Running a successful business is a compilation of multiple factors. To make a career as an employee you need to focus on one unique skill and master it until you become the best in your narrow and profitable area. To be successful in business, on the other hand, will require you to become a Renaissance personality. You will need to have an orientation in many different areas such as sales, finance, communication, negotiations, human resources, law and business models to name a few.
Personally, I believe that one of the best warm-ups for both wanna-be entrepreneurs and actualized business owners is finance and investing. As a business owner, you need to develop a deep understanding of how money works, how to generate it and how you can regularly multiply it.
Let’s have a look at two examples of how you can use the concept of financial freedom and planning your investment to accelerate your progress and entry into the world as an entrepreneur.
# Example 1
How do our knowledge and attitude affect the achievement of financial freedom?
The cornerstone of financial success is sound financial knowledge and a thorough plan for life. The combination of these two elements produces four types of people.
Let’s start with type 4 – This is an individual with low financial knowledge having no idea about themselves as a person. Such people always find themselves in real trouble because not only do they know anything about the nature of money, but they also have no idea what they want to do with their lives.
Type 3 – This is an individual who is able to generate a lot of money and even quite quickly because of a high level of financial knowledge, and then just as quickly ‘getting rid’ of what they have earned because of a lack of clear direction in life and life goals. If you do not have clear life goals, the money will not ‘stick’ to you.
Type 2 – This is an individual with a very solid life plan and life goals. This is a person who, although he or she has no knowledge of the nature of money yet, will soon come to the conclusion that he or she needs to learn vitally about finances in order to achieve his or her life goals.
Type 1 – This is an individual with a lot of financial knowledge and a high level of self-esteem, and an accurate idea of themselves. Someone like this not only knows how to make money, but also knows how to protect their wealth, multiply it, and then pass on their legacy to the next generation.
Take some time now to figure out what type of person you are!
POINTS TO CONSIDER:
Why are you where you are in your life right now? What has happened (or what has NOT happened) in your life that you are where you are? Are you happy/satisfied with what you have just discovered? In turn, if you want to change something significant in your life and finances, what would be your first step to achieve that? (And then what would be the next two steps?)
Sound financial knowledge and an awareness of your life purpose are fundamental to financial success. People who know money but don’t know where they are going in life will quickly spend the money they earn. On the other hand, those who have a clear goal but still lack financial knowledge will quickly learn and start making good money. To achieve financial independence, you need to be aware of where you are in life today and what your purpose in life is. Additionally, improve your financial knowledge – start today and don’t stop.
# Example 2
What do creative thinking and investing have in common?
When we plan a big expense such as growing your business or buying a property, emotions often come into play. They can overshadow facts and make it difficult to objectively assess the situation. This is why it is worth using proven methods that facilitate the analysis.
When evaluating investments in real estate, the easiest way is to apply the model of six points of view which are driven from de Bono’s six hats method. The author of the six hats method is Edward de Bono, a Maltese physician, and psychologist. It allows you to organize your thoughts and look at a given problem – in this case, real estate – from many different perspectives.
|Point of view||Element on which it focuses||Question to analyse|
|Objective||Pure facts||What are the facts about the property you are planning to purchase?|
|Emotional||Your emotions||What feelings are associated with the selected property?|
|Constructive||Positive aspects and good points||What good things are associated with the property?|
|Creative||Many alternatives||How can you have this or that property cheaper, better, differently?|
|Critical||Defects and weaknesses||What problems are associated with the property?|
|Controlling||Controlling course of thought, planning, strategy, etc.||What is the sequence of actions associated with this investment/purchase?|
Conducting a good analysis requires a creative approach. The more viewpoints you consider, the better equipped you will be to make a decision.
POINTS TO CONSIDER:
How do you analyse your real estate investments? Do you anticipate the emotions associated with the property? How do you look for the good aspects of an investment/purchase? How do you look for alternatives? How do you curb your enthusiasm?
When evaluating an investment, such as real estate, you can use methods that support non-linear thinking because investing requires looking at the decision from many different perspectives. This allows us to analyse numerous variables and draw conclusions to help evaluate investment risk and make a final decision.
The three essential questions
- How can you use these two examples to better understand and grow your business?
- How will personal finance and investing principles help you succeed with your business?
- And finally- how will an accurate way of thinking lead you to the accomplishment of your business goals?
As an entrepreneur, you do pretty much the same daily activities as employees: you meet your prospective clients, you prepare offers, calculate risk, work on your business model and technical aspects of your business. However you must apply different rules and your KPIs will be different from those who work as employees.
Everything starts with a different perspective and with a different way of thinking.