Ever wondered how successful entrepreneurs manage their money? “”Rule No. 1: You should never lose money. Rule No. 2: Never forget Rule No. 1.” — Warren Buffett”. Quotes like these give you a glimpse of how tricky money management can be.
In this article, we delve into 8 ways successful business people manage their money. These are things that you can do as an entrepreneur to ensure financial success in your business and personal life. Let’s get started.
Successful entrepreneurs follow a budget both in their ventures and in their personal lives. Following a budget allows them to keep tabs on how much is coming in and how much is going out.
When the expenses are more than the revenue, that is definitely a loss, and they are not out to lose money. Adjustments are made or whatever needs to be cut off gets terminated.
2. Saving for a rainy day
Successful entrepreneurs save for a rainy day. They know that they can fall ill and will need to go for treatment, or any other emergency can happen.
They do not want to use money from their business for treatment or emergencies. Moreover, they have assets that can be sold during lean times or used as collateral during expansion.
3. Keeping credit cards at bay
Successful business people will avoid spending what they do not have, especially in their personal lives. Doing without becomes the better option.
If they have to borrow using credit cards then it must be a business expense with a particular aim – improving their business in a clear and defined way or beginning a new company.
4. Reading avidly, voraciously
While some of the most successful entrepreneurs do not have a college education, it does not mean that they do not altogether read. Bill Gates is said to read over 50 books in a month. They educate themselves on how to become better at what they do.
5. Knowing the difference between wants and needs
Successful entrepreneurs buy what they need, things that continue to grow their businesses. They do not buy something because it is good, attractive or the latest.
They have set long-term goals that they need to achieve, and nothing deters them. Not even the latest iPhone, if it does not contribute to their goal achievement and business success.
Investment is so much ingrained in the successful entrepreneur’s mind; it is almost in his or her DNA. They have an eye for opportunities and even the exact amount to invest. Better still, they only invest in what they know. This way they can calculate the risk and opportunity.
7. Living below/within their means…
… or, better yet, expand your means to sustain your lifestyle.
Successful entrepreneurs live within their means. Their principle is that if it’s not necessary, it’s not worth spending money on. Warren Buffet still lives in the same house that he bought about 60 years ago, despite being one of the richest entrepreneurs in the world.
If established magnates like Buffet do live within their means, it goes without saying that the necessary sacrifice is required to grow as a businessman/woman.
If you can live in a smaller house, until your company is on its feet, the better. You will be able to achieve your goals faster when you make sacrifices and live within or below your means.
Anternatively, you may want to take the glass-half-full path, by working hard and invest better in such a way that you can expand your means to afford your desired lifestyle.
8. Seeking advice
Successful entrepreneurs are not born knowing how to manage their finances. They have learned over time, and do ask for advice on how to manage their money, from the most general one (i.e. consulting with a wealth planner on how to make my money work harder for me) or the most ‘niche’ one (i.e. consulting with an attorney on how to sell a structured annuity settlement for faster payout.)
All in all
Managing your money as an entrepreneur is vital for succeeding in your personal life and business. Applying the above principles consistently will help you achieve your goals faster.