In order to be in business, you need to understand how cash flow works, how your profit margin works, how commerce works. You don’t want to go into business and start randomly experimenting with raising or dropping your prices, changing locations on a whim and so forth. You can study how business works, have a coach to help you along and make intelligent decisions right from the beginning. You don’t have to have an MBA to be superior at business, but it will definitely be a plus factor if you can enlist the help of someone who does, or someone who has had business success before. Reading books is also an excellent way to learn about a business. One book that I highly recommend is “Rich Dad Poor Dad” by Robert Kiyosaki and Sharon Lechter. It will give you the basics on cash flow and money management.
You have to start handling your finances responsibly right from the start. A lot of people say that they don’t have enough money to save, to invest, and so forth. That’s just bull! You know what, let me put it this way: If you can’t handle 100 dollars responsibly, then why in the world would I let you handle 100,000 dollars? I firmly believe that everyone should put 10 percent of their earnings into savings. Another 10 percent should go into an investment of some kind. Personally, I believe that giving away 10 percent is also important, via tithing to your church or giving to community outreach. If you only have a dollar, that means 10 cents goes into the piggy bank right away, 10 cents goes toward an investment and 10 cents goes toward your church or community. Don’t hesitate. Never use lack of money as an excuse for not saving. After all, that lack of money is the result of not saving, isn’t it?
Economists suggest that we should have enough savings to last us six months. This means, even if you lost your job or your business, you would still be able to survive six months before you ran out of money. How many months could you survive? If the answer is under six months, I suggest you start on your path to financial independence today. Grab your wallet or purse right now, and take out 30 percent and place it in the corresponding piles: Savings, Investment, and Tithing. Okay, okay, I can hear some of the moans and groans already. You are saying, “I can’t afford that!”
Look, I will make a deal with you. Let’s just start with one percent. Is that fair? That means that for every hundred dollars you make, you are only setting aside three dollars. I know everyone can do that. By the way, for those of you who can afford the 10 percent, please do not use my generosity as a cop-out. Go for the 10 percent. Continue this process, in good times and in bad, and eventually increase the percentage over time. When you get that raise, or you land that big client, that means it is time to up the percentages. Your ultimate goal is to save, invest, and tithe 60 to 80 percent and live off the remaining income. You did say you wanted to live like a mogul, right? Well, this is how moguls live.
I know I have been a little tough on you in this post, but if you can not handle your finances, it will be a long hard road to reach mogul status. So start small, dream big, and save your paper!