Many people subscribe to the “fake it ‘til you make it” theory of creating business success and although it is definitely a good idea to put your best foot forward in front of others to show that you are thriving, it is a mistake to put yourself in hock to do so. So many times, people who are inexperienced start up a business and spend a lot of money to impress their customers. It is very easy to go over budget in a big way and an easy way to make big mistakes.
Quite a few start up businesses get a business credit card or a big line of credit and then proceed to start spending it on showy things like an expensive company car or business lunches. They do this in the name of projecting a certain image or lifestyle that screams “I make money.” It is okay to brand yourself.
However, all too often this type of money is spent on the wrong people or wrong things. You end up buying your sister lunch and talking about your business for five minutes and then writing off the whole thing as a “business expense.” You end up buying a five thousand dollar computer when a thousand dollar one will do or business cards with reflective Mylar surfaces when a plain white one will do. Sometimes when the money to start up the business comes from the family there seems to be an urge to show them that you know what your doing.
Acting as if you are successful before you are is a way of drawing customers and prosperity to you but it is best not to try and adopt a lifestyle that your paycheck from your business cannot support. It is important to always have funds available that can be put back into the business. You should especially not use our credit card to the max as often interest rates on business cards are super-high. You may have a longer period to pay them off but in the long run, these business expenses really eat into your profits.
The bottom line is that it is a mistake to put funds that can be used to advertise your business or build a website into a lavish lifestyle. You might also need these funds in the future to keep your business alive if business gets lean. If you spend money in anticipation of great wealth and success, you can ultimately jeopardize it from happening.