I remember telling a friend of mine that I have some places I would love to travel to this June but that I am not certain if I will go because of the cost of traveling down there.
And his reply to me may have been a joke but as usual, it set the wheels turning in my head…
He said “you are a business woman nah, you have the money to travel jare”
I was about launching into a talk on how profit from business isn’t meant to be splurged, but there was no time for that discussion with him, so let’s all follow up the discussion here shall we?
Some of us have a wrong understanding about business and money gotten from business deals.
Some think that so far as you are doing business, you are meant to live fly with your proceeds from the business.
But let’s all correct that misconception today shall we?
Sometimes, you see people who have been in business for more than 10years, they may still be running the business but if you draw close to them – enough for them to confide in you and they will tell you that they have nothing to show for it.
Because (maybe) they literally splurged the proceeds of the business on luxuries as soon as the money started coming in.
Now, this is not to say that you are to go hungry when you have money coming in from your business but this just means that you have to be disciplined enough to place yourself on a salary if need be and either plunge the rest proceeds back into the business or invest it.
One thing that hit me from the redefining finance event was that I have the saving bit all locked down but I don’t have the investment bit locked down.
So from right now, what I am actually using the proceeds from my small business for is to build my investment account.
So I pay my tithe, (maybe) pay myself something little and put the rest in an account, building the foundation for money I can afford to use to build my asset column later on.
I say “maybe” pay myself because I am not even certain of that. The only reason I will pay myself a little bit is because I am trying to get these principles on lock down but really, my business is a really small business right now (I will write soon on starting small&the treasure of lessons that can be found therein) so how much can I really pay myself from it?
And what will I use the money for?
My mom told me something that made sense to me a while back.
She said “even if you don’t get extra money, you will still use your allowee for feeding, so why don’t you use any extra money you get for something else? (like stuff I need to but/pay for)”
In this case, that something else I chose to use it to do is to build my investment account.
I will reveal how small of a business I am actually doing right now in another post where we will talk about the treasure of lessons that can actually be gotten from starting a small business if we indeed learn them right.
For today, let’s just learn this…
If you are still working with the mentality that the proceeds from your business are meant to be splurged, then you are indeed on a long thing.
We need to revamp our mind sets.
Read books and educate yourself on what the rich do with the proceeds or profit from their business.
It’s wisdom to recognize what is meant to be seed for planting/ploughing back into the ground and what is meant to be bread for immediate consumption.
If you treat all proceeds from your business as bread for immediate consumption, then there will be a huge problem.
Get a formula that you can work with.
You can chose to pay yourself a certain fraction so you won’t feel too deprived but make sure that you aren’t consuming every profit from your business.
Don’t think that this applies to only huge businesses alone. If you cannot get this right in whatever stage you are in right now, you will most likely not be able to get it right later too.
Remember, there is bread for eating, and there is seed for planting or in this case, seed for ploughing back into the business/investment/building assets.
Let wisdom guide you in knowing the difference between the both of them.
And this wisdom can be gotten by educating ourselves and changing the way we think about money.
I shared a little post on my facebook page where I talked about the lesson I learnt on poverty mentality from the book “Rich dad, poor dad” by Robert Kiyosaki. (btw, thank you dad for introducing this book to us when we were still kids, who’d have thought that I’d willingly read it again today…)
You can read this post on finances to get an inkling as to what poverty mentality means but I will write on that, maybe next week.
Basically, the poverty mentality issue is the reason why someone would think that splurging on luxuries with business proceeds is the next thing to do once you start a business.
But no, the rich in the mind (who may not necessarily have money at hand now), knows that the first thing to do is to grow their asset column, build it to a point when they have steady passive income and then, they can comfortably get what they want (luxuries) without going bankrupt.
So do your research, you can read that Robert Kiyosaki’s book if you haven’t read it already between now and next week so we can have an active discussion on the “Poverty mentality issue” that holds some of us back from dealing with our finances the way that we should.
Don’t forget, deal with your business proceeds wisely.
That’s mostly the difference between a business which grows and one which is stuck.
I wish us all success in all our entrepreneurship endeavors.
Have a great week ahead,
nwabuzor danielJune 3, 2015 at 9:48 am
Well said frances. I think its also important we see business beyond meeting daily needs, that way we would not be so quick to lavishing our profits on ‘mere wants’. Having a business is more like an investment, a safe haven to lean on when the raining days are over.
Frances OkoroJune 4, 2015 at 8:58 pm
Thank you Daniel, another food for thought for us all.
Business profits aren’t for wants but can also be a source of income to fall back on if we treat it as we should.