the real times you – “have to spend vs. want to spend.” 

Second, when you or an employee wants money or budget for an effort or project – especially marketing or sales – strategize how to get the same results without spending a dollar (this is when to call us!). 

Third, make sure you are learning and following the roadmap in the Entrepreneur To Millionaire book. Every chapter, from introduction to last, is focused on how to make money without spending money. Your business is like everyone else’s in this regard – there are huge amounts of profit, cash, and money locked up in your business – cash in the walls – and it won’t cost you a dollar to unlock them. Remember this: 

You don’t need to spend more money to make more money.

You need to learn how to make more and spend less – creating business wealth. 

BOOK INFORMATION

Is Your Business Growing or Creating Wealth?

       “A must-read book.” —Mark Cuban

Amazon: https://amzn.to/2WJSNYw

Kindle Edition – https://amzn.to/2Kw9cgW

Bulk Sales 25+ for 40% off www.porchlightbooks.com

AUTHOR BACKGROUND

Kent Billingsley is the founder and president of the Revenue Growth® Company, LLC (TRGC). He is a published author, international keynote speaker, and business transformation expert. He has become America’s Revenue Growth® Architect by helping thousands of entrepreneurs and CEOs (representing over a million employees) generate several billion in new sales, as well as tens of billions in new revenue and profits for large corporations. He has personally designed, built, transformed, and turbocharged several thousand organizations in 36 countries. Over the last 20 years, his proprietary content and trademarked programs have helped thousands of entrepreneurs and employees become millionaires and multimillionaires by “creating wealth” inside their companies. He can be reached at [email protected].