Don’t let the tale wag the dog. Don’t spend money you don’t have!

May 01, 2011
Thumb_small_avatar25_1
Chicago

Letting “The tale wag the dog” is an expression which refers to someone allowing their hopes and dreams to dictate their decisions.  It can also be called “getting in over your head”, or just let’s plain call it what it is… Don’t spend money you don’t have (yet).

There is definetly something to be said about INVESTING in ones business.  There is much to be said about those who dare to take risks. Sometimes you will find yourself in a situation where to get to that next level, you will have to take a risk; but let that risk be a calculated one.

A perfect example of allowing the tale to wag the dog could be the decision to move into a larger office space. You may use the decision making process that you want to hire more sales people in the future and will need a place to put them. This may be true, but the problem lies when you maybe don’t hire the sales people you thought you would and end up with empty space and a higher rent bill or mortgage than you really need.  That’s the tale wagging the dog.

Rather it’d be a better decision to hold off on the upgrade until you really need it.  In other words, don’t go after a larger office until the one you have is really and truly outgrown.  Don’t lock yourself into a larger monetary commitment with the thought that the money will come, rather wait for the money to come, then decide if you really need the larger commitment.

Another common “tale wagging the dog” episode, especially with contracting businesses, is for the business owner to buy a new truck with the thought that it’s going to be a great year, or wants to show off, when in reality the truck he already has may be a perfectly good vehicle.  When the tale wags the dog you get yourself a larger expense sheet, but don’t always have anything positive to show for it.

Instead learn more about budgeting and planning, learn about goal setting. Learning these necessary skills will prevent you from making major financial mistakes which may lead to catastrophic results.


Comments (4)

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  • No-avatar-62
    22 Constitutionalmost 9 years ago

    Great advice. Especially in the current economic environment.

  • No-avatar-62
    HandyGalalmost 9 years ago

    Hello Grumpy,

    Some of your comments were part of a thread here that I came across online when researching some business questions I had. Your comments remind of how glad I am that I did NOT sign up yesterday for a year's worth of E Myth coaching at $5,700 in twelve convenient monthly installments. I was going to put it on a credit card, a thing I try to avoid, generally, but finally felt it was too much of a risk right now no matter how absolutely sure I think it would help and be a good investment. I'm just not in a position right now to absorb that kind of money if I had to! And there are other, more modest changes I can implement, if more slowly. So thanks for the timely validation.

    Holly

    --Holly

  • Thumb_personal%20pic%201
    kowalityalmost 9 years ago

    I see this so much in the film industry Grumpy. We make incredible money and this can really get a guy in trouble. Last year when we had a film drought because of the Olympics and this caused some guys to declare bankruptcy. This was only a 7 month drought. Make sure you have atleast 10 months of drought money available. Awesome post with good insight. Thanks

  • Thumb_avatar25_1Author
    Grumpyalmost 9 years ago

    HandyGal, there is no doubt some service like that woudl be of some help. Is it worth $5,000? I do not know. I am a member of CCN, which is a business coaching company similiar to emyth, though CCN specifically targets contractors. Services like these are very expensive.

    I have always said that most business coaches are require such a large investment that they are out of reach with those whom truly need their assistance. Often a business coach will use the line: How can you afford NOT to use our services? And to a degree they are right, they are pointing out your need for their service. However we must control ourselves, look at our budget and not get in over our heads.

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