What does financial freedom mean? Having enough savings, investments, cash on hand to be able to do the things we want to do, whether in our businesses or in our personal lives.
Financial freedom is quality of life for our families and ourselves. Is to have healthy finances (debt free) in our businesses. It means that the money is working for us, not us for it.
Imagine everything you could do in your business if instead of looking for clients to pay the bills, whether personal or from your business, you could do what you like, give the best customer service in anything you do because you know that the sale is going to happen anyway, since you don't have the need to urgently pay certain bills, which often forces to almost give away your products or services to achieve quick income so that you can get out of the financial problem.
Let's not go any further, let's analyze what happened and continues to happen unfortunately, with many businesses that have had to close because they could not keep up during this pandemic, because they were not financially prepared, independently of not being able to adapt to change quickly as others did.
How many companies did not have enough savings to bear paying their staff, rent, operating expenses without being able to have the income they were used to on a daily basis. How many people have had to be fired and how many businesses have been closed because we live paycheck by paycheck.
This happen because we have a using credit culture. Since childhood we learn to pay with credit cards, when start earning our own money all we see is opportunities that are around us to buy houses, cars, furniture, electronics, travel, events , etc. all on credit. Enjoy today, pay later.
In our businesses we get loans, supplier credit, lines of credit to operate with the idea of making the money to produce and generate greater profits, that will cover not only debt and interest but also generate profits, and when we least realize all those debts turned into a great snowball that comes down on us like an avalanche. When we finally realize it we have already become slaves to the banks, they are the only ones who win in all this.
At the moment, banks and financial institutions are also struggling since there are many people and many businesses who live day by day and not being prepared for a contingency like this, therefore, they cannot face their commitments, no matter how much they want, although we know that at the end of how many, one way or another these financial institutions will get their money back.
We need to turn this situation around, we know that building a business takes time. If you are just starting out in your entrepreneurship, surely you have realized how much time is needed to build your business from planning to achieving results, you have to invest time and resources so that your business idea becomes a reality.
One of the reasons why we get so much debt personally is because we live from higher income than the one we generate, what do I mean by this? I will explain it graphically:
We live far above our means, imagine if we changed our mindset, and we lived as follows: Income - Savings = Expenses in your venture: Income - Profit = Expense there would be no need to get into debt either in business or in personal life .
Can we turn the situation around? We definitely can, but we need to change our mindset.
• Set goals, both large and small, monetary and lifestyle; Create a plan to achieve those goals. Write down what you need to do to achieve them and how much money you need and in how long, this is very important.
• Make a plan to generate those resources before carrying out that plan to avoid falling into debt. If you know that your venture is going to cost you an initial investment, say 10,000 USD, first find a way to earn that money before starting your project.
• Set a weekly progress review plan and adjust to the income you are generating. Plan your growth based on the income you generate as well as the savings necessary for a greater investment and stable growth.
• Make a Budget so that you can cover all your needs; stick to this plan. If you have debts, make a work plan to pay them in full.
• Get help from a financial advisor and start investing, they can advise you, not only about your savings, but to be able to make automated contributions through your company's retirement plan and establish an emergency fund.
• Very importantly, live below your means. Look for offers when possible; And don't be afraid to ask for or negotiate better discounts or payment terms (without interest).
If you follow these tips, you will not only live a better life but you will really enjoy your entrepreneurship and in times of crisis like the ones we are living right now, you will have the means to face it without any problem.
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