Let me tell you a little story.
Last night I went out to one of the fanciest bars in Bangkok. It’s supposed to have some of the best cocktails in town and is known as one of the premiere jazz venues in all of Asia.
I had a great time, and the bar was exactly what I ‘d hoped it would be. Although for as much as I enjoyed the music and atmosphere, I had one (amazing) drink and it cost me $10. I’m not sure I’ve ever spent that much on a single drink in my life, and I certainly don’t want to do it again any time soon.
That said, on a fairly regular basis I will spend $4-5 on a beer when going out with friends. I won’t think about it, and I’ll often have multiple drinks. Then before I’ve even realized what happened, I’ll have dropped 30 bucks in an evening. I do this regularly without putting much thought into it or feeling guilty.
I also did something else yesterday. I registered a new domain name.
It cost me $10, and you know what? I analyzed the hell out of that decision. I thought about it for a good 30 minutes while I decided whether or not I should purchase it. I already have all the hosting and everything set up, so if I wanted to develop this site it would literally cost me no more than the $10 domain fee.
I bought the domain. And you know what happened next? I felt bad about it. Wondering if I had the time or motivation to actually invest in another site. Second guessing myself every step of the way.
Then I stopped to think about what was happening, and I asked myself an extremely important question that I feel is often overlooked.
Would I rather have a beer or a business?
For me the answer is simple: a business. Yet knowing this is the case, why is it so easy to spend money on a beer and not on the business?
Although sometimes you CAN have both…
It’s pretty crazy to think about the value of what you can get for your money when you compare these two things.
A beer will give you 15 minutes of enjoyment (although, I must say the selection of Thai ales leave a lot to be desired), and then it’s gone forever – well, at least you hope it is.
OR
For roughly the same amount as two beers, you can secure an entire year to create something great. It can be the gift that keeps on giving, potentially making you hundreds, if not thousands of dollars if you’re willing to put the time into it.
One of the most important principles I’ve learned about business, that is almost always true on one level or another is this:
You have to spend money to make money
It doesn’t always have to be a lot, but in order to see the success you desire, you’re going to have to be willing to part with at least some money.
However, I should rephrase that previous statement.
You spend money on beer. You invest money in your business.
You aren’t expecting to get anything in return for your beer (well…usually). With a business, you put money in with the expectation that you’ll get a return on your investment. It’s the same concept as investing in the stock market, real estate, or that multi-level marketing scheme you fell for in college.
The difference between all of those things and an online business is that you can receive results as a direct result of your effort, and the effect can be more immediate. Many people wait years to see their stock or real estate investments pay off.
If you’re lucky, you could begin seeing a return on your new site in a week!
Ok, so it’s one thing to recognize all of this, but how do you actually change your mindset when it comes to spending and investing?
Well there are a few things you can do.
Cut entertainment expenses in half
While this may seem difficult, I promise you it really isn’t.
However much you were going to take out with you tonight to spend – only bring half. Take the rest and set it aside for when you have that next great idea and need some cash to get started.
You can also do this on a more global scale. If you normally spend $200 in a month going out, set aside $100 at the beginning of the month for your business. When you find a project you’re passionate about, you will find that will be more than enough to entertain you!
Explore ways to make it cost neutral
One of the easiest ways to do this is to take advantage of your hosting company’s affiliate program.
Most hosting services will pay you anywhere from $50-100 just for referring a new client. So perhaps you have friends that are interested in starting a blog?
Try sending a message to your subscriber list, or write a review of their services. You have a year to get one person to sign up, shouldn’t be too difficult.
Here’s everything you need to know to get started with hosting affiliate marketing.
Replace alcohol with something else
Lets face it, I used the beer analogy because alcohol can be ridiculously expensive, and almost everyone can relate. However, most of the people I know drink because it’s the socially acceptable thing to do.
Sure, there is always the occasional raucous night, but more often than not it is a few friends just hanging out. So next time this happens, remember that a rum and coke is costing 3-4 times more what it would be costing sans rum. Skip the alcohol, most people won’t even be able to tell the difference.
Bottom line, for under a hundred dollars you can have an entire website and hosting setup for a year. That’s 365 opportunities to generate some income. Not to mention if you spend an entire year working to make some money online, the chances are you’ll make that money back and then some.
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When was the last time your beer ever paid you back?
Sean Ogle
Sean Ogle is the Founder of Location Rebel where he has spent the last 12+ years teaching people how to build online businesses that give them the freedom to do more of the things they like to do in life. When he's not in the coffee shops of Portland, or the beaches of Bali, he's probably sneaking into some other high-class establishment where he most certainly doesn't belong.Join over 40,000 people who have taken our 6 part freelance writing course. Sign up below and let’s do this together.
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31 comments on "Would You Rather Have a Beer or a Business?"
