Life As An Entrepreneur Is Like The Seasons
It’s September – a time to return to our routines, kids returning to school, and autumn preparing for its seasonal debut.
Life as an entrepreneur is like changing seasons; you know that change is coming, but you don’t know how severe or mild it will be. Like many small businesses, any major event affecting regular operations can shut your company down permanently if you are unprepared.
Although the season may change, your responsibilities and commitment to your business do not. Whether a new or an experienced business owner, you will make daily decisions that can boost your success or potentially destroy your business.
One of those considerations must be insulating your business from any event that can stop your money flow for a while or create a significant cash outlay. It can happen; history has shown that it has time and time again.
Suppose your business has been affected by a storm, covid-19, or loss of a significant customer, vendor, or critical employee, or hit with a lawsuit, etc. Now imagine how it can throw your operations into a tailspin. How prepared are you for something like this?
Like most entrepreneurs and small business owners, your personal life is connected to your business operations in many ways. You probably rely on your company for a portion, if not all, of your household income. Therefore, what happens in one will affect the other. Again, how prepared are you for an unexpected financial hit?
Your ability to make intelligent decisions regarding your company operations and finances, business and personal, will determine the level of freedom you will experience.
Consider the bolded questions to help you build a more resilient business that can thrive in any season or bounce back from adversaries.
Who Will Protect You from The Rain?
Suppose you choose to be an entrepreneur rather than work for someone else to have more money. In that case, you decided to take control of your financial destiny. Your primary focus must always be ensuring that your business operates profitably and experience a positive cash flow. This foundation will keep your business thriving and growing.
One way to ensure a consistent cash surplus is to set up your business to have more money coming in than going out. This strategy will allow you to have more PROFIT in your bank account after paying all operating expenses, including paying yourself.
How do you set your business up to have maximum profit/surplus? It’s simple. You must be clear about what it costs to acquire, produce, promote and deliver your products and services to your buyers. Then prioritize your spending accordingly.
Take it from me, a CFO and business advisor of 15 years, you should not spend money on anything that does not have a direct correlation to your profit or freedom destinations. This discipline will enable you to keep more money for rainy days or secure a better future for yourself.
Who Is Spending Your Money, If Not You?
Let’s face it; money does not spend itself. Where is it if you made it and have nothing of value to show?
You work hard to have the life that you want. It is why you went to school, studied hard, got a good-paying job, or became an entrepreneur. You do all of this so you can have money to use for what’s most important to you.
Most entrepreneurs did not learn money management skills as part of their formal education. The focus was more on knowing what was required to be a great employee for someone else.
When shifting to working for yourself and getting paid enough to enjoy the same or better lifestyle that a W2 job affords, you need a whole new set of skills.
Managing your finances wisely during good times and challenging ones is a skill every business owner should learn. Even if you are an experienced owner and your business is doing well, upgrading your money management skills will be a plus.
Running your company operations while supporting your personal and household needs can be difficult when funds are limited. Knowing how to create and follow a spending plan will make your life easier and RICHER!
How Prepared Are You for the Unexpected?
The happiest times for business owners are when business is flowing, operations are running smoothly, and they are making money. But we know that those times do not last forever.
One of the biggest mistakes that many entrepreneurs make is to start operating without laying the proper foundation. And sometimes, it might work for a while as they cruise along for some period, making money and enjoying a good run.
Don’t allow yourself to fall victim to this false sense of security. All it will take for things to get “real” is an unforeseen crisis with a severe financial impact to throw your entire operation into a tailspin.
When such a crisis occurs, if you are not ready to deal with the fallouts, this can lead to you becoming anxious and frustrated and possibly giving up or losing your business by default.
There are no guarantees that your business will not have rough patches that can hurt your finances. Why not give yourself the peace of mind you want by putting a plan in place now? If you already have, you are ahead of most of your peers. Kudos!
Who or what is Profiting from Your Success?
Many people choose to own their own business because they believe it would provide the financial means to live a more fulfilled life and help them help others to do the same.
While some are having enjoyable experiences, others still wonder when their time will come. Even though their company is profitable, they never have enough money in their bank account.
If this is your reality and you want to change it, you must get a grip on what’s pulling the profit out of your company. If you are a sole proprietor, S Corp, LLC, or partnership, you are paying taxes anyway, so why not use it where you can get a good return on your investment?
Consider the following “if the shoe fits”:
- Are you the big spender among your family and friends, always picking up the tab?
- Are designer brands a part of your family’s fashion trend and usually on your dime?
- Are you the family and friends loan officer, dispersing and forgiving them, only to approve yet another one with guilt as the collateral?
- Are you taking expensive vacations and driving luxury cars at the expense of your company’s success?
Now might be a great time to rethink your non-negotiables, put a stake in the ground, and let nothing interfere with achieving the freedom and impact you want from your business.
Don’t let ANYTHING hijack your business growth and your financial security.
If you need help, reach out and learn how to maximize your profits so you can enjoy your best life without compromising your business success!