When it comes to planning for the future, there are a lot of factors to consider. How do you know what’s going to happen from day to day? One day you could have it all and the next day you could be scrambling for cash flow.
Typically when you’re a business owner, the reason why you got into business in the first place was to control your own destiny. Take your fate out of someone else’s hands and to stop being dependent on them for income, and instead go off and make it on your own and be in control of your own destiny.
However, in life and certainly in business, we know that we could plan for the future, but it doesn’t always happen the way we think it might happen. There’s an old saying: man plans and God laughs. The point is you need to build flexibility into your finances.
A lot of times in the beginning stages of business. It’s important to reinvest all your profits back into the business to get the ball rolling so the business will be able to take care of you. However, as your business ages and matures, it’s important to build flexibility into your plan and plan for life’s uncertainty. A lot of times in business there’s cyclical or chronic cashflow issues that need to be addressed.
Think of it as a three legged stool. The first leg is to make sure there’s enough cash to operate the business. The second leg is to make sure there’s enough cash to grow the business, and the third leg is to make sure there’s enough cash for you and your family, both now and in the future.
Now, if you could picture a three legged stool, you need all three legs or else you’re going to fall over. And what we have found in most business is they’re so focused on pouring all their profits back into the business, to run the business and to grow the business, they don’t take enough time to take care of themselves and their family, both now and in the future.
Think about it. What’s the point of pouring your blood, sweat and tears into the business if you don’t get to also enjoy life and provide for your family? This is why it’s important to plan for the flexibility, not only within your business, but also within your family finances.
That’s why we always build flexibility and access to cash for our business owner clients, both in the business and outside the business. So they’re able to take care of emergencies and also take advantage of opportunities, whether personal or business.
Think about it. What would happen if a piece of equipment went down, or your hot water heater went at home, or your child’s college tuition was twice as much as you expected it to be?
All of these aspects would pinch your cash flow further and could leave you feeling stuck. And the best way to make sure that there’s enough cash available both in your business and outside, is to make your money more efficient. Get one dollar to do multiple jobs, and by doing that, that positions you to take advantage of opportunities and to work through emergencies because you have access to cash.
The key is not to save in buckets. Don’t put a bucket on the side for retirement, for college, for building your business. All of your dollars need to be accessible so they’re available when you need them. Availability, without penalty and without major tax consequences, so you’re able to adapt and grow within your life.
And that’s the flexibility that we automatically build into the plans that we designed for our clients, making sure that their major needs are taken care of, but also that the plan is flexible and they have access to cash.
If you’d like to learn more about exactly how we put this process to work for our clients and how to build flexibility within your financial plan, visit our website at Tier1Capital.com.
And remember, it’s not how much money you make. It’s how much money you keep that really matters.