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The minute my first business loan hit my checking account, I texted all my friends and told them to meet me at the nicest sushi place in town.
That night, I spent $1,000—10 percent of my loan—on sushi and sake bombs.
Let me repeat that: I spent 10 percent of my business loan on a party for my friends.
Did it feel good in the moment? Yes. Did I regret it later? Oh yeah. Big time.
Thankfully, I learned from that experience, and blowing money on sushi and sake left and right is not the way I continued to run my business. Instead, when I splurged, it was on things that would benefit the company (like nicer vacuums or a bigger office), and I did it only after I made sure we could afford them.
But there was one expense I didn’t plan for: the cost of caring too much about people.
Early on in my journey, no less than 45 out of the 60 team members I had at the time quit on me at once. That’s a story for another day, but as you might imagine, that was a wake-up call for me. It made me realize that people come first, no matter what.
I went from being a “boss” who delegated tasks to a leader who jumped in first and said, “Follow me!” In doing so, I got to know every single person on my team really well, and I came to truly care about them. So not only did I want to keep these people on my team, I wanted to keep them happy. And to do that, I found myself willing to spend whatever it took.
At first, it was little stuff: Want a raise? You got it. New uniforms? Done. But as the business grew, so did our costs. When someone struggled to hit their sales goals quarter after quarter, I didn’t let them go, even though they were costing us more money than they were bringing in. I kept that person on the team because I believed in them, and I didn’t want them to lose their only source of income. If I were in that situation, I would want someone to believe in and care about me. It was always my gut instinct—not our financials—that informed my decisions. In fact, I never bothered to consult our financials at all. I believed that people should come before the business, no matter what, and that something as impersonal and unforgiving as numbers on a spreadsheet shouldn’t dictate someone’s future.
I probably don't need to tell you that this way of spending eventually caught up with me. It took a couple years, but after some scary meetings with our accountant, I finally realized I had to start telling people no and making tough decisions, or I would dig us into a financial hole we couldn’t get out of. To get us back on track, I had to tell people I couldn’t give them raises because we didn’t have the funds. I had to tell them we'd have to wait on nicer equipment, new technology, and upgrades for our office. I even had to let some people go. I also had to take out some pretty substantial loans, which slowed down our growth and put pressure on us to bring in revenue.
Today, we’re doing OK financially, but my decision to ignore our numbers and blindly put our people first did exactly the opposite of what I wanted to do: I hurt our company and our people. But the fact is that if I could do things over again, I wouldn’t change every decision. I wouldn’t say no every time. I would just be smarter about it. I believe that when you run a business, you have to care about both your people and your numbers. Just like it's irresponsible to spend 10 percent of your loan on sushi, it's irresponsible to promise raises without knowing if you can afford them. But if you never give out raises, your people will feel underappreciated, and they will probably leave to find someone who will appreciate them. It's your job as a leader to take care of your people, and that means you have to make calculated, educated financial decisions.
Learning how to strike the balance between being caring and being financially responsible is really hard, and there’s no magic rule or formula for finding it. I found it by screwing up big time, but take it from me: There’s no shame in that. My biggest screw-ups have taught me my best lessons, and yours are bound to do the same for you. So don’t fear the mistakes you’ll inevitably make—they’re bound to help you strike the right balance eventually.
Want more advice from Kristen? We're giving away five copies of her book “Permission to Screw Up” on Instagram! **This giveaway has closed!**
“Permission to Screw Up” follows Kristen’s journey to build a company in which people are happy, loyal, productive, and empowered—even while scrubbing toilets. Though she started as an almost comically inept boss, Kristen is now a sought-after CEO who teaches others how to lead by rejecting perfection and embracing mistakes. And a decade later, Student Maid is thriving.