Forget the first million

One of the reasons I started my business was because I thought I could make more money than I did as an employee. Then, I got into the business networking circuit and people suggested that I read business books and articles. Cool! I’ve always been an avid reader! What wasn’t cool was that my ideas quickly changed from just wanting to run a nice business to wanting to be a behemoth. I believed the hype - that with the right mindset and hard work I, too, could become a millionaire. The books were obsessed with it.

So I became obsessed with it.

I’d always believed that simply earning more money would fix my problems. And in some ways it did. But as I earned more money, I spent more. My expectations for my standard of living increased. And before I knew it, I was back to feeling desperate and anxious.

Only this time I had more stuff. The ecosystem that businesses operate in only backs this up. As an example, many startups enter business awards for PR. In every single awards entry, they ask for your growth as a business.

They want to see crazy growth over the first few years. That’s something impressive. That’s something to crow about. They rarely ask for a lot of detail about profit or how much the proprietors are managing to pay themselves.

Nope. It’s all about the big bucks headline figure.

Turnover’s vanity

That kind of obsession can become really damaging to a new business. In my fourth year of business, we almost quadrupled our turnover in a year. We went from about £100k to about £400k.

The business awards people lapped it up. Meanwhile, I was poorer than I had ever been. I remember feeling utterly disconnected from the figures that I showed off in the awards entries because my life didn’t look like the life of someone who had generated the best part of half a million pounds in a year. My life was worse than it was when I earned £12k a year in a job.

Not only was I poorer than I had ever been before, but I also had all this crushing responsibility. I had staff, premises, leases, taxes. I didn’t have official sick or holiday pay. What had I done? That’s when I realised that I’d been focusing on the wrong thing. That drive to make a million had completely blinded me to what would make me truly happy.

Break away from the toxic cash grab

Despite our complicated relationship with money, 97% of self-employed professionals say they would never go back to traditional employment. The problem is that the mad scramble to a million, combined with unhealthy approaches to money means that more often than not, this life is ruled by toxic and unhealthy emotions.

In many cases, our approach to money is very personal. It’s based on observing how key figures in our lives approached and managed their own finances. From parents arguing over bills, to a feeling of being inferior for not having the latest accessories on the playground, feelings around money are deeply ingrained from childhood.

Does that mean we should chuck it all out the window? For those contemplating moving to a commune in the countryside of Bristol, no. Fundamentally, we need a shift in our cultural and entrepreneurial understanding of money. There is a way to make decent money and also be happy. You can do this without feeling unimaginably stressed or transforming into a Californian luxury-car-driving pedestrian-ignorer. So, let’s dive into what actually makes us happy.

Leisure

The healing powers of nature have long been written about in poems, stories and songs. Now, scientists have backed it up. A recent study carried out in China demonstrated that a group of students sent into the forest for two nights had lower levels of cortisol (the stress hormone) than those who had spent the same two nights in a city. A diff erent study showed a decrease in both heart rate and cortisol levels in people in the forest, compared to people who were measured in urban areas. If you want to be happy, get up from your desk and get outside into nature.

Positivity

There is no “main” attitude or outlook to be aiming towards. However, researchers have found people with the positive attitude of optimists, paired with the rational outlook of realists tend to be more successful and happy. Realistic optimists tend to face challenging situations head-on, accepting the situation and using their creativity and imagination to fi gure out the problem.

Money

Now, this is a complicated one. We’ve just gone through all the mental health issues that can be caused by money. But in some ways, it can make you happy. You may have heard of the famous 2010 study by Kahneman and Deaton, that showed increases in happiness reaching a cap at earnings of around $75,000 a year. This leaves us with an idea that as long as our basic needs are covered, money doesn’t matter much at all. Unfortunately, the reality is that not many actual millionaires were represented in the research. A Harvard study aimed to fix this, by surveying “a financial institution’s high-net-worth customers - a sample of more than 4,000 millionaires - about their wealth and happiness.” The results showed that participants with “a net worth of roughly $10m or more reported greater happiness than those with a net worth of ‘only’ $1m or $2m.”

Relationships

But before you tell yourself that you’re clearly on the right track with your mad rush to a million, consider this: a 2018 study showed that perceived financial well-being is a key predictor of overall well-being. It was found to be comparable in strength to the combined effect of other life domains (job satisfaction, physical health assessment, and relationship support satisfaction). This means that to run a happy, healthy business and life, you should be aiming not towards a meaningless number whose value is ever-changing, but towards a number that works for you and your life.

This is an abridged excerpt from Forget the First Million: Detox Your Approach to Finance. Build a Better Business by Lucy Cohen. It is available to purchase at Amazon.co.u