MARCUS for BUSINESS

Ideas, Information & Inspiration

How To Properly Respect Money

10 mins
What You Will Learn
  • What it Means to Respect Money
  • The Importance of Respecting Your Money
  • The Benefits of Respecting Money
  • Ways to Respect Your Money
by Marcus Business Team
Woman paving the way for more business with money

If you saw a $20 bill on the sidewalk with no one else in sight, you probably wouldn’t waste any time before picking it up. But then comes an interesting question. What would you do with this sudden infusion of cash? Would you spend it right away on a special treat, put it in your savings account, or give the money away to a charity? While it’s tempting to spend the $20 immediately, putting it away for the future shows that you respect your money. That’s what Marcus Lemonis means when he says, “I respect money and I think that a lot of people don’t.”

In a successful business, customers provide you with an ongoing flow of cash.  While there might be peaks and valleys in that revenue stream, enough money is coming in to cover the bills, salaries and long-term financial obligations. So, you need to be sure to respect your money. Otherwise, your business may be forced to close its doors.

While Marcus emphasizes the importance of having your products, processes and people in alignment, managing money is also essential for success. For example, a California cookie company was burning through its money despite having a great family recipe, and a growing number of satisfied customers. To expand the manufacturing process and launch a product line for supermarkets, the owner had borrowed heavily from all kinds of lenders. By the time Marcus was called in to help, the business was behind on more than $1 million in loans, had racked up $100,000 in credit card debt and owed another $780,000 to investors. While Marcus was able to work out a deal with several of the lenders to turn their debt into equity, he wound up walking away from the company, as he felt that the owner did not seem to respect money in the way that a business owner should.

Man growing his money tree by watering it

Why is it Important to Respect Money?

If you respect your money, you will take care of it properly. It is the same principle as respecting your partners, investors, employees and customers. They are the ingredients for business success, and you need to value their contributions to your organization.

As for money, it bears repeating that a dollar once spent is gone, while a dollar saved has an opportunity to grow in the future. And investing money into your business can be one of the best ways to build a financial powerhouse for the future.

If you manage your money effectively, you will be less exposed to an economic downturn or an unexpected surprise like the COVID-19 pandemic. Having a nest egg available for your business is also a cushion against a slowdown in sales or an increase in expenses. If you respect your money, you will also have greater peace of mind without the worries about meeting the next loan payment or covering your team’s salaries.

Man looking for opportunities with telescope

Respecting your money is also an indication of how well you feel about yourself.  If you have a positive outlook on life, then planning ahead is a natural step. You might be looking forward to a vacation, buying a new home or adding to your retirement savings.  It’s also a great feeling to know that your hard work will pay off. As Marcus says, “You don’t get anything. You have to earn it.”

 

But not everyone has a respectful attitude toward money. Some people are careless about spending because they focus on immediate gratification. Others are waiting to inherit a fortune or take over a family business. There are also people who subconsciously feel they don’t deserve to be successful, so they manage to sabotage themselves financially. In these situations, it can be easy to take money for granted, and assume the funds will never dry up.  But it’s far better to recognize the value of money and treat those dollars with respect.

How to Respect Your Money

It is one thing to say, “I respect my money,” and another to put that philosophy into practice in the business world.  So, here are some tips to help you demonstrate that you respect your money.

1. Track Your Income and Expenses

Knowing how many dollars are coming into your business is essential for making good financial decisions.  Use one of the many applications available to chart the flow of current income, as well as your receivables, which represent income in the future. You should also track your expenses, including rent, utilities, leases, salaries, taxes, payables and the interest and principal on loans or other debts. This fundamental practice can help you identify peaks and valleys in your cash flow and spending, so you can make any necessary adjustments before you reach a critical situation.

Woman looking at reports to track her business through a mobile device

2. Pay Bills Promptly if You Get a Discount

Look at your payables to see if there are any advantages to making a prompt payment. Otherwise, keep track of when bills are due and send payments close to the due date to avoid late charges.

3. Take Care of Your Profits

When your business income exceeds expenses, you can reap all the benefits of profitability. You could put your profits into a business savings account, set the money aside for future capital purchases or share the rewards with your partners. One of the biggest Fortune 500 companies, Facebook, financed its global expansion by using its profits, and had virtually no debt through 2015. Even today, the social media giant treats its dollars with respect and carries a relatively low amount of debt compared to annual revenues.

4. Pay Down Your Debt

This is one of the best ways to keep your business in a positive financial position. That’s what Apple did in the late 1990s, after taking on heavy loans to avoid bankruptcy.  Thanks to the success of its iMacs and iPods, Apple was able to use its profits to pay off all its debt by 2003.

Man putting more money into piggy bank full of money, property, technology, and knowledge

5. Invest Your Money Carefully

Look at your budget for the next month, quarter or year, before making any investment decisions. You might want to keep funds in a low-interest money market account in order to have them readily available. Or you could put your money into an asset like real estate with a potentially higher level of return – provided you don’t need the money for several years.

6. Separate Emotions From Money

Money is an emotional topic. It can stir up feelings of fear, contentment, greed, anger or happiness – just to name a few!  But if you respect money, try to keep your emotions out of your decision making.  Use your head when it comes to making financial decisions about your business and don’t let fear or avarice take over.

List of ways to respect money.
List of ways to respect money.
List of ways to respect money.

A Simple Exercise

If you respect your business partners, you pay attention to their hopes and dreams. If you respect your customers, you pay careful attention to their buying habits and watch for any trends that might impact your level of sales. If you are serious about respecting money, you need to keep a careful eye on your financial accounts.

Woman balancing on time, money, success, the internet, and her finances

Here are some basic questions to ask yourself:

  • Do I know the balance in my business bank accounts?
  • How much have those balances changed in the past month?
  • Does someone monitor the petty cash drawer? If so, what is the balance?
  • Do you track employees’ travel and entertainment (T&E) expenses, or do you trust each team member to follow the rules?
  • Do you have a qualified retirement plan, such as a 401(k)? If so, do you know the balance?
  • Do you use an application to track your personal finances?
  • Do you know the balances on your personal savings, debt, and investment accounts?
  • Do you know your protected tax liabilities for the coming year?
  • Will I need to make a major capital investment in my business in the near future?

Hopefully, you were able to come up with the right numbers, even if some were estimates (or guesses). If not, it’s a signal that you may not be treating your money with the respect it deserves.

List of questions to ask yourself.
List of questions to ask yourself.
List of questions to ask yourself.

Respect Money, but Keep Your Perspective

In business, it’s always important to say, “I respect my money.”  But at the same time, you need to remember the big picture and keep your perspective. Ultimately, respecting money means more than just accumulating as many dollars as possible. Instead, you should use your money as a means toward achieving your business and personal goals in life, such as having a strong relationship, raising a family, contributing to your community, showing your faith, and leaving a legacy.  So, forget the saying,  “He who dies with the most toys wins.”  Instead, listen to Marcus’ advice: “If you don’t have emotion and you don’t have passion, then you shouldn’t be in business, because money is a byproduct, not the purpose.”

MARCUS’ CLOSING QUESTIONS
  1. Do you currently take any measures to respect your money?
  2. What are some things you can do to better respect your money, based on the above content?
Photo of Marcus Lemonis