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Isn’t funny how we don’t really think twice about spending a fortune on drinks but are so conservative when it comes to buildings sites, buying domains and ads etc. I’m a victim of this.
+1 on cutting back on alcohol – being a non-drinker is one of the main reasons I could travel the world, even when working crummy minimum wage jobs. People don’t realise how much money they waste on pointless activities. If they invested that same money into something else worthwhile they could dramatically change their lives!
Excellent post Sean!
I have been thinking the same way for a while and have been consciously limiting my entertainment expenses (mainly by limiting alcohol consumption). It’s easy to spend 20 euro or more a weekend on drinks, not feeling guilty about it, because that’s what everyone around you is doing. Something like buying a 5 – 10 euro book, 4 dollar a month web hosting or a 9 dollar domain however seems to be a lot harder to justify. As you point out, this is pretty illogical behaviour if you really think about it.
Alcohol is certainly expensive. And bad for you! I don’t drink much and rarely buy my own alcohol. It saves so much money.
I find that the people who drink the most are the most workaholic. They need something at the end of the week to erase the week they just spent! And they usually blow through a good bit of the money they made. How stupid. A better balanced life would not need such extreme swings.
I have had similar experiences as your domain name experience. $10 for something that lasts a year (and maybe pays me back) or $10 for a sandwich? Somehow, sandwich seems easier. Is it habit? It is because eating is a necessity, and domain names are not? I got over that really quick. Now I won’t spend $10 on a sandwich so easily!
Thanks a lot!
Eric
Great article and so timely. I have had a business idea for months and haven’t really done a thing with it yet have no problem wasting hundreds of dollars and tens of hours socially a month. Thanks for putting things into perspective!
Ah, the short term vs. long term issue. Beer is easy; it doesn’t require you to think or act. It doesn’t set goals, raise the bar, or challenges you.
A business however is a big deal; it’s will hold you responsible, requires hard works and tells you brutally honest when you’re failing. (it will also cost you more then only money, like time, effort, thought).
Where it all comes down to: Do you choose short term / little enjoyment (‘it’s nice), or long term / great enjoyment (‘YEAH, world domination!’)?
I know which I’m choosing. Thanks!
Thanks for this Sean. You have reminded me yet again why I stopped going to Starbucks every morning. Where I work it’s a morning ritual to do our “soda run” where we get a morning beverage and maybe a scone. At some point I realized that $5-6 a day for tea and scones was costing me $25-30 a week. This was money that was being sucked away from making my dreams a reality. It’s so easy to lose sight of the little incidental things we buy throughout the day that add up over time. So while I still do the social aspect of the “soda run” I now bring in my own tea from home and snack on trail mix. It all comes down to where you want to be heading and what your priorities are. Excellent post!
It’s a funny occurrence with “cheaply priced” items. You’re willing to spend $30 on ten little items (7-8 of which you “probably don’t need) wherein we sweat and freak about a $20 purchase. I do this a lot with my mint.com account, watching all the $3.23 Target and Hannaford (local supermarket) charges adding up to way too big a chunk of my little mint.com pie each month! You can obviously tell that looking at this pie has had a severe impact on my spending (10 months later, still the same.)
Finances are a habit, and just like any habit you need to work to change them and be careful not to slip back into bad ones.
As for removing alcohol, I like to drink vodka tonics when I go out (or a good Shipyard IPA…depends on the mood) and I switch between each drink. Start with a vodka tonic, then two tonic waters, then a vodka tonic. Not only am I spending less, but I’m hydrating more and less hungover the next morning. Though there was the period of time when my friends were freaking out cause they heard me keep ordering non-alcoholic drinks and thus thought I might be “expecting.” I tried to explain that at that time if I were “expecting” then they should probably start atoning for their sins cause we would be experiencing the second coming of Christ soon.
You probably don’t have to worry about that as much though. 😛
Awww Sean, if you want I can send you a razor to Thailand. Your pic in this post looks like you need one. Miss you buddy.
-Nick
PS: I have been playing some pretty good golf over the past few weeks so I think you will be in trouble.
EXCELLENT post and so timely for me. 🙂 I’m starting a new business as well and have been wrestling with much fear and second-guessing this weekend. I’m braver today and I love your oh-so-practical tips. It really is easy to cut down on expenses when you have something good to be building towards. 🙂
I don’t drink alcohol but it’s still great article hehe. E-business is awesome because it doesn’t need much money to start.
Why not start a bar and have both?
I think you and I consistently have very similar revelations. I agree and I’ve even written about this concept before but I will add…
A beer CAN BE an investment. It can be an investment in building friendships and relationships. It can help you blow off steam after a long week or day which is healthy and sometimes necessary. A beer often will lower people’s barriers and loosen them up.
Of course there’s a very fine line you walk between an investment and an expense when it comes to alcohol – a line I’m still trying to define myself.
