Last week I wrote about how to create wealth, attract money and be a money magnet. I referenced money affirmations and mindset mainly. This week’s post is more practical. It’s more strategic too. I’m getting specific and as a result you’ll be getting the 7 core habits I’ve been using forever-and-a-day to grow large, profitable businesses, including my own!
You lucky, lucky things! 😉
My 7-core habit create wealth formula
Habit #1. Learn about money and success from wealthy people. Yes it’s really quite simple. Go and make friends with the bling-bling crowd. Hang out with them. Watch how they operate. Listen to the way they deal with things.
If you’ve not read Rich Dad Poor Dad give it a skim. It illustrates the point I’m making well. You see, the truth of the matter is this – most of us learn about money from our parents. No one teaches us about money and success in school and it’s a big failing in my opinion.
So, consider who you’ve been taking money advice from. Is it from your friends and family who’ve struggled to make ends meet, or is it from successful mentors who’ve proven they know how to make and maintain money and wealth?
Now I’ve hung out with a lot of wealthy people over the years and I can tell you this – wealthy people regularly take advice from people who’ve more money than they have. They employ the smartest accountants who make their money work for them i.e. they make it go further. They also continue learning about money and about investing all the time.
So take time to learn from those who know. Let their knowledge rub off on you.
Habit #2. Take good care of your money and become a good money manager. I used to dread logging into my bank account online or going to the ATM and requesting a balance. I used to have to psych myself up each time. No joke! It’s ridiculous I know, but it’s true. However, it dawned on me slowly. How could I hope to get more money if I couldn’t deal with these basics? So if this is resonating with you, do as I did: start to treat your money like it’s of real value. Doh! And, the easiest way to do this is to imagine it is!
Watch your bank account too. Look at the interest you’re being charged and manage your cashflow daily. You need to have your eye on your P&L (profit and loss) and review it regularly. Management accounting is about as sexy as selling. Sorry. It’s a pretty dry subject but it’s so important.
So, you need to know exactly how much money you’ve got coming in (both for your business and for your personal accounts) and how much money is going out. You don’t need to be a whizz at maths to do this either. You can do this with a simple spreadsheet but if you’ve got accounting software then that’s even better. Look at your cashflow, sales order book and invoicing DAILY. It will focus your mind! Cash is always king.
I learnt the “cash is king’ lesson the hard way when my first 7-figure business nearly failed. Picture the scene. I’d just had my third child (the other two were 10 years and 19 months) and the business was set to storm the year. My business partner and I had adopted an even more intense ‘all or nothing’ growth attitude. We’d decided at the start of the year to stop playing it safe and to take some measured risks so we could grow. For example, risk #1 was investing in one of our industry’s largest shows as an exhibitor. Risk #2 was taking on a very expensive consultant in preparation for a contract that we’d just been given a verbal order on. Risk #3 was signing off on larger office premises. Now we had a strong order book at the time, but when several of our clients went into receivership out of the blue, owing us money, it nearly wiped out our business. Having a strong order book was about as useful as a chocolate fire guard. The bank wasn’t able to extend any credit or able to increase our overdraft. Unless we could find a way to pay our suppliers, we were out of business too. However, we fought hard to hang on to the business, and thankfully we managed to turn it around. The lesson was learnt!
Ok back to the habits….
I’m going to bring up debts whilst we’re on the subject of money management. Make sure to pay your debts on time but also use debt to grow your business. What do I mean when I say this? Well, as an entrepreneur you’re going to have to use debt occasionally to grow your business. I call this ‘good debt’ as it leads to you making more money. It’s an investment. It delivers a return (ROI) and it generates cash! Examples of good debt include investing in a course, some coaching, equipment and so on. It may be through a credit card, a lease or hire purchase. Bad debt on the other hand is when you put things on credit cards and it doesn’t generate you any money. I’d use a company car as an example.
One of the best books I’ve read on money management and how to create wealth is The Richest Man in Babylon.The book dispenses financial advice through a collection of parables set in ancient Babylon. It teaches you through the characters in the parables who learn simple lessons in financial wisdom. Interestingly, it was first produced as a series of separate informational pamphlets and was distributed by banks and insurance companies.. It’s a classic and an enjoyable quick read.
Habit #3. Look for opportunities and avoid being comfortable at all times. As an entrepreneur you’ve got to do things that others won’t do. You’ve got to think, be, and act differently. And if you’re after success you need to see opportunities where other people just see risk. I’m going to use companies that started in recessions as examples – Disney, IBM, Apple, Microsoft, General Motors, General Electric, Burger King, FedEx, Revlon, CNN, and in the UK, our very own M&S!
Habit #4. Play to win and make sure you’re playing to win BIG. Decide now. How much money do you want to make? This is the time when you really can pluck a number from the air. However, once you’ve done this you need to plan for it and test it out. This means you’ve got to work out intelligently and strategically how you’re going to achieve it. NEVER settle for an ambiguous amount without doing this. Otherwise that would be plain dumb!
Habit #5. Get used to being uncomfortable and decide if you’re playing to win or loose. Avoid thinking and using the word ‘comfortable’ at all times. Being comfortable will keep you stuck in survival mode. In order to get out of your current money zone you’ve got to get out of your comfort zone. Your business is only ever going to grow as much as you do and you’re only growing when you’re uncomfortable. Ironically when you’re used to discomfort you’re going to end up with wealth and success that makes you very comfortable.
[box]”Small thinking and small actions lead to small bank accounts. Big thinking and big actions lead to big money” – Jane Frankland TWEET THIS[/box]
Habit #6. Learn to love receiving. This can be so hard for many of you I know. It was for me, until fairly recently. I cured it by becoming aware of it and learning to respond in a different manner. For example, whenever someone used to say that they liked my outfit I’d be quite embarrassed and say something like, “oh this? I’ve had it ages.” Now, I just smile and thank them. It’s a win-win for both of us. When you don’t accept a gift you’re actually denying someone else the joy of giving. So if you’re guilty of doing this, work on it as soon as you can.
Getting this sorted can go a long way to sorting out those “I’m not charging enough” or “Am I worth it” money issues I blogged about the other week. It enables you to feel comfortable charging appropriately for your products and services. Make sure to always charge well for your services and don’t apologise for your rates or success. Get paid on time or ahead of time. Become good at asking for and receiving payment because you’re worth it.
Habit #7. Enjoy giving.This is often referred to as ‘playing it forward’ and I love it. There is nothing more satisfying than being able to do it and it’s one of the reasons so many entrepreneurs are in business. You want to give to the charities and causes you believe in as you’ve a social conscience. So donate or give a percentage to charity and remember to leave a tip after a meal or for the maid if you’ve stayed at a hotel.
Now I want to hear from you…
Tell me which of these tips will you use? What tips do you use to create wealth and manage your money. Please share them here.
Thanks for participating!
With love and gratitude – as always,
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