As we find ourselves in the month of Freedom, it is only apt that we reflect on what Freedom means for us in our businesses.
To start with, a reminder that ActionCOACH’s definition of a successful business is:
“A Commercial Profitable Enterprise that runs without you.”
Put another way, a successful business is:
“A business that generates money (cashflow) which allows you to invest in the growth of the business, in terms of people, systems, marketing and equipment, which in turn buys you personal time and freedom.”
It is the latter part of these two definitions that I want to focus on in this article.
- A business that runs without you.
- A business that buys you time and freedom.
Money is a key resource required to invest in the business’s growth and once that has been achieved it will allow you to buy time and freedom. You can’t buy time and freedom at the exclusion of having a business that first generates strong cashflows.
Let’s unpack what we mean by time and freedom.
Our businesses are merely vehicles for us to achieve our personal goals in life and very important for us to be able to live out our calling or our purpose in life. In order to obtain that, our businesses must provide us with the freedom to pursue these goals. This requires freedom in terms of time as well as financial freedom.
To obtain freedom in terms of time, we need to have invested in strong people and systems that run the business. Here the importance of understanding the Cycle of Business is critical:
Getting this cycle right is an important step towards obtaining TIME freedom in your business. Once achieved you have the time to pursue hobbies, community involvement initiatives and any calling that you are passionate about pursuing.
What do we mean by the concept of Freedom in this latter definition?
The first and very important component that comes to mind is financial freedom. Lack of financial freedom is often the most debilitating feeling that any business owner or head of family can experience. Lack of financial freedom impacts self-worth, health, levels of confidence, personal relationships and many other factors.
On the other hand, financial freedom provides us with the opportunity to invest in ourselves, invest in our families, invest sufficiently for retirement, invest in others (the less fortunate, the needy, our communities, etc.), invest in opportunities and initiatives that bring about change in the societies that we all live in. Each of us has been given unique talents and skills that we are called to use in order to impact on people that we come into contact with daily as well as the communities around us. We, therefore, need to be able to invest in our personal growth (talents and skills) to be more effective in doing so.
When it comes to financial freedom there are some basic principles that need to be applied. In this sense I am reminded of the following quote:
“Failure is merely a few errors of judgment repeated daily. Success is merely a few simple disciplines repeated daily. “
Financial freedom is a choice, however, it requires discipline.
The first principle that needs to be implemented is the following:
You earn through multiple income streams, you set investment goals and what is left is your disposable income. Many people apply the model of EARN (one income stream), SPEND and then try to INVEST with anything that might be left.
In addition to the above, I recently came across an article that referred to the five principles to handle life’s financial decisions. It refers to B – A – D – G – E.
What does B -A -D -G -E stand for?
In order to get the most out of your finances, you need to create and stick to a budget. This requires consistency and provides you with an understanding where every Rand is going.
Everyone has the ability to earn money, but increasing your wealth is true financial freedom. Wealth can be defined as assets minus liabilities. You need to invest in assets that generate passive income for you so that you don’t have to rely on one source of income – your job or one business or one client as is often the case.
Debt is the enemy of financial freedom. Having too much debt or using debt unwisely can cost you more than you bargained for. Be mindful of every loan, credit card or mortgage/bond that you obtain.
It will either move you towards financial freedom or financial bondage.
If you don’t know where you are going you won’t know how to get there. Develop a plan for emergencies, for retirement, to be able to buy the big ticket items, your children’s education, and your financial legacy that you want to leave your family.
Whilst wealth builds opportunities, enhancing your earnings potential is also key to success. Create multiple income streams, from multiple Customers and from earnings on assets that you have invested in (Dividends, Rental of property and income from other businesses that you have invested in).
Mastering these principles is not for the select few. It is for everyone! We are called to live in freedom but often end up in bondage to our businesses because we have not invested in the right people and systems that drive the business. Following simple but powerful financial principles give us the opportunity to achieve financial freedom as opposed to financial bondage.
We all have the choice to choose between bondage and freedom – no one else can and will do that for us – we have the power to make that decision.
If you struggle with making these changes, the best investment you can make today is to invest in an ActionCOACH Business Coach that will help you plot the path to freedom in terms of time and financial freedom. Contact us today, click here.
Pieter Scholtz, ActionCOACH Southern African Country Partner