Many people start a business in order to achieve financial freedom, but instead may end up with less freedom and more stress! Many assumptions can be made before going into business which is why the first question you need to ask yourself is what are you hoping to achieve?
Financial freedom can mean totally different things to different people as financial freedom means having enough money for you to live your desired lifestyle. If your desired lifestyle is an overseas holiday twice a year and a few mini breaks in between then you are going to require more money than someone who wants the freedom to be able to cut back to working 4 days a week so that they can spend a day reading and relaxing by themselves before spending a weekend catching up at home with friends and family.
Return on Investment | Cashflow | Profit
After investing a significant amount of cash to get the business started you may have expected to get a great return on your investment. You may be busy focusing on profit, assuming that will mean more money in the bank. What matters even more though is your business’ cashflow. After all you need enough cash to pay your team, suppliers, re-invest in your business and pay yourself.
It is never too late to sit down with your business accountant and ask them to explain the difference between profit and cashflow and to help you implement strategies to improve your cashflow. This will mean more money in both the business bank account and your own!
Let’s Get That Financial Freedom for You
So once you’ve identified what you consider financial freedom we have to calculate how much money your business will need to provide you so that you can have this. Start with what you want over the coming 12 months and talk to your business accountant. They can help you break this down, so you know the revenue and sales targets you need to achieve to hit the magic number.
They will also help you develop a plan so that you have the action steps required to achieve your targets. Your accountant can also act as an accountability partner if you want them too and check in with you to make sure you’ve taken the steps required.
Then you can follow the same plan for 5 years or 10 years because as James Clear (author of Atomic Habits) says “real wealth is not about money … real wealth is about freedom.”
You may also find these articles interesting:
I Want to Start a New Business – What Now?
5 Tips for Small Business Owners – Get the Most Out of Your Accountant
5 Ways to Improve the Efficiency of Your Small Business
