Top 3 Lessons To Save The Dumb Tax

Now you’re probably reading this thinking “yes, tax is dumb and is this an article in saving myself tax with a nifty tax deduction?”

I’m not really talking about taxes being dumb (even though every business owner will say they are), I’m talking about The Dumb Tax (TDT). TDT is a term coined by Keith Cunningham in his book The Road Less Stupid (side note: every business owner should read this book), and when I tell you that I related to this on a spiritual level; I related to TDT on a spiritual level.

The Dumb Tax can be summarised as the money you spent, because you were being dumb and not thinking about what you’re doing. If you’ve ever worked on a start up, you’d be lucky to have your TDT sitting under 100k. If you, like me, think you have a ground breaking concept that needs to come to market quickly, your TDT will be significantly higher.

I have made countless mistakes in business, and I can only hope that I don’t make the same mistake twice. Perhaps there will be a point in the future where I’ve made so many mistakes, there’s none left to make.

So here are my top 3 lessons to save yourself with TDT!

Do not jump into bed with the first person that validates your idea:

This is a challenging one, because I both know and feel to my deepest core what it is like having an idea and having critical opposition to that idea. It can seem like the world is against you, that people are trying to discourage you so they can steal your idea; veteran entrepreneurs have a reverse case of tall poppy syndrome where they don’t want others to succeed to the same extent that they have. The reality is that yes, all those things are true. But, the even harsher reality is that these opposing opinions will challenge you to validate your own ideas, and consider the reality that maybe your idea isn’t that good; or maybe it’s a good idea, but to make it great you need to take on the constructive criticism (or just plain criticism).

The tricky part comes here: when you have the utmost faith in your idea, when you have a deep passion and fire that burns inside you when you speak about it, you believe you truly have a million dollar idea – you risk jumping into bed with the first contractor that validates your idea. You think to yourself “yes, these people get it! They have the same vision as me! They don’t think I’m crazy or that I’m an idiot!”.

Here’s the reality; these people may very well be on your level and think your idea is great – but they may also see an idea with no direction, and a lot of billable hours to find that direction for you. In your worst case scenario, this first person to validate your idea will be seeing a lot of money they can extract from you, and also be incredibly under-qualified to actually deliver on the desired deliverable.

When I first had the idea for my most recent tech start up, numerous developers turned down the project because of my “lack of experience”; which resulted in me latching onto the first people who were willing to work with me. I don’t need to spell out why this was a god awful decision; but, coming off the back of so much criticism in the concept, the decision was a hasty one when someone did validate my idea.

Really, having someone say yes to working with you doesn’t mean they’re equipped to delivering on what you want. Having people provide criticism only provides you with more considerations, and having opposition to your concept makes you ask the hard question of “is this actually a good idea?”

Before you spend, consider your long term outcomes:

Coming off the back of “do not jump into bed with the first person who validates your idea”, a close second was “before you spend, consider long term outcomes”.

Again, this one may seem obvious, but clearly not as obvious as some might think.

Being flush with cash, having someone invest in a pre-seed/angel investment – this does phenomenal things for the ego. It’s more money than you’ve ever seen in your life thus far! It’s the softest cushion you’ve ever slept on. It’s Dorothy’s yellow brick road, and at the end is your brain child manifested.

It can be incredibly easy to throw spaghetti at the wall, and see what sticks. But I urge you to think about the long term outcome from every dollar you spend. The best lesson my mother ever gave me as a child was this:

“If you think 50 cents is not a lot of money, walk into a shop and try to buy something for 50 cents less than the price; tell me if the shop sells it to you”.

Every single cent matters.

What is your long term plan, have you mapped out every step of your journey in this venture? I’m not talking about a high-school business plan; I’m talking about a roadmap of every milestone and stop that you need to get to before you can move on to the next.

If you knew that the $1000 you spend today on your web developer, would cost you 10 fold in 6 months because that money is actually needed elsewhere – you’d save yourself a lot of grey hairs (or in my case, the sale of your car).

Be like the couch in friends, and PIVOT PIVOT PIVOT:

If you aren’t familiar with that scene in friends where Ross is screaming “PIVOT PIVOT PIVOT” while the gang tries to get a couch up a set of stairs – do yourself a favour here.

But if you have, be like the couch and pivot, pivot, pivot.

Just as lesson #2 encourages you to think twice before you spend, lesson #3 pulls from this and encourages you to pivot where you need to. That road map probably won’t go to plan; and when it doesn’t, what are you going to do?

Every point on that road map should have a tree that branches off with potential ways to pivot, every “what if…” should have an answer.

“What if my shipping company falls through”

“What if my developer goes insolvent and can’t work on the project any more”

“What happens if I my competitor comes out with something similar in the R&D stage”

Every single one of these, needs to have a pivot point and a way for you to go with the new path that is being forged. Obviously some of these pivot points are minor; but some can change the entire trajectory of your business model and idea. Some of these pivot points, will make you realise that “had I known this 2 years ago, I could have actually saved myself thousands in the dumb tax”. Some of these pivot points, will make you realise that working with them as opposed to against them, will save you thousands in the dumb tax.