One of our last blogs was about financial planning. And since one part of our lessons puts emphasis on how lessons from history can be applied to entrepreneurs and start ups, i was asking myself if there was a link that provides financial information concerning history.
I stumbled upon “The Richest Man in Babylon” written by George S. Clason. For those interested in the book, click for the pdf-file.
Babylon, which is situated in a region, that is today known as Iraq, was part of the ancient Mesopotamia, located next to the Euphrates River in an arid valley. There were neither forests, nor mines and the rainfall was insufficient to raise crops. Nor was there any big trading route, that Babylon´s economy could have profited from. Yet Babylon represents an impressive objective of man´s ability to achieve great objectives even with few resources.
Babylon´s inhabitants were once the richest people on earth, having built for their families a great amount of wealth that they could be nourished from.
The two characters in the book, Bansir and Kobbi complain about all the effort they have put into becoming a chariot builder and a musician, yet they are still poor. Their childhood friend Arkan provides them advice, since he has become one of the richest men in Babylon:
The principles that are mentioned in the book, were not just principles being used in the past, they are universally valid. They are…
A part or your income is yours to earn.
Arkad, the rich man of Babylon advises Bansir and Kobbi to use one tenth of their income as savings and to live from the other nine tenth.
Start-Ups can apply the same principle and put away some of their profits for bad economic times.
Control thy expenditures:
Arkad, the advice-giving rich man asks how many men have lean purses. Everybody raises their hands. But he makes clear that not everybody earns the same. Some men earn more, some earn less. Some have larger families to feed, others have no families at all, but all of them have equally lean purses. Expenditures and Income usually increase the same level. The more we earn, the more we spend. But we can keep control over our expenditures until we make ourselves conscious that we can live of less than we earn.
With a professional Budget control, Start-Ups can eliminate all unnecessary expenses and focus on their core competencies.
Make thy gold multiply:
The money advisor in Babylon makes clear that once you have started saving one tenth of your income, you can put that money to work, earning interest.
Start-Ups can reinvest their profit, to maximize their wealth.
Guard thy treasures from loss:
Tempted to spend their money on investments that they barely know about, Arkad makes clear to the folks that security comes before high interest. Even if temptation is high, a loss of everything is worse than a gain of a little bit.
By seeking financial advice, Start-Ups can protect their wealth from financial crisis.
Make of thy dwelling a profitable investment:
Instead of paying rent every month, one can seek to own their property by paying a mortgage. At the end of a certain period, assets will have increased.
Insure a future income:
Arkad underlines that no person´s life is infinite. Therefore a prosperous business must be covered by insurance.
Start-Ups can insure their business by choosing the right legal form, so that the business has the possibility to grow despite its founder´s absence.
Increase thy ability to earn
Every person must increase his ability to earn. The conscious decision for live-long learning and the will to grow as a person is, what brings oneself forward.
Founders of successful Start-Ups usually have a strong will and the vision to bring their ideas to live.
Feel free to leave a comment if you know of other historical events that can be linked to Start-Ups