COMMON ENTREPRENEUR MISTAKES WHEN CREATING FINANCIAL FREEDOM
Following on from the previous article, I regularly see three problems entrepreneurs have that stop them creating financial freedom using their business. These are:
• not creating a solid financial foundation to commence the financial freedom journey
• not having a plan to use profits to invest, create wealth and forecast financial freedom — forecasting their future, if you will
• not having a clear exit plan to maximise the sale of the business to deliver financial freedom.
By starting to see yourself as the CEO of your personal finance business you’ll be able to address these issues. Let’s have a quick look at each of them now, and we’ll go into much more detail about each later in future articles.
Not creating a solid financial foundation to commence the financial freedom journey
Entrepreneurs often blend business cash flow with personal cash flow. Personal expenses are paid from business accounts and vice versa, and money is often transferred from one account to another to cover shortfalls or bills as needed. Because of this, you may not even know how much you need to live on personally every month.
Mortgage payments are made but your loan balance feels like it’s not reducing as fast as you would like. This is not the life of a CEO.
Not having a plan to use profits to invest, create wealth and forecast financial freedom
Does this sound like you? Your business is making good profits — it could be better — but you never seem to take these profits out of the business. You and your business partners want to keep reinvesting back into the business. And when you do have spare cash, you just don’t know where to invest.
It’s time to stop letting your business run you, and to stop being too proud to ask for advice. You are the CEO. Ensure that profits are taken and then get great advice on where to invest them.
Not having a clear exit plan to maximise the sale of your business to deliver financial freedom
At some stage most owners will sell their business, but perhaps you want to have options to stay involved in the industry after the sale? You have so much knowledge and want to keep active. Perhaps you even heard how a fellow entrepreneur sold her business but now owns the building the business was operating in? How did she do that?
The problem for you is, your business partners have never talked about an exit or sale strategy. Or if it’s just you, you’ve never given this the attention it needs. You don’t want to sell tomorrow, but it would be nice to have a carefully considered plan for when the time comes.
As the CEO of your personal finance business, it’s your job to create a plan, communicate this plan to all involved, and to execute the plan. To do this well you must create a great advisory team and get it happening.
I get it; it’s not easy and it requires patience and hard work. It also requires a deep understanding of what is going to drive and motivate you to achieve success and financial freedom as an entrepreneur. And you need a roadmap and a willingness to make some changes.