Your Financial Freedom
How to control your financial future and make sure that your business provides for you forever.
How often have we heard the words "Financial Freedom" and do we really believe it is possible for us, especially if we are Business Owners? We know that others seem to have achieved this lofty goal either through hard work, a thrifty approach to finances or by some incredible stroke of luck or rare entrepreneurial genius.
We have read articles on Financial Literacy and seen that many have taken back control of their finances and learned the basics of Financial Mastery, after they lost their life savings, suffered a major setback or just went broke.
Can it be achieved by ordinary mortals and more specifically by us? Well, the answer to this question is a definite YES!
In essence, there are Six Steps to Financial Freedom according to the MaxMyProfit formula. The first step is Mastery - Moving from Chaos to Control. Although achieving Mastery is the first step to gaining control of your business, it is one that most business owners tend to forget, simply because they usually focus first on Sales and getting Customers.
This first step of Mastery is a vital step and the start of securing the cash flow needed and profitability required that will enable them to invest for growth.
The 4 key areas of Mastery are:
- Financial Mastery
- Time Mastery
- Delivery Mastery
- Destination Mastery
When any of us start a business, mostly we are satisfied if we can pay the bills, have a decent holiday once a year and get continuing work. More often than not, we fail to plan for a bigger picture or a brighter future; in short, we fail to plan.
It can be dangerous not to take stock of where you and the business are at financially and certainly keeping an eye on Financial Mastery is ongoing. Know the percentages, such as, what are the wages as a percentage of sales/revenue, what are the wages as a percentage of net income, what is the gross profit margin, what is your break-even point every week and so on? Are these figures in line with the industry benchmarks? If not, do something about it.
The most helpful business approach carries with it the absolute necessity to ask the real questions a Business Owner needs to hear, and to help them build a picture of how profitable their business could be if they took the steps needed. Without asking all these questions, business owners often labour under the illusion that all they need is more Sales and not more Financial Control.
In business and life, people struggle to understand where money comes from and where it goes; they confuse profit with cash and often spend money because they think they should, rather than whether it is based on revenue. Do they have a 90 Day Cash Flow Forecast and if not, how much better would they feel if they knew where they would be in three months’ time? If they don’t know where their business is going to be in three month's time, they need to get a Cash Flow Forecast together fast.
These questions and the lack of answers would surely make most people wonder exactly just how on top of finances they are. The whole thrust of Mastery at this stage, and the way forward involves at its most fundamental, knowing the precise goals required, and having plans for achieving them. Through proper testing and measuring of financials, watching advertising dollars and the cost of acquisition of customers, along with scrutiny of the Profit and Loss Account, Balance Sheet, Cash Flow Forecast, business owners can begin to regain that sense of certainty and security.
What business owners do with their time is so important it bears mentioning here and as often as possible. This lack of Time Management is usually the first item on the agenda for business owners wanting their time and their life back; helping them control their time far more efficiently is urgently required.
Although later on in the Six Steps to Financial Freedom, what may be a revelation for some, is that most business owners do not even understand what a sales process is; they think they only need to talk to people and they will buy. They fail to realise that they need to drive people through a sales process and understand the basic skill or mastery of dealing with potential customers and clients. Many businesses take a call, give a quote and that’s almost the end of their Sales process. They don’t realise the necessity to have a lot more “touch points,” in place.
At the completion of the first Step of Mastery, you should have a Commercial Enterprise at the very least; later on, when you near the top of the Six Step ladder, according to the MaxMyProfit philosophy, you will have a Profitable Enterprise that works without you.
Now, how good would that be?
Chris Borrett Business Coach, Lawyer, Property Developer