Food for thought - perhaps

[profitxchange]

Wealth creation - is it worth giving my business another day of my life?

Setting up and running a business is one of many potential ways of building personal wealth.

The key to success is doing it efficiently.

How efficient is your business at translating your investment of cash, hard work and the rest of your life?

Based on NPBT percentages I have seen, they can range from –30% to +75%!

At what point does it become worthwhile to continue trading another day of your life for the wealth your business is creating. Your life is a finite resource!

From what I read on business forums and working with small businesses over the last decade, measuring the wealth creating efficiency of the business is rarely perceived as something that should be measured, other than at year end for the tax calculation.

Selling widgets, or providing a service is merely the vehicle for generating income. The income has to be processed through the business. Paying all the bills provides income for everyone else before your wealth drops out as profit.

Wealth (profit) is a consequence of an efficient business, nothing else.

Whilst the profit & loss, and balance sheet give a useful picture of business efficiency, it is regularly monitoring the key trends within these that provide the best picture of how effective your input really is.

You’ve read it before:-
Sales are vanity, profit is sanity, cash is reality.

In a small business it all too easy to get engrossed in doing the business and losing sight of the business purpose – to create wealth for you!.

Managing the financials is only one dimension, one needs efficient processes, good T&C’s, employment policies, marketing and sales processes, cost effective suppliers, the list is almost endless. But the secret is reviewing these regularly and dispassionately to ensure they are right for you and delivering as efficiently as they can. Otherwise you are frittering your life away.

Easier said than done is often the response, but sure as eggs is eggs the wealth creating efficiency of your business will decline or even collapse if you do not take the time to monitor your business as a wealth creating machine and take steps to continuously improve.

A good entrepreneur can be successful in any business, because they concentrate on managing the wealth creating efficiency, not doing the business. They always employ the very best staff to concentrate on getting the best performance out of every element of the business.

Take a leaf out of their book and take a hard honest look at your business efficiency, and do it regularly, and ask the question – is it worth another day of my life.

 

[johnthesearcher]

Some great points made in your post which I'm sure we can all identify with.....I mean we've all been there right?

Just to compliment all you said above I have added the following thoughts I had after reading your post........

‘Earn twice as much money in the same time.... with half the stress’

During the last 20 years I’ve seen thousands of eager, intelligent, hard working people make the same mistake over and over and over again.

• the mechanic opens a garage repair shop
• the flower lover opens a florists outlet,
• the painter starts a decorating business,
• the cycle mechanic starts a cycle business,
• the therapist start a therapy venture

Let’s look at what happens to those people! Because they are good at doing what they do.... they get stuck doing the work. The work and their business revolves around them. My next statement may cause a sharp intake of breath, but bear with me.

It would be better for therapist to start a garage because then they wouldn’t be able to ‘do the work’ They could run the business instead of the business running them! Now why do I say that, doesn’t that go against what most small business owners believe they should do? Well that would, naturally be their first reaction.

And that’s why so many business owners and self employed people have such a hard time. Instead of their business giving them higher income and more free time, their business robs them of the very benefits that they embarked on the 'journey' to find in the first place.

Every day they go ‘back to work’ and day in and day out and they find themselves ..... doing it ..... doing it.....doing it! because, they know how.

There is a way you can free yourself from everything you hate about running a small business.

The solution seemed so simple and I was amazed so few people were actually aware of it. I thought it was an undiscovered secret.

Actually it isn't really a secret at all or a 'one size fits all solution' admittedly, but it is used by every single person who starts a small business and turns it into a serious profit centre, freeing up more time for the owner...... YOU ......to enjoy the fruits of YOUR labour.

'The more time that you spend working ON your business (systems, systems,systems) will result in you spending a lot less time IN it!

• Andrew Carnegie - US Steel never worked in a steel foundry
• Arthur Anderson - P & O Ferries never owned a boat
• Richard Branson - Virgin has never been employed as a train driver
• Tom Farmer - Kwik-Fit never worked in a garage.
• Tom Hunter - Sports Division (now JJB Sports) never personally made any sports equipment.

In April 2007, Hunter was reportedly the first ever home-grown billionaire in Scotland. He is currently the richest individual in Scotland. His wealth was recently estimated at £1.05 billion.[1] (source Wiklpedia)

I would have to concede though that I'm still learning as I go.

John

 

[Adventurelife]

I 100% agree with both of the posts above. The first thing I do when I start a new business or purchase one is put the best people I can find in each of the functional areas.

I keep a " dashboard " oversight on all areas with the exception of marketing and sales where I have a higher level of input.

Everything in the businesses is in a system that is constantly worked on to improve.

I do not get involved in anything that does not pay back original investment within 12 months, many have taken much less.

Only slight difference to the above posts is that I have decided to work in a sector that I do enjoy. I could make much more £ in other sectors, but my life is not just about the pursuit of money. The sector I am in lets me make £ and also live the life I would spend my money on if I was working in another sector

Good posts above

Peter