Comments on: The Best Way to Raise Money? Don’t Pay Yourself http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/ Musings of a Balding 25 Year Old Entrepreneur Fri, 29 Aug 2008 06:08:46 +0000 http://wordpress.org/?v=2.2.2 By: Wohoo a Paycheck! - Adam McFarland http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-737 Wohoo a Paycheck! - Adam McFarland Thu, 08 May 2008 23:46:53 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-737 [...] in February we made the somewhat difficult decision to self-fund our move and expansion by not paying ourselves for three months.  In retrospect, this [...] […] in February we made the somewhat difficult decision to self-fund our move and expansion by not paying ourselves for three months.  In retrospect, this […]

]]> By: The Difference Between Being 20 and 25 - Adam McFarland http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-691 The Difference Between Being 20 and 25 - Adam McFarland Mon, 21 Apr 2008 00:38:20 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-691 [...] on the high side of what we were projecting.  The only way we don’t pay ourselves before our June 1 deadline is if we choose not to do so - cash flow is very good.  On a personal level, I’m moving into [...] […] on the high side of what we were projecting.  The only way we don’t pay ourselves before our June 1 deadline is if we choose not to do so - cash flow is very good.  On a personal level, I’m moving into […]

]]> By: Gordon http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-558 Gordon Fri, 22 Feb 2008 17:09:09 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-558 The reason I say it is that I run a website for a physical product - but I just sell ads to people who actually sell it and do all that stuff. My site results in significant sales for my advertisers, but for the moment i'm happy with it as a side gig that I can ignore for a week if I need to.... The reason I say it is that I run a website for a physical product - but I just sell ads to people who actually sell it and do all that stuff. My site results in significant sales for my advertisers, but for the moment i’m happy with it as a side gig that I can ignore for a week if I need to….

]]> By: Adam McFarland http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-555 Adam McFarland Wed, 20 Feb 2008 21:34:49 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-555 Gordon, glad you're enjoying it. That's definitely the point - if no one gets anything out of the blog I might as well just keep a diary! It's funny you mention the inventory, warehouse, customer service, and returns. I felt the same way. My partners have done a good job of convincing me it was worthwhile, but on my own it would be a total pain to deal with. The reality is that there are very few "perfect" businesses. I've dabbled in a lot of things and e-commerce isn't that much more of a pain in the ass compared to everything else. For us, each aspect suits our cumulative personalities, so it works. It does, however, take a lot more cash to scale...and we're seeing that right now. Gordon, glad you’re enjoying it. That’s definitely the point - if no one gets anything out of the blog I might as well just keep a diary!

It’s funny you mention the inventory, warehouse, customer service, and returns. I felt the same way. My partners have done a good job of convincing me it was worthwhile, but on my own it would be a total pain to deal with.

The reality is that there are very few “perfect” businesses. I’ve dabbled in a lot of things and e-commerce isn’t that much more of a pain in the ass compared to everything else. For us, each aspect suits our cumulative personalities, so it works.

It does, however, take a lot more cash to scale…and we’re seeing that right now.

]]> By: Gordon http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-554 Gordon Wed, 20 Feb 2008 21:28:15 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-554 This really is fascinating stuff to watch in real time, keep up the good work. And it also makes me realize why I never want to run a company with inventory and a warehouse and returns and customer service....ugh. Good luck! This really is fascinating stuff to watch in real time, keep up the good work.

And it also makes me realize why I never want to run a company with inventory and a warehouse and returns and customer service….ugh.

Good luck!

]]> By: Adam McFarland http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-548 Adam McFarland Tue, 19 Feb 2008 19:49:56 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-548 Probably not Nev, probably not lol. Probably not Nev, probably not lol.

]]> By: Nev http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-547 Nev Tue, 19 Feb 2008 16:38:14 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-547 So I guess this means Adam & the crew aren't gonna be poppin bottles at the club till June huh?? :) So I guess this means Adam & the crew aren’t gonna be poppin bottles at the club till June huh?? :)

]]> By: Adam McFarland http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-543 Adam McFarland Tue, 19 Feb 2008 15:10:59 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-543 Of course Anthony, the whole point of comments is to spark a discussion...it'd be no fun if you didn't make me think a bit :) I guess we'll come up with Plan B when we need to. Again, in this situation it was the best move for us. If we each had a wife, house, and 2.5 kids then it probably wouldn't be. We're not opposed to loans (personal or bank) or giving up equity at some point, but at this time I'm willing to take the risk of draining my life savings to make this work. Of course Anthony, the whole point of comments is to spark a discussion…it’d be no fun if you didn’t make me think a bit :)

I guess we’ll come up with Plan B when we need to. Again, in this situation it was the best move for us. If we each had a wife, house, and 2.5 kids then it probably wouldn’t be.

