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The Making Of An Online Business – The Money

Post Series: Starting An Online Business

This is the 3rd article from The Making Of An Online Business series, and it will focus on the money part. If you’re looking for a way to monetize your project, I covered this topic in the second article of the series, about creating and maintaining online projects, which you can find on the link list below.

This post will deal with my way of interacting with money as an online entrepreneur. There are tons of other blogs or courses from where you can learn the basics of money management, so don’t expect to find that kind of information in this article. Instead, expect to find some fresh approach to money interaction as a whole, applied to an online business.

If you came here directly I encourage you to read the rest of the articles and the summary by following the links below:

Start Your Own Business
The Making Of An Online Business – The Series
The Making Of An Online Business – The Projects
The Making Of An Online Business – The Team

Money Is Hot

From the early beginning I will tell you that I always felt money is hot. Meaning I can’t really keep it in my hand. In fact, money was so hot for me than I rarely saw it in big piles. Every time I had a serious amount of money available I was reinvesting it like the next second. Please note the difference: spending versus reinvesting.

And it was a good decision. By reinvesting the money in my own business I accomplished at least 3 good things:

1.  I always had new projects coming

This is crucial in the online. As I wrote before, online has the highest availability degree you can imagine, higher than any other business field, but it has also the tiniest loyalty mark, so your audience can be stolen away almost instantly. You have to be able to offer new things, you have to innovate, to re-create stuff. And fueling your R & D department with generosity is the easiest way to keep you on top.

Don’t expect that any projects you launch to be a success. But do expect to learn from any of your projects, both successful or unsuccessful. Spending money on new projects is like paying for your own education.

2. I soon learned that money is a resource not a goal

Too often money is seen as a goal. Blame the modern society, consumerism, your mom and dad. You can’t deny that, everybody judge success by the amount of money you have in the bank. But if you have the courage to not pile money out of your business and reinvesting it back, treating it like a resource, you will grow your business. And in the end that’s the only thing that matters.

You can win a lot of money out of one project and then get scared not to loose it and stop reinvesting it in new projects. Big and dumb mistake. Money is not the stake, growth is the stake.

3. I always had to closely watch the money flow

Starting new projects constantly makes for a great financial discipline, because you really have to know all the time if you do have enough resources to keep you going. I learned to maintain a constant money discipline, and that thing is benefiting me now tremendously. I always know how much money I have, even if you wake me in the middle of the night.

Knowing how much money you have, how much money you can spend and how much money you will make out of something has nothing to do with scarcity. It’s a transparent mindset that keeps you connected. It’s like always knowing your resources and potential and avoid walking on thin ice.

Cash Flows – Where Is Your Money

In fact, I learned this discipline very early. I remember like it was yesterday that after I quit my job and started my own business, I faced a very delicate day. It was the 15th day of the month. The pay check day. I had nobody else to pay me, but me. From where? From the bank, of course! Do I have money in the bank? How much money? How much do I have to spend for other stuff? Is it enough? Do I have to wait until I cash more?

In minutes I started to write this on a piece of paper. Made two columns, one labeled “In”, and one labeled “Out”. Under each column I started to write every information I knew on that subject. Under “In” I noted everything I already had and what I expected to cash in the next 10-15 days and under “Out” everything I had to pay. After I finished, I did the math: “In” minus “Out”. It was a positive number, fortunately. Without even knowing I was making my first cash-flow.

I made hundreds of cash-flows. Literally, hundreds of cash-flows until this become so internalized that I made it on auto-pilot. This habit helped me incredibly during my early years and it also proved extremely useful even when my income sources become wider and my company bigger. I learned years after, when I started an MBA, that I did everything right. All your money interaction is reduced in fact to these two columns: if you get a positive number after you made the math, you’re happy, if you get a negative number, you have problems. And this lead me to other very interesting thing I learned: money is not for free.

The Cost Of Money

Yes, money comes with a cost. Every time I got a negative result to the In/Out math, I had to find a way to make it positive. In fact, this is basically all you have to do when you have an online business: keep that number positive. I had my times with negative numbers there. And those times where not at all easy.

Whenever I realized I am under water, I had to do something. In the beginning I acted a little hectic, but after a few years I distilled some patterns. You can only have 3 ways to make that number positive:

  • create more value and trade it for money
  • borrow money
  • sell assets for money

In the early years I chose the first option like there was nothing else on earth that could save me. Every time I saw that “minus” sign I added a few more daily hours at work. And every time I did this the effort paid back. But after a few years I realized there are other options too, the only things that was different was the cost.

