If You Need to Be a Profitable Entrepreneur, Take Word of These 7 Classes
This article was translated using AI technologies from our Spanish edition. Errors can occur due to this process.
The opinions expressed by the entrepreneur’s contributors are their own.
One of the main goals of starting a business is creating wealth: for the environment, for society and for the business owner.
The creation of wealth is related to money and its correct management. Many entrepreneurs start their business as an operator or technician and never bother with money management. This keeps their businesses small or failing to survive over time.
That is why I decided to write this article, titled “7 Secrets Of Money To Do Successfully”:
1. Entrepreneurial mindset
Many people think that all they need to get started is a good idea. Unfortunately, that’s not the case, good ideas are everywhere and they are meant to die if you don’t have an entrepreneurial mindset.
Starting a new business requires hard work, a high tolerance for frustration, a willingness to move on when all seems to be lost, implementation, implementation, and more implementation. Most of all, it takes an obsession to make your dreams come true, more than an obsession to make money.
If you’re looking for money, your chances of success decrease (because you won’t have it in the beginning). If you try to change people’s lives and make a change in the planet, money will come as a result.
Do you or have no entrepreneurial mindset?
2. Feasible business model
Most of the people who start a business are obsessed with their brand and product and this is one of the most common mistakes I see in entrepreneurs. Your brand and product are worth nothing unless they show that they are capable of making money.
- First, you need to make sure that someone is ready to buy your product / service. Describe who your valuable customer would be, reach out to people who meet the characteristics, and see if they are ready to buy.
- Second, you need to develop your business model – that is, you need to know how to connect all parts of your business together. You need to know how to attract potential customers, how to convert them into customers, how to produce and deliver your product or service, how to charge, and how to pay. Once you’ve put it together, you’ll find that your model takes money to work. That’s your cost and your expenses.
- Third, you need to prepare your financial statements or figures and make sure that your business is profitable and scalable. You will find profitability when you calculate your sales minus your costs and minus your expenses. You will find scalability when you acknowledge that there are many people out there who fit your valued customer’s traits, that you can serve them through your business model, and that you have enough money to start and maintain it.
If you meet these three points, we can say that your business is profitable. If you find it doesn’t, then as long as you confirm that someone is ready to buy what you are offering, you can adjust your business model.
3. Absolute austerity
One of the mistakes people make when starting their business is buying and spending too much. They are looking for the best computer, office, car, or spending their money on things not directly related to generating sales.
One principle that Carlos Slim uses and that I highly recommend is called Absolute Austerity. When buying, make sure it is directly related to sales generation.
When you need a computer, ask yourself which computer meets your basic needs (not which one meets your ego’s needs). And are you wondering if I can increase my sales by buying a more expensive computer?
4. Cash flow
Cash flow is the gasoline that powers businesses. Many companies that are highly profitable (i.e., make a profit) die because the entrepreneur or business owner did not know how to manage their cash flow.
There are three levers I recommend for managing your cash flow well:
- The first: top up beforehand and pay later. This way, you can use your customers’ money to fund your business instead of becoming their bank.
- The second: dealing with low inventory levels. One of the places your money gets stuck is with inventory when you have too much of it. Try not to give in to the temptation to buy too much for a discount.
- The third: protection reserve. Try to have enough backup money to pay for a business month or two. There are always fat and thin cows. If you don’t have the money to pay for lean operations, a profitable business goes out of business.
5. Reinvest your profits
One of the entrepreneur’s temptations is to spend his earnings immediately upon arrival. My suggestion is to reinvest them in the same business. You can use them to attract more prospects for marketing and sales, or to optimize your operations and reduce your costs and expenses.
Until when should you reinvest your earnings? Until you have a good critical mass and the business can work without you.
6. Plan your transition
One of the most common questions I am asked is, when is the right time to quit my job and get on with my business?
The answer is if your company is able to generate enough money (consistently and consistently) to replace the salary your work generates.
It is important to plan the transition with clear goals. So that you say: in six months the business has to leave me this amount of money. When I reach that amount of money, I will quit my job. That way you know where to focus and when the transition will take place.
And I know that a lot of entrepreneurs are kamikazes and ready to quit right away.
Can you do it and achieve it successfully? Sure. However, if you want to avoid or reduce the effects of corporate trauma and emotional crisis, I recommend planning your transition.
7. Continuous learning
This part is essential for any business owner. You must be willing to learn continuously if you are to be successful. If you don’t enjoy learning, entrepreneurship may not be for you because in a short time you will become obsolete and the business will fail.
Now there is some kind of education for every purpose.
- If you want to learn how to be a better employee in a company, you need to consider academic training (e.g. masters, diplomas, areas of expertise).
- If you want to learn how to achieve better results in your company, you need targeted training (e.g. conferences, seminars, workshops).
The difference between the two is that the first one gives you a lot of theory (and takes a lot of time) and teaches you how to run someone else’s business, and the second one (in a short amount of time) teaches you and teaches you workable principles how to do it Run your business.
What’s the first thing I learn to recommend to you? To manage your money. To manage your personal finances.
Business money is a reflection of how you handle your money. If you learn to do this, you will achieve sustainable results for your business.