What's your dream car?

Ferrari's are high on many people's lists - personally I would rather have a Bentley. When you start a business, and get an early windfall, it's often tempting to blow all your money on a big purchase like a Ferrari. But if there isn't an infrastructure and a way to diversify your sources of income this may be taking valuable funds from other areas of your business.

As a business owner you have to make hard decisions. When first getting started, sometimes these decisions take the form of:

"Do I want to buy food this month or keep my phone turned on?"

Financial education is not included in most people's high school experience. Even college, unless you are majoring in a field like economics, doesn't teach much about money management.

Balancing a checkbook
How to invest, or even
The difference between an asset and a liability

are still skillsets the majority of people do not have in America.I remember the first time I learned about assets and liabilities...I was 19 years old, just made it off the streets into my own apartment. One of my classmates from highschool had a sister who was into a MLM type company. Essentially a pyramid scheme, as many MLMs are, like Avon. The company was called Quixtar - which years later renamed itself as Amway.

I was supposed to convince people to join, and buy groceries wholesale price from a website, which would deliver things like toothpaste, toilet paper and other nonperishable goods. I was 19, and pretty lazy, so I never got too into it. But, the required reading for the program was Robert T. Kiyosaki's Rich Dad Poor Dad. Reading that book was probably the best part of the program before I quit it.

The Rich Dad Poor Dad book defined what a liability is (what you owe other parties - like a student or business loan that's an investment into higher returns ideally) and what an asset is.

Assets add value to your company and increase your company's equity, while liabilities decrease your company's value and equity. The more your assets outweigh your liabilities, the stronger the financial health of your business.
Wallstreet Mojo gives a good breakdown of them here. 

Being good in business means having financial smarts, not just a degree from the McComb's school of business (which, by itself without a vision and strategy can often equal just being a manager at McDonald's).Learning how to make wise investments in time, money and a blue print for the future is something everyone can benefit from, not just entrepreneurs.

At a recent entrepreneur conference I was at, I was exposed to the money smarts of Ezra Firestone who is a multimillionaire. We're friends now on Faceobok at least, and I remember one of the key takeaways I got from his presentation:

Use the money your business makes to reinvest capital into that business, and sell the company, liquifying your assets, and then with the extra time and money you have now, invest in a new better company.

Rinse & repeat.

I think about his presentation, and a recent conversation I had with a friend of mine. We were talking about my plans for launching another business and getting into a bigger house as a result.He warned me to not spend too much money on it and cut costs where I can.

It was good advice.

I mentioned this and that I wouldn't make this decision until I had revenue above certain margins, and ideally multiple streams.I need to figure out the amount of investment capital I can get to jumpstart this project but I wouldn't be able to do this unless I spent time first looking within.

The way to become successful is to figure out yourself first.

Developing healthy routines for introspection, life path planning, and how to get to those first milestones is crucial to maintain momentum.So when do I get to buy a Ferrari? Or perhaps an Aston Martin?

The answer is when you're able to put money back into your business to grow it bigger and see that return, with more than once source of revenue - then it may be time to splurge.

A promotion doesn't equal a business. Big wins are great - but the follow up plan is how you stay winning. Daily routines, mental, and emotional are how we get there - babysteps to creating a better future.
 

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