How To Keep More Of Your Money and Build Wealth In Your Business
I’ve been doing this entrepreneur thing for two decades. Hitting 6 and 7 figures as a business owner creates plenty of opportunity to look back at the process getting to there.
Let’s get one thing out of the way first…
My business hit 6 figures in 2018. Our construction business hit 7 figures in its third year. There are things you learn reaching those milestones.
Thing is, I'm not any more special than anyone else. I just took the risk to ask, learn, and do what I could creatively to generate money for my business, and grow.
Each time, I succeeded.
But....I also had a leaking bucket. Clearly, I could start a business. In this ability to bootstrap, I didn't know when using that money was coming at a cost of future growth. I, unknowingly, created a financial ceiling that I couldn't get past and subsequently felt a level of defeat, like my business wasn't scalable, or able to grow past a certain point. What I realized what that I was
1. limited by my own belief (for sure), and
2. my own bucket had holes.
I want to share the most important holes I’ve encountered.
As you walk through this journey, you will get better at identifying these holes when they first spring a leak, and be able to quickly fix them.
Hole #1. Buying your way to the next level (will only leave you broke and without money to grow). Keeping more of your money
Savvy entrepreneurs (most) will generate money. But jumping ahead in your journey will definitely not fast track your success. Here's why; you skipped the doing part of your business by trading money to continue to be busy in your business. And the steps you skipped are the ones you need to work on the most. This right here is exactly why you do not have the same level of success you see others in this phase. They already did the work and are where they are supposed to be. You didn't do the work. You used money to skip steps.
Solution: Slow down. And save your money (maybe to pay yourself? Hole #2). You need to go through the learning stage of your biz. And it's ok to be right where you are. This is the stuff that makes you successful. You are supposed to learn each day in order to grow sustainably.
Hole #2. Not paying yourself. Keeping more of your money / Building wealth
Believe it or not, this one is critical to successfully building wealth in your business. You MUST pay yourself. Regularly. Non-negotiable. This is a habit that needs to be formed and it has a trickle down effect. You don't just one day show up and decide it's time to pay yourself. If you start out not establishing valuing on what you do for your business, growing and having more money later won't change that value. If you don't value what you bring to your business, you won't value how you price what you offer, you'll sit in "imposter syndrome" longer, you'll have a harder time scaling growth, the list goes on. If you say you can't afford to do this, you're already sabotaging your business. Check those thoughts. If you say you'll pay yourself when you get to XYZ point in your business, you won't. XYZ point is fluid and we all know being an entrepreneur is an evolving learning curve. Decide now.
Solution: Determine a non-negotiable amount to pay yourself, weekly, on auto draft. This will prevent you from overspending (see Hole #1) and establish the value of wealth in your business simply because it is paying you.
Hole #3. Bootstrapping a business on a credit card is not bootstrapping a business. Keeping more of your money
There are always risks and rewards entrepreneurs will pursue. Building a business on the back of the worst debt possible is disastrous, especially if you are not paying yourself. That's a double wammy. Using money is a fundamental part of bootstrapping, I get it. But you need to decide if you're making sound decisions or just throwing ideas out there gambling that they will somehow become successful. It's easy to find ways to spend, being an entrepreneur. Ultimately it boils down to you actually "doing", not spending money and convincing yourself you are busy working towards "doing".
Solution: If, and only if, you need to use a credit card, set a low limit that you absolutely do not go past. And check your decisions at the door when you approach that limit. Better yet, make decisions that make money for you to spend (Hole #4).
Hole #4. Leverage what you already know or be creative and make money while learning what you want to make money on in the future. Building wealth
Don't be too proud to leverage skills you already have. Even if your business is a total 180 degree shift into a new direction, you are resourceful. You've made money somewhere. Tap into that skill. If you can work it into what you currently do in your business, be creative and go for it. Just make money. As you do so, you will be amazed at what you learn along the way. Ask any successful entrepreneur..they'll tell you their progression to where they are today. It's a process. This is about determination to reach your goal.
Here’s how I leveraged to reach my goals:
1. I babysat two kids to put myself through college. This gave me the freedom to be home with my own kids so I didn't have to work away from them.
2. I built a sustainable farm business by baking and selling home made bread at a local farmers market. This money was put away to purchase my livestock, which in turn created more income streams.
3. I fast tracked creating a membership for entrepreneurs by leveraging my accounting skills. I asked a client to invest 20k into my membership startup in order to expedite its creation and get it launched. For the investment, I traded my technical & accounting skills for two years.
Solution: You already have value. Tap into that if you are coming up short on money. Write down how you've made money before. Keep your eye on your vision and goals, but check to see if you're leaving money on the table by underutilizing the skills you already have.
Hole #5. Not acting like a successful business owner. Building wealth
What does a successful business owner look like? That varies from entrepreneur to entrepreneur, but each of us has an idea of what that looks like (or who). And it will also evolve as you grow. What it isn't is 'wingin' it'. What does a successful business owner do? 1. They don't buy their way to success. 2. They pay themselves. 3. They build a business within their means, and analyze risk before taking on foolish debt. 4. They do what it takes, and leverage what they know, to increase their wealth.
Solution: This is not always going to be easy. But you definitely can do it because your vision is bigger than any shitty day you may have. Write down 50 things that would make you feel like a successful business owner. Pick two to do in the next two weeks.
Here's how you can check into what needs to be worked on:
Rate yourself on a scale from 1 (uhhhh...I had no idea that's where the water was coming from!) to 10 (I'm glad I already plugged the leak on this one!) on where you are at for each hole. Evaluate the lowest score and make it a priority to work on in your business.