We’re not opposed to loans (personal or bank) or giving up equity at some point, but at this time I’m willing to take the risk of draining my life savings to make this work.

]]> By: Anthony http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-542 Anthony Tue, 19 Feb 2008 15:05:40 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-542 P.S. I think playing devil's advocate makes a blog interesting. Just for the record - if I could do it all over again, I'd do it exactly the same. I support the mindset. I'm simply offering some counter-arguments which became much more apparent to me a couple years after adopting the same strategy you are right now. P.S. I think playing devil’s advocate makes a blog interesting. Just for the record - if I could do it all over again, I’d do it exactly the same. I support the mindset. I’m simply offering some counter-arguments which became much more apparent to me a couple years after adopting the same strategy you are right now.

]]> By: Anthony http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-541 Anthony Tue, 19 Feb 2008 15:00:23 +0000 http://www.adam-mcfarland.net/2008/02/19/the-best-way-to-raise-money-dont-pay-yourself/#comment-541 "How hypocritical is it to ask for $50k or $100k and then pay over half of it back to yourself in salary? Just doesn’t seem right to me." Well, in this particular instance in your life, I suppose it would be. But for most folks who don't have the type of savings you do to support a zero-salary situation, it's just the way things have to be. I mean, to be quite blunt with you - I used to take your stance all the time, constantly re-investing in my business and using savings to live on while my personal expenses were low enough to even further aid the situation. And boy did my business grow. Here's the problem I ran into: I'm making more money than I ever used to, except now, I'm struggling more than I ever used to. Why? Because I am now completely self sufficient, having moved out, and did so with a savings account nearing zero, because of all the re-investment into my business over the past couple years. What did that mean for me? It meant spending more money than ever, and having to spend all of it from my business profit/salary with no savings as backup. I'm not saying using your savings is the wrong move, but I also just don't think it's as obvious and beneficial move as it first appears. One question for you: what about a plan B? Your plan is near flawless - IF Tastefully Driven takes off to the level of success you envision. But what if it doesn't? What if your savings is depleted, TD doesn't do so well, and now you're in a position where your personal savings is gone, you have less salary coming in than before, and more expenses than ever before because of your expansion? I hope that won't happen to you, and if history is any indication, you know what you're doing and it won't. But based on personal experiences with your exact mindset, I can tell you that the risk of not taking a salary for months on end is not as straightforward and simple as it seems. “How hypocritical is it to ask for $50k or $100k and then pay over half of it back to yourself in salary? Just doesn’t seem right to me.”
Well, in this particular instance in your life, I suppose it would be. But for most folks who don’t have the type of savings you do to support a zero-salary situation, it’s just the way things have to be.

I mean, to be quite blunt with you - I used to take your stance all the time, constantly re-investing in my business and using savings to live on while my personal expenses were low enough to even further aid the situation. And boy did my business grow. Here’s the problem I ran into: I’m making more money than I ever used to, except now, I’m struggling more than I ever used to. Why? Because I am now completely self sufficient, having moved out, and did so with a savings account nearing zero, because of all the re-investment into my business over the past couple years. What did that mean for me? It meant spending more money than ever, and having to spend all of it from my business profit/salary with no savings as backup. I’m not saying using your savings is the wrong move, but I also just don’t think it’s as obvious and beneficial move as it first appears.

One question for you: what about a plan B? Your plan is near flawless - IF Tastefully Driven takes off to the level of success you envision. But what if it doesn’t? What if your savings is depleted, TD doesn’t do so well, and now you’re in a position where your personal savings is gone, you have less salary coming in than before, and more expenses than ever before because of your expansion?

I hope that won’t happen to you, and if history is any indication, you know what you’re doing and it won’t. But based on personal experiences with your exact mindset, I can tell you that the risk of not taking a salary for months on end is not as straightforward and simple as it seems.

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