There are two main reasons why most entrepreneurs (and I used to) spend more than they should on things they really don’t need:
1. It’s human nature to spend what you have. Whether you’ve got $1,000 or $100,000, you will find a way to spend all of it unless you automatically deduct a percentage of your revenue as soon as you receive it. We have a false perception that what is, today, will also be tomorrow (or even be better). If we make $100,000 today, we feel we will always make at least $100,000. But success is not a direct path upward; it is more like a hornet’s nest that weaves and knots its way upward.
2. It’s human nature to follow the status quo. When setting up your business, you’re likely to look to other businesses in your industry as models for how to do just that. This approach will lead you to spend money on things you don’t need (or even want) just to appear more “legit;” things that, in the end, are of no benefit to your company. Fancy business cards, bored receptionists and nearly empty offices are all too common for first-time entrepreneurs.
Whenever I consider taking on a new expense, I ask myself if it would help me to better serve my clients and reach my goals. And if I do need it, I ask myself how I could get it for free or almost free.