When You Control Your Money You Control Your Future.

Originally posted September 28, 2021

The top line is for your ego.

The bottom line is how savvy entrepreneurs keep score.

??and?

It's not what you make; it’s what you keep.

These are three simple concepts that entrepreneurs often ignore. It’s easy to get caught up in the ego game of “I must get to $10M or $20M or $50M or more in revenue to prove my worth or position my company for resale.”?

There is an inherent danger in that strategy.?

Eighteen to 20% of companies that make the INC. top 500 are out of business within two years of making the list.

High growth is high risk; profits and savings are sacrificed or ignored to reach the next pinnacle. The cost of growth is underestimated, and more often than not, it costs more than double your original estimate in both time and money.

Companies find themselves saddled with debt that cripples their financial health and sustainability and eats away at the founder’s capital.

Many years ago, I was coaching a bakery specializing in creating spectacular wedding cakes priced in the $3,500 range. The CEO was concerned that her sales were less than $1M.?

I pointed out to her that with sales of $700,000, she generated over $300,000 in profit, putting her in rare air for entrepreneurial companies.

Her labor costs were low, and she owned the building, so she had control over her rent. Flour, sugar, and water were her primary ingredients or cost of goods. I shared with her that she was financially savvy and focused on all the right things and that, in time, she would achieve all her financial goals.

She invests her profits in real estate and other investments. Today, she has a multi-million dollar real estate empire, her core bakery business, and several food-related acquisitions.

Currently, I am working with a client who is laser-focused on his financial numbers and projects to net $2M this year. His mantra is that "the house gets paid first." He orchestrates his cash and cash flow with a team of two financial operations specialists he depends upon to provide him with real-time financial information to guide his decisions, and they deliver.

They have set up two accounts for his profits. One account is an operations account that provides a cushion if the company needs one.

The other account is a profit account, currently at $1M, which he is investing outside of the business. In doing this, he is living the mantra that it’s not what you make that counts; it’s what you keep that counts.?

"Doing well with money isn't necessarily about what you know; it's about how you behave."

- Morgan Housel

My Seven Rules for Financial Success

1. The top line is irrelevant if you don’t focus on the bottom line.
2. Manage your margins to ensure a financially sustainable business model.
3. Set aside a percentage of your profits to grow your wealth.
4. Become a master of managing your money and your cash flow.
5. Don’t rush to failure.
6. You can do anything you want, but you can’t do everything you want.
7. The house gets paid first.?