In this week’s episode of Freedom Fast Lane, Ryan Daniel Moran discusses the distinction that makes a huge difference in the overall success of a business. Successful companies designate proportionate money for taking new risks and if you are an entrepreneur wanting your business grow, then you need to hear this growth hack on what keeps businesses growing.
Key Lessons Learned:
- Our own stories, beliefs and habits get in the way of things that actually work.
- There is a concept that is ‘Work on your business not in your business.’
- Most entrepreneurs spend time doing things that aren’t empowering the business, but rather put out fires.
- One distinction is that ‘you are not your business,’ but you ‘built’ your business.
- Many entrepreneurs believe they are their business, and as a result stay stuck.
- This concept is similar to ‘you are not your thoughts,’ but thoughts happen.
- There is a difference between entrepreneurs who fund a business themselves and entrepreneurs who take outside funding to grow a business.
- The person who funds the business themselves has risk involved.
- The entrepreneur who takes outside funding is free from the risk of thinking ‘I’m going to fail and this is my business I have to protect.’
- Successful companies designate money for taking new risks.
- Your net worth is driven by your business and the more your business grows, the more money you make
Symptoms of Lack of Growth:
- Taking money off the table
- You haven’t hired anyone in a while
- You are not developing pro-active systems
- “What if it wasn’t your money?”
- “What if it was the businesses’ money?”
- Pay yourself back the initial risk.
- Instead of taking out profits, put yourself on payroll.
- Designate an equal amount to go back into growth of the business.
- Take out 50%, so $5K for you and $5K for a second product line.
- Once there is $100K in the business bank account, it becomes difficult for entrepreneurs to put $50K back into the company because of the limiting mindset that it is ‘your personal money.’
- If you allow yourself to see it at the ‘businesses money,’ then you are free from the ‘what happens if it fails?’ mindset.
- The temptation is to say ‘if I didn’t take that risk I would have $50K extra in my bank account.’
- Designate an amount you will take out for yourself when there is cash in the bank.
- Designate an equal proportion that will go back into the business, e.g rolling out new products, hiring a team, reinvesting into developing systems, buying new advertising, and going into new channels.
- The important distinction is that you keep the proportion of investment equal, regardless of how much money is in the bank account.
- This assumes you want your business to grow beyond the level it is.
- If you want your business to stay how it is, then tweak the strategy and you don’t have to reinvest anything into the business.
On your iPhone? Listen on iTunes here.
Links to Resources Mentioned
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