Frugal or Flashy In Business - Who Wins?

August 13, 2008


Most folk I know who’ve been successful in business have also been extremely frugal. And personally, I’ve tried to follow the rule of not investing in a single gizmo or gadget unless it will lead to an increase in sales in some way. And whenever I’ve broken this rule, I’ve regretted it.

But, not everyone shares the same view. A few months back, Caroline Middlebrook mentioned that investing in expensive gadgets can actually make you feel more successful and this feeling will actually motivate you to become more successful in business.

I’ve pondered on this for a while. If you haven’t heard of Caroline Middlebrook, you can read more about her journey towards business success here. She gave up her job a few months ago to start a business completely from scratch. I admire her for doing this and for sharing an honest account of her ups and downs with her readers. And I have no doubt that her persistence and courage will lead her to great success.

So which is best - being frugal or flashy in business? Or is it different strokes for different folks? Take Warren Buffet for example. He’s well known for his frugality and this wonderful post by Shilpan highlighted the fact that much of Warren Buffet’s success can be attributed to his frugality.

But, people who are flashy in business have had heaps of business success too. For example, Donald Trump was deep in debt at one point. But he promised the bank that he’d be able to repay every single penny, on the condition that they would continue to fund the lavish lifestyle he’d become accustomed to. The bank agreed and it paid off.

Both of these famous guys appear to be successful on a financial and personal level. So maybe a different approach does work for different people. What do you think?

Which type is more likely to be dominated by the fear of becoming poor? Are the frugal types more frugal because they fear losing everything? Or is it the flashy ones that worry about losing their wealth most?

I’m frugal in most areas of life and business. I don’t spend a lot on gadgets, gizmos, clothes, furniture and cars. But I do spend too much on travel and leisure.

Which most accurately describes you in business and your personal life - frugal or flashy? And what are your main weaknesses?

Image Credit: Paparutzi.

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24 Responses to “Frugal or Flashy In Business - Who Wins?”

  1. Sterling Okura on August 13th, 2008 6:16 am

    Interesting topic. I think there is no one right way to do it, you have to be true to yourself.

    Real Estate investor & author Dolf de Roos doesn’t believe in penny-pinching. He feels there are better ways to earn wealth.

    He was an early adopter paying $5000 for one of the first mobile phones when they came out. He bought one of the first fax machines but at the time there was no one else to fax to. He definitely had an abundance mentality when it came to buying gadgets that might help his business (whether or not they could actually help at the time he purchased them).

    I think there is wisdom in both Warren Buffet’s approach and Dolf de Roos’. It just depends on what viewpoint you feel most comfortable with.

    Sterling Okura’s last blog post..The #1 Problem With Small Business Websites

  2. Davina on August 13th, 2008 6:30 am

    I agree with Sterling; there is no one right way. I believe that success in business requires a mix of skill, creativity, preparation, perseverance and most importantly… personal dedication and passion. Money is secondary and the success of the business is not necessarily dependent on it. I’ve learned that from personal experience… you’ve just gotta have the right mix of all of the above… plus a bit of luck too.

    Davina’s last blog post..Bears Come Calling

  3. Barbara Swafford on August 13th, 2008 6:30 am

    Hi Catherine,

    I have to agree with Sterling. It’s what works for each individual. I would say I’m basically a frugal person, but when I do buy a big ticket item, I do my research and try to get the best product at the best price. We live in such a disposable world, I hate to buy something only to find it’s basically a “throw away” when it breaks.

    Barbara Swafford’s last blog post..Blog Visitors - Like Kids In A Candy Store

  4. cathlawson on August 13th, 2008 6:54 am

    Hi Sterling, I haven’t read his books but I’ll be checking them out. I had no idea mobile phones cost that much to begin with. No wonder they took a while to catch on.

    Hi Davina - I hear what you’re saying. Maybe if we get all the things you’ve mentioned right - being either frugal or flashy will have little bearing on our success.

    Hi Barbara - I guess research has to be more important than cost. And cheapest isn’t always best value.

  5. Scott McIntyre on August 13th, 2008 8:43 am

    Sorry that I’ve not been around for a wee while, Cath, but I kept leaving comments on your last few articles that never ‘took’ (when I refreshed, I got the ‘duplicate comment’ message :-)

    Anyway…

    I’d like to think that I have a healthy balance between being willing to invest for success and being cost effective.

