If you’re a new business owner, then you need to avoid being charitable. Think I’m kidding? I’m not. You need to tell your favorite charities to stay away for a while. Unless required, you need to limit or stop donating your time or giving “pro bono” advice. Why? Because in most circumstances, getting a new business off the ground will require all the time and money you have. Later on, when your company is on solid economic footing: that’s the time to start giving back. Right now, you need to do everything you can to keep the lights on.
I know I must sound like the Grinchiest Scroogiest son of a you know what to ever own a business, but in most instances what I’m saying is true.
When I first started my business, I tried to keep up with my charities. My business was in the red but I was still donating $100.00 a month to XYZ charities.
Even worse, I took on a lot of “pro bono” work. That means I was doing work for free, when what I really needed was to be out finding paying clients. This work ended up bogging me down and taking away from my ability to find paying customers/clients. It almost destroyed my business.
Later On….Be Generous
In a few years when your company is hugely profitable, then give as much as you’d like. But when you’re first starting out, you’re either using up what little money you have or you are running your business with debt. Your creditors are not going to be as charitable if you don’t pay what’s owed each month. As mentioned above, time drains can be an even more serious issue.
Some people will recommend giving to charities (money—not time) for “the tax benefits.” But when you’re first starting a business, you’re unlikely to be earning much money, so the tax benefits (if any) will be limited. Even if you’re completely altruistic, you might have to face the reality that giving to others is one of the first things you’ll have to limit for a while. If you’re about to become a charity yourself, then perhaps that charity might have to “start in the home”—or in this case, your business.
Giving to Get Business
It’s not such a large secret: not all giving is altruistic. Besides the tax benefits, others give in hopes to “look good in the community,” “get a foot in the door with a certain company” etc. If that’s the case then perhaps what I’m saying doesn’t apply, but again, it’s still turning charity into a business decision.
Every situation is different, but for most small business owners, it might not make sense to be overly charitable in the first fews months/years of their business. The startup is a monster with its own needs, and it needs to constantly be fed. In other words, if you can’t afford to pay your rent, then you might want to cut back on giving to charities. And if you can’t find time to find paying customers, then perhaps you shouldn’t be donating much of your time either.
And if despite all that, you still decide you want to give like before, well….then you’re a nicer business owner than I.