THE SMARTEST MONEY AD­VICE I EVER GOT

MARK CUBAN, DAYMOND JOHN, BOBBI BROWN, AND 19 OTH­ERS

Inc. (USA) - - FRONT PAGE - By Anna Hensel

TONI KO THOUGHT SHE WAS ON TOP of her com­pany’s fi­nances. Then she woke up one morn­ing in 2016 to find half a mil­lion pairs of ex­tra sun­glasses star­ing her in the face.

The founder and CEO of Los An­ge­les sun­glasses com­pany Per­verse was by then an ex­pe­ri­enced—and suc­cess­ful—en­tre­pre­neur, hav­ing sold her pre­vi­ous com­pany, NYX Cos­met­ics, to L’Oréal in 2014 for an es­ti­mated $400 mil­lion-plus. So Ko was not new to man­ag­ing cash flow and in­ven­tory—and she thought

she was pretty savvy about fi­nances. De­spite this, in Per­verse’s early days Ko found her­self mak­ing a very com­mon mis­take: buy­ing more prod­uct than she could sell.

“I com­pletely for­got my own ad­vice,” ad­mits Ko, 44. “With my first busi­ness, the in­ven­tory was a slow buildup over the years, so I never felt cash-strapped. But as I started my sec­ond busi­ness, I over-pur­chased.”

Ul­ti­mately, she had to trash more than 250,000 pairs of glasses. She wasn’t able to re­coup the pur­chase price—but at least she saved tens of thou­sands of dol­lars in monthly stor­age fees. Ko swore that next time, she would re­mem­ber her own ad­vice. “As en­trepreneurs, we know a lot and learn a lot—but some­times we for­get,” she says. “And this was a cru­cial one for me.”

As Ko has now learned twice over, money is at the root of ev­ery de­ci­sion you make as a busi­ness owner. But sav­ing and spend­ing habits are of­ten formed—or for­got­ten—long be­fore you de­cide how much to pay your first em­ployee. The salary you take for a new job will de­ter­mine how much money you can set aside to start your first busi­ness. The loom­ing sense of dread you feel when you can’t pay off a credit card bill at the end of the month could later re­mind you not to take on too much debt at your com­pany.

To help guide you through the money trade­offs you face ev­ery day, Inc. asked founders, in­vestors, and other busi­ness lead­ers to pass along the best piece of fi­nan­cial ad­vice they’ve ever re­ceived. Some of th­ese ex­perts, like GoldieBlox founder Deb­bie Sterling, are still build­ing their first busi­nesses; oth­ers, like Ko and Bobbi Brown of Bobbi Brown Cos­met­ics, ne­go­ti­ated big-ticket sales of the com­pa­nies they founded. And some, in­clud­ing Care.com founder Sheila Lirio Marcelo and Max Levchin of Pay­Pal and now Af­firm, have suc­cess­fully nav­i­gated IPOs.

Th­ese en­trepreneurs credit men­tors, in­vestors, the framers of the Con­sti­tu­tion, and, like Ko, painfully lived per­sonal ex­pe­ri­ences for their fi­nan­cial wis­dom. But it’s of­ten parental wis­dom that ends up mean­ing the most. Just ask Shark Tank in­vestor and Fubu founder Daymond John, whose mom took him to get his first credit card when he was 18—while warn­ing him to never fall be­hind on pay­ments be­cause “the world is built on a credit sys­tem.”

Ben Chest­nut, mean­while, grew up watch­ing his mother and sis­ter run a beauty sa­lon out of the fam­ily’s kitchen—and learned never to spend more than the cash he had on hand.

“My mother used to tell me, ‘You are the only per­son you can de­pend on to put food in your mouth,’ ” the 42-year- old co-founder and CEO of MailChimp re­calls. “So in the early days of MailChimp, it never oc­curred to me to bor­row money or get fund­ing to grow my busi­ness.”

Six­teen years later, his At­lanta-based email mar­ket­ing firm earned an­nual rev­enue of $403 mil­lion. “If I need to make more money,” Chest­nut says, “I find a way to serve more cus­tomers—just like my mother taught me.”

“Make money be­fore you start ask­ing for it. The best way to val­i­date your mar­ket is to get cus­tomers.” An­gela Ben­ton Founder and CEO of NewME Ac­cel­er­a­tor, which fo­cuses on women- and mi­nor­ity-owned star­tups

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