    In my personal life, I like to weigh up what benefits there are to me in spending over a certain amount of money.

    And, as I begin the journey on a parallel work path, this will be my attitude too.

    I think it’s crucial to work to budgets- no matter what the circumstances. That’s the only sure-fire way to be relaxed about what you can, and cannot, spend.

    I am a canny Scot after all :-)

  6. cathlawson on August 13th, 2008 9:01 am

    Hi Scott - sorry your posts weren’t getting through. It seems that Askimet has taken to eating you and several others. I just fished this comment out of there.

    Now, I won’t mention the terrible rumour that Scots are extremely tight. But I agree completely on the importance of budgets - and we should try to stick to them in business and life.

  7. Alex Fayle on August 13th, 2008 9:23 am

    In my last business I spent too much developing the business (and on a really stupid advertising commitment) so I had to earn a whole lot of money just to pay for those things.

    This time around I’m going for the frugal development, slowly building when I can afford it. So far so good. We’ll see what happens next…

    Alex Fayle’s last blog post..Commitment to Growth: Tina Su Interview

  8. cathlawson on August 13th, 2008 9:37 am

    Hi Alex - you won’t be the the last person to waste money running unsuccessful ad campaigns. I’ve certainly done it too.

    Frugal development sounds like a smart idea. I’m hugely in favour of free or cheap marketing methods. If you stick to a tight marketing budget, I think it encourages you to be more creative.

  9. Caroline Middlebrook on August 13th, 2008 10:00 am

    Thanks for the mention :) However I do need to clarify a little - I don’t buy ‘expensive’ gadgets as you put it. What I did do, was buy myself a couple of cheap little toys that could help me move forward. Having a rule of frugality can limit you but there is a whole world of difference between one extreme of frugality and another extreme of being flash with your cash. I prefer to sit somewhere in the middle - I am careful with my money but not so careful that I deny myself tools that can make my life easier.

    Caroline Middlebrook’s last blog post..Developing Money Making Niche Sites With WordPress 2.6: Video 5 - Setting Up AdSense

  10. Robin on August 13th, 2008 10:39 am

    Hi there Cath - I think this is a really interesting question. I’m frugal myself, and believe in consolidating “where I’m at” for myself - and when I’ve seen people splash out beyond their means it has not appeared to work for them.

    But that is only what I have seen - I think it probably boils down to people’s expectations - if we truly expect to be successful while splashing out, we will be (or something). My 2 cents.

    Robin’s last blog post..Letting Creativity Just Slip In

  11. cathlawson on August 13th, 2008 10:57 am

    Hi Caroline - you’re welcome. And I’m sorry if it seemed as though I exaggerated the cost of your gadgets. You wrote that post a few months ago and I tried searching your site to link to it, but I couldn’t find it.

    Sitting somewhere in the middle sounds like a smart idea - especially if you’re investing in gadgets that increase your productivity.

    Hi Robin - that’s a good point. And expectations may well come into it. I guess that if someone is 100% confident that they’ll achieve success - they won’t allow room for failure.

  12. Brad Shorr on August 13th, 2008 2:09 pm

    Good question, Cath. I guess I’m pretty frugal, which is a strength and a weakness. Like Sterling and others are saying, you have to be yourself. A really effective combination in business is to be aggressive in sales and marketing, but conservative on the finance side. Flamboyant risk takers can lose it all by not paying attention to stuff like cash flow and debt. In small companies, I’ve often seen partnerships work well where one is frugal and the other is flashy. We entrepreneurs have to wear both hats, which can be challenging!

    Brad Shorr’s last blog post..Twitter - What’s Your Favorite Non Person to Follow?

  13. cathlawson on August 13th, 2008 2:46 pm

    Hi Brad - That would be a really good combination. It’s really tough to wear several hats if you’re on your own in the beginning. Few of us are good at every single aspect of business and it can be hard to avoid putting the most effort into the tasks we enjoy most.

  14. infoaddicts on August 13th, 2008 2:51 pm

    Hello Cath,
    I would just like to say, ‘will you stop inserting such good links in your articles’, it has taken me nearly 2 hours to reach this point (only kidding, keep them coming). I love to read other blogs, especially Carolines blog, as it is really interesting, she has come a long way.

    I agree in that everyone is different and there is no wrong or right way.
    I myself am not frugal or flashy, saying that I do like to try and own the latest gadgets. I was much worse when I was younger, so does that make me flashy?
    Regards
    Jeff.

    infoaddicts’s last blog post..Where Have I Been?