See you in less than a week man!
– Derek
True that a beer in hand can be a valuable addition to any attempt at casual networking, which can also lead to more opportunities. Also true that those situations are not the one’s we usually spend all our hard earned money on alcohol at.
I had a very similar realization about a month ago and almost completely stopped going out. Mint.com no longer sends me warnings about overspending on Bars & Alcohol. Now it barks at me for overspending on Books. It’s a step in the right direction, right?
Buying domains is ridiculously easy for me. It’s probably easier than buying a beer. Actually taking the next step and turning them into something would be wise…still sitting on gayforgadget.com…
I always think about this concept. We are so hesitant to spend our money, especially online. But when I compare it to spending money at the bar, it’s insane how free I am with my money while at the bar, compared to buying things that actually have long term returns (not just business).
It’s true, you have to be able to spend money in order to make money. You might hear about situations where entrepreneurs were able to build something without investing much money at all, but this usually isn’t the case.
I completely agree. About 2 years ago I faced this issue myself, spending sometimes up to $9 a day in Starbucks. I had an idea that I wanted to bring to life and found myself complaining about not having enough capital to invest in it. It forced me to take a look at the money I was spending that I was taking for granted.
The result of that change has me allowed me to live abroad for over a year, now living between 2 homes in Thailand working on not only that one idea/project, but several others… and even now, in Chiang Mai with a Starbucks across the street, I opted for an espresso machine sitting next to my computer because it was a better investment in the longrun. (or thats my excuse, old habits die hard)
Well said, Sean! And as you mentioned, I think part of that difficult decision is because of the pending work we’ll then have to put into that new venture. But like your picture, that could then be reason to hit a bar with wifi and get down to it! Thanks, man.
Funny how prices are all relative. I can spend 20 bucks in a split second, but I agonize over shelling out $7 for a domain name or some other nominal amount for something I KNOW will improve my life…
Great post, however I think we should be careful with taking the opportunity cost logic to the extreme, don’t be afraid to take that night out on the town to reward your successes. Isn’t that point of this lifestyle, to be able to freely enjoy our successes?
I hadn’t bought a new domain for a while until the other day. The one I bought I have plans for I just recognised it as a quality domain name. I have been trying to think of a domain for an idea I do have and be buggered if I can come up with something that isn’t already registered.
One another note. I can’t recall the last time I bought a beer at a nightclub in Oz so I’m not sure how much they go for but it stumps me that a beer can cost $5 in Thailand, even in average and non seedy bars.
That is so right. The number of people who I know who will happily shell out $100+ for a designer shirt but consider setting up an online business a waste of money is shocking. The amount many people spend on the lottery each year could be used to easily set up one or two websites which have a far greater chance of success and will probably earn them far more money over the long term.
Can I have both? Ha ha. You’re on point here Sean. I’ve thought about the same analogy while in college and realized what I buy most of the time needs to be an investment instead of a liability. I always work on keeping that in mind.
The only person I know that can have both a beer and a business at the same time on a regular basis is my cousin, because he is a beer blogger/writer who actually gets paid to drink beer. It’s insane.
But for us regular folks, these ideas you mention here are great. A lot of times I find myself thinking in terms of Adwords clicks or articles. Like, “$10 for that! That’s like 100 Adwords clicks or 3 outsourced articles!”
Yet another great post that all of us aspiring, hard working and often times struggling entrepreneurs can take to heart.
Great post. A great reminder about instant gratification vs. long-term planning. Not only does this apply to money, but also time. It is easy to fritter away time by doing unproductive things, yet if we carve out 30 to 60 minutes per day to work on something meaningful (business development, development a skill/hobby, excersice) the rewards will come in the end. Enjoying your posts, they always keep me thinking/processing.
Yet another fantastic post, Sean.
So many people – like myself, I’ll admit – are afraid of spending money in order to make money. Doubt seeps in, we wonder whether the spending will come back to us by way of the business… You know the drill.
But like you said so well, spending is NOT the same as investing. You invest your money in a business; you spend money on a beer.
Investments trump spending every time.
I read the post a week or so back, but I skipped the comments so excuse me if I hit of something already mentioned.
I just want to point out the if you earn you money online as a sole propritor you are taxed at 33 percent so lets look at the true cost of that $10 beer.
You would have to earn 13 dollars roughly to pay for that beer.
Or you could put that 10 dollars into you business and it really only cost you 7 because if you were to pull that money out and spend it 7 dollars is all you would get out after the taxes were pulled.
This difference between rich people and poor people is how they spend their free time.
Sean, I am so impressed on your progress! I’m glad you’re safe too. Keep up the good work and buy cheap beer….It causes fewer headaches in several ways. I can honestly say that my life would be better without wasting money on unnecessary luxuries.
Thanks again for sharing and letting us all know that there’s hope!