What changes a person from a typical spend-as-much-as-you-can-borrow consumer to a live-within-your-means wealth accumulator?
Personally, it was the realization that personal finance wasn’t that much different than business finance. Just like a business, you must generate revenue (income) and control your expenses so that you will be left with a profit at the end of the month, quarter and year.
Personal finance is really about being in the ”business of you.”
How long would a business survive if it didn’t generate sales (income)? Not long.
How successful would a business be if it didn’t control expenses? Not very successful.
If a business was not profitable and looked for help, a consultant might be hired to analyze current performance and suggest steps to get a business on the right track.
A consultant would begin, at the most basic level, reviewing sales and expenses. How much revenue is there, where does it come from, what are the profit margins and then they would take a detailed look at where any monies were being spent.
Trying to get to a profitable state as quickly as possible both sides of the profitability equation would be considered. Is there an immediate opportunity to increase revenues?
|Extended Hours||Overtime/More Shifts|
|Obtain More Customers||Take On More Responsibility|
|New Revenue Streams||Second Job|
|Improve Sales Efficiency||Obtain a Raise|
What expenses can be reduced or eliminated without crippling the businesses ability to operate and serve its customers?
Based on the initial observations a plan would be established. The plan would likely include an overarching vision of the approach, some key steps and milestones to achieve the objectives and even establish financial guides to meet.
Being in the business of you also means you will establish a budget that clearly defines your income sources and all your expenses. In virtually every situation, if you look closely, you will find opportunities for improvement; cost reductions or generating additional income.
A business consultant would not stop with just the basics. They would also look at other areas of the business to identify longer term opportunities to improve the operation.
In the business of you, you should always be keeping an eye open for ways to grow or improve your business. A business is not only about sales, expenses and profits; it is also about marketing and operational efficiency.
You should always be networking in your field and out. Remain open to new opportunities, a different role or even working for another company.
Within your current company or job you should not be afraid to market yourself ensuring leadership is aware of your contributions and capabilities.
You should also adapt to the ever changing marketplace, improve your skills or learn new skills to show your coworkers and supervisors your dedication to your company. Professionally and personally you should make continual efforts to improve and learn better how to manage your time, your resources and your wealth.
You are in the business of you. Like any business that is fighting to survive, it takes education, dedication and determination to grow your business, maximize your opportunities and control your expenses to maintain profitability long-term.