The Financial Advice You’ve Heard A Million Times But Should Never Listen To
If you’ve been to university, especially a top-tier university like Oxford or Harvard, you will have been deluged with advice about how you should take a job at a corporate gig. This advice seems logical at the time: after all, corporate work is usually stable and relatively well paid. But it’s not exactly enjoyable, especially for people who are looking to take a more entrepreneurial path. In fact, for some people, advice to go down the corporate road can lead to decades of misery that are never really resolved.
The problem is that a lot of financial advice is based on intuition, rather than after a careful examination of an individual’s priorities. It’s about striking a balance between what seems possible, and what seems safe. The problem for many entrepreneurs is striking a balance between the two. Some entrepreneurs rely on other people exclusively for advice about their finances, while others only rely on themselves. Jodi Goldstein, the woman behind Drync, the mobile wine company, says that what entrepreneurs need is a bit of both. They have to know good advice when they hear it and ignore all the bad.
“Stick To Advisors In Your Industry”
The first thing that Goldstein recommends that businesses do is seek advice outside of their immediate industry. Relying solely on one narrow cadre of people won’t give you the diverse range of experience that you need to understand how to go about organizing your finances successfully. Approach people with diverse backgrounds outside of your industry who have also been successful, and try to find out what it was that they did that helped them to make money.
“Focus On The Short Term”
Another bad piece of advice that you often hear is to focus on the short term. Usually, this is dressed up in a different way, like the importance of cash flow or the necessity of living in the moment. But the problem with this advice is that making money is almost always about taking the long road. Goldstein says that she has been to startups where the exclusive focus is on making money in the immediate term without thinking about how those quick financial gains will translate into long-term business plans. Often, she says, the promise of making money fast leads to a deterioration in the ethics of the company, which can ultimately hurt it in the long term.
“Don’t Litigate, Just Move On”
Another piece of financial advice that is bandied about with worrying regularity is this idea that entrepreneurs shouldn’t sue, they should just move on. However, this isn’t something that most entrepreneurs do as evidenced by the number of personal injury law firms. Goldstein says that founders need to take advantage of opportunities to litigate, otherwise they will find themselves working in an asymmetric environment. If they aren’t litigating, their competitors will be.
“Don’t Vet The People Who Give You Advice”
If you’re still in the startup phase, you’ll be amazed by just how many people there are out there who want to give you advice. Often, they’ll claim to have experience and know what’s best for your business, but you shouldn’t take their word for it. Do a quick background check on these people to make sure they’re who they say they are.