I have always been fascinated by what drives us and what as human beings we want. And because of that, I have spent a lot of time (and money) finding answers to the ultimate question of what it is that business owners want.
I have been advising business owners for over 20 years. And when it comes to things we want it boils down to just 3 things. Yes, I know there are people who are bonkers who will try to convince me they are not normal and therefore ‘special’.
That means their wants are different they will tell me. Err…. No, it’s not different.
Want to climb the Himalayas? How about that Limited edition 007 Omega watch you need because you dive in the ocean often? Maybe offer your services to an ashram for the next 2 years. Or maybe you just want the entire Jimmy Choo collection (my wife’s dream). These things people want and they may come from different people at different ends of the personality or values spectrum. But it still boils down to 3 things.
What we want to do or own usually comes down to:
- Time freedom – to do the things you want when you want
- Daily money freedom – not having to worry about money on a day-to-day basis
- Wealth freedom – building wealth for your future and leaving behind a financial legacy
I am not talking about happiness. That is a different topic and a minefield of its own.
I am talking about wants – things we crave which may bring happiness. Because happiness depends on what we feel when we obtain our wants.
You see you cannot climb the Himalayas without time to train and then you have to have the time to do the actual climb. I’m sure it is not a cheap exercise either. The Jimmy Choo collection? Well, you will need to own a bank to get that. And then remember you must have right place to store them. After all they have to go with the ‘image’. And a 2 year stint at an ashram needs time and money to support yourself.
So, if you want something and have not got it, now you know – it’s either because you are time-poor, daily money poor or wealth poor.
So here is another question. If you are a business owner how do you get time freedom, money freedom and wealth?
And the answer to that took me about 20 years to work out.
So if you want to save yourself 20 years of time, read on.
This comes from doing 3 things consistently.
- A business structure review
Your structure determines how much tax you pay and how best to extract money from your business. Get that wrong and you have to work harder (and longer) to have the same amount of money as someone who prioritizes and undertakes a structured review on a regular basis.
- A Tax Review
One thing is always true. You will always pay taxes. Some will pay crazy levels of taxes.
And we all know that if you pay more than you should need to then you have to work harder to have the same amount in your pocket as someone who minimises tax.
And that is why we and you need to routinely undertake tax and structure reviews.
But be careful – there is a difference between tax minimisation and tax evasion. Doing the wrong thing will make a difference for a while but if the ATO catches up with you, you will end off time poorer and definitely money poorer for years to come. And that is a fact.
- Efficient Operations
An efficient business machine means more money is made. We all know that. And we also know that more efficient businesses require less time operating the business.
There’s more. An efficient business gets a higher price when sold.
But how many business owners actually make this a priority? How many turn a blind eye thinking it is too hard to deal with the issue?
If you believe you may be struggling in these three areas then we suggest a simple 2 page effective revolving business map which is reviewed every 90 days.
Your 90 day goals will be based around efficiency and sitting down with a professional to make sure those dreaded taxes are kept to a minimum.
Daily Money Freedom
- What is the scoreboard telling you?
If you are struggling to create daily money freedom then the chances are you are not clear of your numbers. Let me ask a question.
Imagine you are a sports coach. Any sport will do. Now imagine you have to train and coach your team and play competitive matches but are not allowed to look at the scoreboard. What are the chances you are going to win and be successful? The chances are low.
In business, your scorecard is your Profit and Loss Account. Ignore and not look at it regularly then the chances are you will struggle to make money on a day-to-day basis.
Again a business map will help so goals are set.
- How do we make cash abundant?
The idea of a successful business is to generate cash. So it is logical to ask how we will increase cashflow.
You need to have conversations about your cash cycle (the time it takes to be spent on resources and then come back to you from a customer). Eg you buy stock, store it and then at some stage sell it. The time it takes from buying stock to when the money hits your bank account from a customer is your cash cycle.
There’s more. Cash can be improved by reducing expenses or increasing margins. And sometimes long term cash can be generated by buying efficient equipment now.
What opportunities exist to increase business that you can take advantage of?
This is the ultimate financial success. It allows us not to worry about how we will fund retirement and allows us to leave a legacy for the next generation.
People think they will become wealthy by earning more. They don’t. You become wealthy by:
The wealthy become wealthy by investing their income in assets that either increase in value consistently or bring an income to them. Many will borrow money to obtain the asset. The idea is that over time you repay loans leaving you with an asset with real value or an income stream (passive income) which can help you live your lifestyle.
Many think accountants should do this for them. That is not true.
The accountant’s job is to help you generate the maximum business income from your business. A financial planner then invests it for you.
- Passive Income
Investments should at some stage provide positive passive income. This income comes to you even if you are sleeping.
- An Estate Plan
And once you have built wealth the idea is that you keep it until it is time to pass it to the next generation paying the least in taxes and making sure those who inherit it do not lose it either on purpose (ie they go on a spending spree that would make Victoria Beckham envious) or by circumstances (think divorce or bankruptcy).
If you are not wealthy that is because there is insufficient income diverted to investments. And one thing that is always true. Those who have become wealthy did so with the help of fantastic accountants and fantastic financial planners.
So ask yourself – do you have a fantastic accountant and financial planner? If not, then maybe that is one of the reasons you are not wealthy.
If you would like a consult about time freedom, money freedom or wealth, get in touch and we would be happy to talk to you.