You’ve probably heard of the Barefoot Investor (sometimes known as Scott Pape) by now. He’s that chap with the no-nonsense financial advice that’s managed to resonate with everyone from millennials to boomers.
And while Barefoot Investor’s advice is aimed primarily at personal finance, there are nevertheless certain salient points that can be applied to small business as well.
Here are six times we think Barefoot Investor has hit right on the money.
#1 Simpler is better
One of the reasons the Barefoot Investor is so popular is the emphasis he puts on making personal finances simple. There’s a real power in simplification, especially if you’re a small business owner.
Performing mundane tasks might be inevitable when you’re running your own business, but you want to be spending as much time as possible leveraging your key skills, and less time rummaging through your office for that one receipt.
Set up systems that simplify your operation, and you’ll make your life that little bit easier. You can automate your finances and billing, centralise your computer filing system with a server, or get a software package to help you manage schedules.
#2 Prepare for rainy days
Barefoot is a big proponent of emergency funds, although he more often refers to these as “Mojo” accounts, since knowing that you have some cash stacked away is a big stress-reliever that can help you “get your mojo back”.
We couldn’t agree more. Most experts agree that having a minimum three months’ living expenses is a must when starting a new business.
Entrepreneurship almost always involves a risk, so having a fall-back position should something go wrong is essential if you want to live and fight another day. Mojo is a must.
#3 Prioritise ruthlessly
If it doesn’t affect you too much, it’s probably not worth spending more money on than is absolutely necessary. Go through all your bills and make sure that where you’re paying extra, you’re paying for added value.
Don’t skimp on the things that will make a real difference to your business; proper bookkeeping, for instance, is hardly an indulgence. On the other hand, you probably don’t need extra-nice office space, no matter how much it will impress potential clients.
#4 Negotiate on everything
A surprising amount of personal finance problems are the result of people just wanting things to be “sorted” and not bothering to negotiate to lower rates. This is sometimes known as “the lazy tax”.
Barefoot definitely does not put up with the lazy tax (he even provides a script on negotiating in his book), and neither should you.
Insufficient cashflow is one of the top killers of small business, so getting those overheads down is absolutely essential. Negotiate hard on those recurring payments.
#5 Make it fun
Barefoot advises scheduling date nights (either with your partner or by yourself) on which you complete more mundane parts of your finance journey – such as setting up better-value bank accounts – right there in the restaurant.
Forcing yourself to complete a tedious task by adding snacks and libations seems like a good move to us (as long as the latter is consumed in moderation). Trawling the net for a cheaper supplier, for instance, would just be so much better with a beer and some chips.
#6 Be tenacious
In his book, Barefoot advocates what he calls the “alpaca mentality”. Hopeful savers, he says, must guard their money like an alpaca guards it flock (i.e. with surprising ferocity).
Taking an assertive, scrappy attitude to your finances is great advice, but entrepreneurs need to take this mentality to just about everything if they want to maximise their chances. In an ever-shifting business landscape, being able to move decisively and aggressively when needed will give you a killer edge.
(Lead image: Barefoot Investor / Facebook)