Do you ever wonder why your neighbor drives an old car wears older clothes and doesn’t have fancy furniture?
The reason is that you didn’t realize that your neighbor is a millionaire. Being a millionaire doesn’t happen by magic. It happens with disciplined mastery over your money. Yes. Believe it or not you can become a master of your money. It is within your control. People that become millionaires use three simple steps. they make money, save money and invest money.
Your business is like an ecosystem in nature. Every part of the business is independent, sales, marketing, operations, accounting, legal, tax and so forth, yet each part of the business is interdependent, one cannot exist without the other. You can’t have sales without demand for the product and you can’t have money without operations.
The problem is that many business owners make basic money mistakes, which can be avoided, preventing them from saving and investing money. These mistakes include focusing solely on sales, trading time for money and messy math.
When business owners focus only on sales, they typically take the revenue and profit from the sales and plow it back into the business. Their thinking is that they will be able to expand the business and some day there will be enough value in the business to sell. Often times, however, the business owner will be older, maybe sick or the business becomes obsolete and they have failed to save for their future.
Service businesses that charge by the hour, simply trading time for money are one of the worst offenders and the hourly rate is one of the most difficult ways to become wealthy because there are limited hours in the day.
By far, the one, single massive mistake that a business owner makes in becoming wealthy is in not understanding the businesses financial information; profit profit margins, product mix and business expenses. All of these basic mistakes prevent business owners from achieving financial well-being.
To make the shift and avoid the money mistakes it takes 3 simple steps
Step One in building wealth like a millionaire means gaining mastery over your money.
Money Mastery means knowing how much it costs to make your products and services, what kind of pricing you need for your products and services to give you an edge in making more profit, what products are the best products that sell for the greatest price and keeping costs under control.
Step number two in Building Wealth like a millionaire is to keep the money you make.
Keeping money you make requires setting goals, and taking the money you make and putting it into different money saving buckets. Some of the buckets you may consider include a savings bucket for short term purchases you want such as a television, an investment bucket for long term wealth building, an entertainment bucket to have some fun and reward you for doing a good job of saving your money and lastly, maybe a charitable bucket.
Step number 3 in Building Wealth like a millionaire is to invest money.
The single most underutilized wealth-building strategy is a 401(k). A 401(k) is a place where you can invest your money, tax deferred or tax free. Any growth on your money is tax deferred or tax free and you don’t have to start taking money until you are 70 ½. That’s a long time to let money grow for your use in your later years. There are all kinds of programs and tax strategies using 401(k)’s. When starting early and being consistent, the money in a 401(k) will make you a millionaire over time.
Building Wealth like a millionaire means changing your approach and how you think about money.
One simple action step you can take to change the way you think about money is to create lifetime net worth goal. How much money would make you comfortable once you are ready to stop working.
This action step provides clarity, focus and a completely different foundation for how you think about your business, how you price products and services and deliver value to your customers.
For more information on Growing your Business by Design, creating financial well-being and steps you can take to become a millionaire please visit our website at www.businessgrowthbydesign.com.
For a free E-book- Business Strengtheners- Strategies to move from Survival to Stability and Affluence please go to www.businessgrowthbydesign.com/strong