In this episode of the Marketing 24-7 Podcast I am going to let you in on a closely guarded fast money entrepreneurial secret. It’s about 4 things you should do in your business when it comes to money;
- Make it
- Manage it
- Use it, and
- Liberate it
Bad businesses have money stuck in the business. Great businesses have cash being liberated all of the time.
Most people have the wrong idea about the very purpose of business.
Unions would have you believe that the purpose of business is to employ people. The government thinks the purpose of business is to pay taxes. Communities think the purpose of business is to provide jobs, and sadly a lot of businesspeople think the purpose of business is to provide them with a job!
So, most business people behave with an employee mentality. They don’t even have an owner mentality, let alone an entrepreneur mentality.
Smart entrepreneurs understand that their business is a tool, a device, a means of creating money that you then take for yourself spin off and invest elsewhere. It’s a different paradigm and very few people make that paradigm shift.
Business is used to Make money
Once one makes it one should Manage it
To Use it… but the most important aspect that most business owners miss is…
To Liberate it.
The ordinary businessperson typically leaves their wealth in their business, and it gets trapped in there. Often the mindset is in 20 years from now, 30 years from now, 45 years from now, I’m going to sell the thing. And that’s when I’m going to get all my money out.
The problem is, first of all, it’s very hard to predict what’s going to happen in 30- or 40-years’ time (think Block Buster Video Store). And so, what you think you may be able to sell for $x, you may or may not be able to realize.
Beyond that, it simply means that you’ve left the money idle for all of that period of time before you get at it and start using it better.
So, one of the key responsibilities that everybody misses is extracting cash. Most people think of business as a thing to put money into. A smart entrepreneur’s belief is that business is a thing to get money out of.
It comes all the way back to a very basic personal finance principle, pay yourself first. Whilst most business owners pay themselves last.
You pay everybody else; you pay all the bills. If there’s anything left, you take some. Quite often there’s nothing left.
Most entrepreneurs think like this.
And it’s exactly wrong. It’s the polar opposite of how business should be run.
You get paid first, and if you can’t get paid, then the whole deal is bad, and get out of it as quickly as you possibly can.
Your job is to extract wealth from your business on a day-to-day, week to week, month to month, year to year basis, and accumulate your wealth outside of your business.
Your ability to create wealth from a business actually depends on how many times you can turn the same invested dollar over. If you’re not good at that, you can’t liberate money out of the business because you have to leave a whole lot of dollars in the business because they’re not turning, well then your business is sick and some solid medicine is required.
Change your mindset – think cash liberation and you will find that your decisions, your actions, and your results will start to get you on the right path.