Money mistakes – they’re nothing new.
Do you wrestle with money mistakes? Do you learn from those mistakes?
I keep thinking about the financial reality that Buffer CEO Joel Gascoigne shared about his money mistakes.
Buffer increased spending to a sum that couldn’t be sustained based on revenue levels. The aggressive hiring of staff, along with perks, led to plummeting profit.
The mistake was painful.
The passion and optimism to build a business and employ a great team of talented folks reaped painful financial consequences. People lost their jobs, staff perks were slashed, and Buffer’s sustainability questioned.
Fortunately, the mistake didn’t cause the company to go down in financial flames.
The company made changes – changes that were difficult to swallow. But swallow they did.
CEO Joel and COO Leo listened to their advisors and learned.
The painful experience over their money mistakes resulted in healthy choices for the future.
CEO Joel outlined mistakes that included
- Precarious growth choices rather than taking a steady and gradual pace
- Lack of expertise in financial and human resources arenas
- Questionable financial modeling
- Risky financial behavior
Overall, they acted like two kids in a candy store with no control. They bolstered ego and pride without insight and reality. They were creating a business and were full of adrenaline. Energy and passion are exciting.
Joel and Leo’s behavior is not uncommon. Being an owner of what appears to be a successful business is a psychological thrill all its own. It’s like being a parent for the first time. It’s a time like no other. However, being a proud parent and moving into the next stage is something entirely different. Children must be nourished for a life time.
The business owner must protect and nourish their business.
Financial realities make it possible for a business to continue into the future. If CEO Joel and COO Leo had maintained their level of spending, their company would have crashed financially.
Don’t let your unhealthy spending behavior destroy your business.
Know your numbers – be mindful – so that the real numbers don’t cause loss and pain.