Using Personal Savings as Startup Capital
ByThe habit of saving money is important for the person who wants to start a business and succeed. When Gary Blinn served two tours of duty with the U.S. Navy in Vietnam during the 1960s, he saved 95 percent of his military pay. About all he spent was a dollar a week on cigarettes. The Navy paid for all meals, and he had few places to spend money on the Mekong River, so Gary put his pay into government savings accounts earning 10 percent interest. “The government encouraged saving,” he says, dryly.
When Gary got out of the military, he used his savings to help finance his masters of business administration studies at Harvard University. Upon graduation, Gary went to work for the international banking division of the First National Bank of Chicago. He worked for ten years in Panama, Guatemala, Brazil, and Hong Kong, among other overseas assignments. During that time he and his wife saved half of his pay.
“My wife and I were both poor kids, so we learned to save,” Gary says, adding that his employer would help with overseas expenses. “The bank would try to make up any differential in costs of living, such as the higher cost of air-conditioning in Saudi Arabia, so that employees would accept foreign assignments. They would compute what an apartment would cost in Chicago. Employees would pay that [amount], and the bank would pick up any additional cost of housing.”
Gary didn’t even own a car until he was 38.
His longtime habit of thrift gave him a large nest egg with which to buy Norfolk Beverage Co., a Budweiser distributor in Norfolk, Nebraska, when he left the bank and returned to the United States in 1982.
“Four years at Annapolis [U.S. Naval Academy] and eight years of active duty in the Navy taught me what I need versus what I want,” Gary says. “When you have wonderful friends and good medical coverage, you don’t need a great deal more.”
It became easy for Gary not to spend every dime he made because he had cultivated an attitude of satisfaction with whatever he had. Equally important was to develop the habit of saving money at an early age and to stick with it consistently. By putting the money into savings accounts up front, it isn’t missed as much as if it is the last payment made at the end of the month. For Gary, saving became second nature.
His discipline of saving is a model for all would-be business owners because virtually all of them must rely on savings, not just to buy or start a business, but to live on until the venture can afford to pay the owner a salary. Also, throughout the life of the business, the owner needs the discipline to save money for taxes, for unanticipated expenses such as broken equipment or accidents, and for growth opportunities. Gary and his wife continued their saving ways even as Norfolk Beverage Co. prospered.
“We paid cash for our house; our vacations are not expensive,” Gary says. “I wanted to be an archeologist, so I like to go on digs to Roman forts in England, eat beans out of can. That’s a lot more fun than fancy hotels.”
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