Whether you're already rich and own a business or not, there are some vital insiders secrets you need to know to achieve and sustain true wealth.
Knowledge is power and if you want to improve your wealth, understand why and how to calculate your net worth for a true measure of your riches.
Most people, regardless of how much money or success they perceive to have, don't realize the most accurate measure of their financial riches is net worth.
This impacts their planning, strategies, and ultimately their bottom line because what they believe is flawed.
New York Times Bestselling Author T. Harv Eker got it wrong a couple of times but when he got it right, he (wrote a ground-breaking book about it,) sharpened his millionaire mindset and kept replicating the same actions to continue winning.
And he has been winning at a multi-million dollar degree, consistently for the last 2 decades with no intention of slowing down! You can do it too. Read on.
It’s crucial to distinguish between the different types of money affecting your business if you’re a business owner, or plan on becoming one.
Learn here about the gravity of cash flow, revenue, profit, expenses, timing, and how getting it right gets you rich!
Even if you've never watched the movie, Jerry Maguire, you may be familiar with the famous line, in a scene where Tom Cruise screams, “Show me the money!”
Sounds like every business person’s mantra, yes?
You must become the master of your own life if you are to succeed.
We’re not here to just ‘get by,’ for a meager hobby or a part-time side hustle.
Our ultimate goal is committing to going big and getting rich doing so.
Once your business is launched and you start generating money, it feels great when you sense you’ve achieved progress and you’re getting somewhere, right?
However, there’s more to it.
A vital distinction exists between the different types of money involved in running your business.
Unfortunately, most business owners are unaware of the difference between money that’s always available and money coming in.
It’s a minor distinction, which has major implications.
Regardless, precious few business people understand it, hence the majority become employees at their business instead of gearing their business to be their money machine (also only if they’re lucky enough to make it beyond the first 3-5 years).
You must draw clear distinctions around money entering your business.
Most people focus solely on revenue and think that's what makes them rich.
And as absolutely important as it is, rich business people also place focus on cash flow, profit and expenses, taking everything into account that will make their business grow.
Revenue doesn’t equate to profit.
The average business person asks about nothing more than ‘how much money came in today’.
They have no clue what the expenses are, and they fail to realize the impact of expenses on their bottom line and profitability.
Say your business has a 20% net, then out of each dollar of revenue, 80 cents must be reserved for running expenses in your business, and what’s left is 20 cents.
You have to multiply every dollar you spend by either five or ten to account for expenses.
The quickest road to business failure is by not calculating expenses properly.
If you want to get rich, be proactive and know your numbers.
Secondly, you absolutely must consider timing.
The difference between money actually coming in and money that will eventually come in affects your cash flow!
Most individuals hit a brick wall due to failure to pay their expenses, and even less so, can they generate cash flow to invest back into their business for growth.
And it’s not so much that they don’t have revenue or sales.
It’s because they’re still waiting for revenue to come in, but the bills have already arrived.
By far, more businesses go under because of poor timing than due to poor sales.
Getting paid after goods delivery is counterproductive.
Although established companies can afford to do this, it is imperative that you ensure you have more cash flow than expenses, which will enable you to spend some money.
Being rich requires calculated strategic action.
You're in business to get rich, whatever your reasons for being wealthy are.
Know what’s going on in all aspects of your business by having systems in place to ensure adequate measurement and record-keeping of key performance indicators as well as income and expenses.
Don’t get lost in the rabbit hole - learn the differences between and best ways to manage cash flow, revenue, profit & expenses.
Because time is always of the essence, if you make one decision today on behalf of your business, let it be to accept upfront payment.
Sound like a win-win?
The difference between what you owe and what you own is your net worth.
Knowing the value of your accumulated assets, the sum of your outstanding debt, the total amount of your regular expenses, the status of your investments or passive income and what you have in savings is essential for building wealth.
A healthy aim is to have a net worth of double your annual salary by the mid-mark of your working career, however, placing a limit on what you believe your net worth should be is counterproductive if your goal is to be financially free and wealthy.
Not at all.
Your income is not a calculating factor in your net worth, instead, your net worth is calculated by including your debts, savings and investments.
The value of all your assets (what you own), minus the total of all your costs or liabilities (what you owe) is the sum of your net worth.