  15. cathlawson on August 13th, 2008 2:55 pm

    Hi Jeff - no, that makes you a geek. Only kidding - but it would be madness to have a tech blog if you weren’t interested in all those gadgets.

  16. Stephanie on August 13th, 2008 7:29 pm

    I go for frugal in my personal life and business, but that’s how I grew up. My husband likes to spend money, and training him to live on a tight budget has been tough.

    It’s hard for me to picture being otherwise, even as I earn more money. Definitely a matter of personal style.

    Stephanie’s last blog post..Options to Data Entry Work at Home Jobs

  17. louise on August 13th, 2008 8:07 pm

    I’m pretty frugal in business, but sensibly. when I’m spending money I am always looking at the bottom line, is this purchase helping me increase my business profits or not?

    if not then I won’t go ahead and spend.

    One thing I did spend money on that was worth every cent was business coaching when I first started. It cost a couple of thousand dollars but it has paid for itself over and over.

    I am much more disciplined in business finances than I have been with personal finances!

    louise’s last blog post..Lucky Number 8

  18. Vered on August 13th, 2008 8:17 pm

    Fabulous linking to appropriate keywords. :)

    I can’t talk about a business but in my personal life, I do tend to go for the best. So, not frugal. I wouldn’t exactly call it flashy, though.

    I don’t think this has anything to do with success. I do believe that being frugal is just a character trait. You can build a successful business either way.

    Vered’s last blog post..No More Bikini Mishaps (Wordless Wednesday)

  19. cathlawson on August 13th, 2008 9:07 pm

    Hi Stephanie - I guess it is a matter of personal style. And it’s tough to get someone into the way of spending less, when they’re used to spending more.

    Hi Louise - It sounds like you’ve got your business finances sussed. It definitely makes sense to spend more on something that will make you a profit.

    Hi Vered - I didn’t optimize this post. I’m way too lazy when it comes to SEO on here, which doesn’t get me a lot of love from Google.

    Davina said something like you said too. Maybe frugality or flashiness has little to do with business success at all.

  20. Urban Panther on August 13th, 2008 9:10 pm

    Generally my philosophy is, if I don’t have it to spend, I don’t spend it (mortgages and car loans being exceptions to this rule because they are necessary evils). However, I do realize that in order to build a business there is an up front investment. And I am willing to spend money to get a good product, but I won’t buy flash for the sake of flash. Guess that makes me middle of the road?

    Urban Panther’s last blog post..He’s a scamp

  21. cathlawson on August 13th, 2008 9:24 pm

    Hi Urban Panther - It sounds like you’re a lot like Barbara - you look for best value, as opposed to cheapest.

  22. Donald Trump | Frugal or Flashy In Business - Who Wins? on August 14th, 2008 6:00 am

    [...] Most folk I know who’ve been successful in business have also been extremely frugal. And personally, I’ve tried to follow the rule of not investing in a single gizmo or gadget unless it will lead to an increase in sales in some way. And whenever I’ve broken this rule, I’ve regretted it. But, not eve … Source: Frugal or Flashy In Business - Who Wins? [...]

  23. Monika Mundell on August 15th, 2008 2:58 am

    @ Cath: I used to be subscribed to the flashy version of life. I was aiming at the big house (no, make that 10), the big cars, the high life and what not.

    Until I realized that flash can be fun, but also very empty. A lot of the flash is often pretty shallow and I’m to honest a person to feel comfortable within an environment like that. That is not to say that I don’t love Vegas. :-)

    Lately, I’ve embraced the frugal mind set. This doesn’t mean I would be happy living without my comfort, but instead of chasing the flash I have resorted to enjoy the simple things of life a lot more. Plus, my dream is to eventually live a frugal life as a writing nomad. That is one of the reasons I’m working hard right now. The other is to help my husband to quit his work.

    He deserves to spend more free time after 22+ years slogging away in a stinky hot kitchen.

    Monika Mundell’s last blog post..Humble Reality Check And The Art Of Living

  24. cathlawson on August 15th, 2008 9:52 am

    Hi Monika - It’s great how our goals change once we realise that living the life we want to lead is far more important than the acquisition of material things isn’t it?

    Travelling whilst you’re writing sounds like a wonderful way to live. And knowing what you want is half the battle isn’t it? You’ll get there.

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