My office is in a cookie factory.

I am not in the business of making cookies, but I sure as heck like eating them. Especially the toffee-chocolate chip cookies. Yowsers, they are good!

I’ll explain in a moment.

Frugality is a way of life for me, something that I became acutely aware of as I gained more experience as an entrepreneur. In lean times, and even when the sky seems to be raining money, I’m the guy who will always try to find a way to eliminate or drastically reduce costs. Simply put: finding creative ways to save money makes me feel good.

As an entrepreneur, my evolved frugality has become a blessing. Cash is the lifeblood of business, after all, and I’ve seen too many promising companies go under because they can’t cover payroll or meet consumer demand. I’ve had my share of cash crises, but I have always weathered the storm—partly because I don’t overextend myself, or my company.

I wasn’t always the frugal type. Truth is I nearly crashed my first company because I was spending cash like it was Monopoly money. I bought things because my ego thrived on it. In fact, before I woke up and changed my ways, my first company ran on ego and loans. Later, it survived on my drive and my personal savings. Finally, it kicked major ass when it was fueled by my passion and newfound commitment to frugality.

 

Why We Spend More Than We Have

There are two main reasons why most entrepreneurs (and I used to) spend more than they have to 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.

 

Better Expenses

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.

Which is how I ended up operating out of an office in a cookie factory where 90% of the people don’t speak English.

I had a perfectly nice office close to my house when a colleague mentioned he had a bunch of empty offices on the second floor of his cookie factory, a couple of towns over. In exchange for serving as his consultant, he offered me my pick of offices rent-free. That’s right. I don’t pay a dime for my office space, or my parking space, or electric, or Internet, or the endless supply of cookies. Could I afford these things? Absolutely. But why should I spend the money on office space when I can get it for free without negatively impacting my business?

Most people would expect me to operate out of fancy building with all of the usual trappings. What they get instead is a building that smells like cookies baking and an exchange that goes something like this:

“Is Mike here?”

“Quién es Mike?”

“Mike. The guy who wrote The Toilet Paper Entrepreneur. You know, the toilet paper guy?”

“El baño está ahí.”

I guess there’s some irony in the fact that, when people ask for me, they’re directed to the bathroom. But I’m saving money, which I can use to grow my business in a meaningful way. And if my industry experiences an unexpected downturn (I’m sure you’re intimately familiar with this reality), I’ll have enough cash to stick it out.

What could you cut today that would have zero impact on your clients’ happiness? What could you get for free or at a reduced rate? Give me your best frugal ideas in the comments—I want them ALL!

 

The Chocolate Floor

PS: When visitors inevitably do need to use the bathroom at the cookie factory, they often run right back out with horrified expressions on their faces, sputtering, “Uh… the floor… it’s…”

My response is always the same: “Don’t freak out. It’s just toffee. Delicious toffee.”

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