I read (and enjoyed) Dr. Stanley's latest book, "Stop Acting Rich," which compares and contrasts the lifestyle choices of the super-rich (deca-millionaires, with $10 million or more to invest), the rich (those with investable assets of at least $1 million), and the merely "income rich" (those people with high incomes but equally high consumption habits, rendering their investment accounts empty).
Dr. Stanley's main thesis is that the rich live within their means while the wannabe-rich use status symbols (BMWs, Rolexes, Grey Goose vodka) to try to transplant themselves from one economic class to another without doing the hard work of actually earning a place among the super-rich.
The book got me thinking about how the same idea might apply to business owners. Admittedly, I have not done research on the topic, but if I had to guess, I'd imagine the wealthiest millionaire business owners would display some similar patterns.
Here are 4 habits (I'm sure there are more) to build a business like a millionaire:
1. Choose a boring industry
I have found that the most profitable businesses are in the least sexy business categories. The scrap metal dealer or the heating and air conditioning company with the grubby vans is likely more profitable than your advertising agency or craft brewery. Generally speaking, businesses that sell to other businesses grow faster than business-to-consumer companies.
A good part of the reason boring industries are more profitable is a simple fact of supply and demand: Fewer people want to make plumbing gaskets than bake cupcakes. Pick your industry wisely.
2. Create a two-color logo
Back in 1995, I started my first business and was convinced I needed a four-color logo. By the time I printed business cards, envelopes, invoices and some basic marketing materials, I had blown through thousands of precious startup dollars. Every time I hired a new employee, I couldn't use a basic quick-copy center to get his or her business cards. Instead, I had to send the cards off to a professional printer who charged hundreds of dollars per box of fancy four-color cards.
Smart companies make do with two colors. The Nike swoosh was one color. Lululemon Athletica -- two colors. John Deere is just green and yellow. Coca-Cola is and always will be red and white.
Book publishers know that two colors is plenty. When my publisher, Penguin Books, sent me mock-ups for the cover of my new book, sure enough, it was two colors. They're smart, they've done the math, and they know two colors is enough to make a cover striking. When applied over thousands of copies per title and hundreds of titles each year, the money adds up.
3. Rent month-to-month
Perhaps because I blew so much money on my fancy logo, I started off skimping on office space, and I think this moderation was the main reason I was able to get my business off the ground.
My first office was my parents' basement (five-foot ceilings and the scars on my forehead to prove it), but the price was right: $0. The next office was a spare bedroom in the $800-a-month apartment my fiancÃ©e and I rented.
I finally moved out of the house two years after starting up and rented a 100-square-foot closet (really) that had no windows and no ventilation system. In order to get any air in the closet, I had to leave the door to the hallway open, which made for some interesting encounters, given that the building was a little seedy and a hot spot for street people and panhandlers. Both my first employee and I toiled from the closet, and I paid $75 a month with no long-term commitment.
The next office cost $250 a month -- and had a window. As we grew, I negotiated other month-to-month leases.
After years of skimping on digs, I screwed up. Figuring we had "graduated" as a business and were now successful, I did what Dr. Stanley would have rolled his eyes at: I signed a five-year lease on a trophy office that cost me $20,000 a month. It was way more space than we needed and had individual offices for each of my staff. It was ridiculous, and I would live to regret it. We never actually filled the space and rarely entertained clients there. After five years and $1.2 million paid in rent, my penance was over, and we moved into space that cost less than half as much, with an option (not an obligation) to take extra space if we needed it. Lesson learned.
4. Buy furniture at auction
I think office furniture actually depreciates faster than a car, which is worth 15 percent less the day you drive it off the lot. Determined to bootstrap our first few offices, I paid less than $100 per work station (chair, desk, etc.) for furniture I bought at various auctions over the years.
The best time to pick up office furniture was in 2001, just after the tech wreck, when thousands of well-funded dot-coms blew up, flooding the auction market with Aeron chairs and Herman Miller desks available for pennies on the dollar. In my opinion, we're in the midst of another enormous technology bubble that will end with a "pop," and then you too can pick up furniture for a pittance. In the meantime, keep an eye out for auctions in your town.
What kind of "millionaire next door" habits do you cultivate?
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