Invest more, spend less

"Lack of money is the root of all evil” George Bernard Shaw

The difference between spending money and investing money is usually in the eye of the beholder. I once worked with a CFO and the running joke in the office was that the Grand Canyon was formed when he dropped a nickel down a gopher hole and went digging for it. To him any transaction that had the word “payable” attached to it was just wasting money.

I’ve also worked for some very wealthy people. They had to be because they spent real money like it was Monopoly money. Unfortunately I've worked for less than wealthy people who spent other people's money the same way.

The fact is spending money is fun; hiring bright people, having a cool office, state-of-the art equipment, leading edge marketing et al. What fun, just like a grown up company.

Unless, of course, if you're not a grown up company, you’re a start up, or a restart or a company in financial trouble. Somewhere between squeezing nickels and being cool is sanity.

I once played golf with a guy who said his father always told him to "swing easy whenever it's uphill, into the wind....and all other times". Pretty good advice for spending money too.

Ask these questions:
o What is this being used for….really?
o What business impact will spending this money have....really?
o If you spend capital on this what might have to wait....and which is more important?
o If one of your investors or board members is in the office when it/they arrive will you proudly show it/them off?
o Would you spend your own money on it/them?

Don’t get me wrong, every expenditure shouldn’t become the Spanish Inquisition but with anything that requires care and feeding or goes on a Cap Ex table you should swing easy.