Today, we’ll cover the 3 myths about money that all entrepreneurs MUST break away from in order to achieve financial freedom.
Getting your mindset right is the #1 thing you have to achieve if you really want to succeed in business.
As the popular saying goes, “You are your worst enemy and best asset.”
From mentoring and coaching many clients from all walks of life, I can tell you that the best and most successful clients are those with the right mindset and attitude, who aren’t plagued by incorrect beliefs about money.
It’s myth-busters time. Time to align your mindset and make things right!
Myth #1 : “Profit is something you get if you work really, really hard and make lots of money”
Nope. Not true.
Profit is a choice that we make, and we can and should make that choice with every deposit.
History and basic accounting have been telling us for centuries that Sales – Expenses = Profit, and therein lies the problem. Profit comes last! Like it’s the leftovers/not important/only there if we’re lucky.
Profit is extremely important – a business cannot survive, let alone grow, without profit. The real equation to success is Sales – Profit = Expenses. Put your Profit first!
It may sound too simple, but the most impactful things generally are quite simple. You can do it. I mean, you chose what expenses to have and pay. So why not pay yourself, or your business, first?
I get to see this in action every day with clients who signed up for Profit First and the results continue to be transformative.
Myth #2: “I am my business”
This is SO not true.
A business is truly its own entity. And I am not just talking about being its own tax entity, i.e. sole prop, LLC, S Corp – I mean in all aspects – a business is its own entity and must be able to stand and grow on its own. When a business is weighed down by expenses that don’t belong to it, such as the business owners’ personal crap, it will suffocate and eventually die. But allowing your business to flourish on its own will allow you to really see what it’s capable of and set it up for strategic growth.
There is still that old school mentality about “write-offs”. Or the old school “just expense it, then it won’t cost you anything” – lol, that one makes me laugh. Putting your personal expenses of any kind through your business is a recipe for disaster and can and most likely will damage both your business and your personal finances. And, buying something just because you believe you can “write it off” is no reason to buy anything. That’s like buying something for $10 because you might save $3 (in taxes)… that logic makes no sense.
Keep your business “life” (Income and expenses) and your personal life (income and expenses) COMPLETELY AND TOTALLY SEPARATE.
When you do this, both will flourish beyond your wildest dreams.
Myth #3: “Getting a loan is good!”
Wrong! Debt is not your friend.
Too often I see businesses go after loans and lines of credit just so they can have access to cash and then believe that will make them feel secure.
The truth is that debt does not give you the financial freedom that you might think it does. Debt actually shackles you to the bank or lender until that debt is paid off. It ties up your cash every month, (or more often with some lending agencies) which can truly hurt your cashflow and thus your business. Cashflow is KING in any business – it is the lifeblood of your business – and if it’s not flowing, your business can and will get sick.
The better way to go, and I say this from experience, is to self-fund. Save your profit, at least half of it every quarter, and keep it in a “Reserve” savings account. Do your best to bootstrap and make do with what you have at your disposal, be creative, be scrappy, and let that reserve fund build. Before you know it, you’ll have created your own line of credit without any shackles – now that’s financial freedom!
Why is believing in these 3 myths problematic?
Because believing in these 3 myths will keep you from achieving financial freedom. It stagnates your business which often then stagnates your life. Your confidence gets affected, you don’t seek guidance, and subsequently, you’re unable to transform your business and life as a result.
As someone who works with business financials for a living, I have seen breakthrough after breakthrough and I know that is not as difficult as it may appear. This process is about learning the right strategies and putting in the work.
Take heart and don’t for a second doubt yourself.
That’s all I have for today! I want you to know that you can do this, 🙂
See you in a FB Live (Tuesday mornings at 7:30am EST) on Instagram or Pinterest, or in your inbox next week!
Until then, take care!