If I chose the “more value for more money” option I always had to invest more from my time, from my energy, from my creativity. Great for keeping me fit, but disastrous if I didn’t pay attention to my health and relaxation activities. Not to mention that this approach could seriously disempower your employees. You’re free to spend 16 hours a day at your job, because it’s your company, but don’t expect your employees to do the same, for them this is only a job. If you’re doing this and only this to keep your money balance positive, chances are that you will get burned pretty soon.

So, I learned that you can also borrow money, if you are willing to pay interest, and you can also sell some of your assets if you think the bigger picture of your business will accommodate that. In the late years I borrowed money and also started to sell some of my assets. Don’t think big, in this business an asset is most of the time either a domain name, either some website that you can let go without much regret.

Financially Good And Bad Times

Another very important thing I learn related to money is that there is a cyclic model involved in it. You can’t really understand this until you have a business for more than 5 years. There are patterns of the money flow and there are good times and bad times. If you are lucky enough to grow constantly in the first 3 years, you will surely hit a bad period pretty soon. I tell you this from my own hands on experience, not from a manual. And I also tell you what a manual can’t or won’t tell you: bad times are good.

As strange as it may seem, bad times are the best teachers you can have. Financially bad times means that you won’t have enough money to sustain your business. You won’t be able to pay your partners on time, you won’t be able to pay your employees on time. The feeling is really bad.

But the good news is that you can always get out of there. You can put more value, you can borrow money (if you agree on the interest) or you can sell some assets. Whatever you’ll do you will learn something out of it. Bad financial times are there for a difficult lesson to be learned. The sooner you learn the lesson and put your balance above minus again, the better. Just don’t expect to have a dolce farniente all the time, because that is the only thing that will kill your creativity for good.




Running For My Life - from zero to ultramarathoner


The spooky thing about depression is that it sneaks in. There aren’t really trumpets and loud voices announcing: “Hail, hail, this is depression entering the room, all rise!” Nope. It’s slow, silent, creepy. It doesn’t even look like depression. It starts with small isolation thoughts like: “Maybe I shouldn’t get out today, I just don’t feel like going out”. And then it does the same next day. And then the day after that and so on. And then it starts to whisper louder and louder in your ears: “Why would you go outside, you loser? Didn’t have enough yet? Want more people to make fun of how much of a big, fat loser you are?”

And then you start to breath in guilt and shame, instead of air. Every breathe you take is putting more dark thoughts into your body.

Until you get stuck. You can’t move anymore. At all.

If you want to know how I got out of this space, eventually, check out my latest book on Amazon and Kindle.

Running For My Life -from zero to ultramarathoner

This Post Has 9 Comments
  1. Hi,

    Money are a resource that has to be used. Totally agree. If you stay with a big pile of money and you don’t reinvest them you’ll begin to develop a fear of investing and soon you’ll find small problems with any potential project (it happen to me until I decided to invest).

    I have a question : By Projects do you mean a new website ?

    Thank you

  2. Hi Toma,

    Thanks for commenting and retweeting this, as always, I really appreciate it.

    Yes, by projects I generally mean new websites, but I had my detours. I remember I once decided to invest in a printed magazine with free distribution. It took me a few dozen of thousands EUR spent and 6 editions printed to understand that this is not going to work. Difficult lesson, but learned lesson.

  3. The lesson here that served me well is that rather than focusing on “trying to make money”, focus on “being resourceful”.
    Emotional attachment on the outcome of my actions was the greatest challenge in achieving my financial goals.
    Thanks,

  4. @Io_da hey, good point about emotional attachment, glad you pointed that. And glad we’re having you back on this blog 😉

  5. It is true you have to spend money in order to make it.Holding on to it isn’t making it work for you.
    I really like your approach to this subject.
    cheers

  6. Hey Dragos, I just really like all your points how money is a resource. If people truly believe that, it is much easier to dissociate from the love of money… Which we all knows what that leads to.

  7. @BunnygotBlog thanks for commenting here. Again 😉

    @Mike King Yes mike, love of money has nothing to do with money value. Too often love of money and greed have a polarizing effect on people, which lead to really extreme approaches: either love of money, either hate. If everyone would understand that money is just another form of energy, things would be much easier.

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