A couple of things struck me this past week as I look at my clients who net over a million dollars per year (and whom I’ve known since the beginning), those who can’t hit sustainable cash flow or wealth and those who like to talk a lot about it on social media.
The most successful people are often the quietest.
One of my clients I’ll call him Paul started a fairly boring business, but one that had a need. He identified clearly who his market was, right from the beginning. His partner was an expert in that particular service and market, but couldn’t run a business. Paul got the business started and they worked hard. He watched his financials, reviewing them every quarter at first and then soon every month. Where were they making money? Where were they losing? What opportunities were there? What expenses were starting to spiral out of control?
Slowly and surely, the business grew. At the end of 10 years, Paul moved his family to the mountains, where they always wanted to live. He managed the business by reviewing the key indicators for his business every month. His net annual income is over $1 million from a business he barely works in and that you’ve probably never heard of.
Another client developed an app that became wildly successful in Europe. He lived in the US and new that the app was really a fad, so it was better not to build too extravagant of a lifestyle. He paid cash for his middle class house, even though his business was grossing $100 million per year. He bought his mother a house, another more modest home. He bought a couple of used cars because he couldn’t see the point of buying new and taking the hit for depreciated value.
Sure enough, trouble came.
In this case, it was in the form of merchant service providers (MSP) who got worried because he ran so much through his accounts. They started delaying the payments to him more and more, and some times even just cancelling, but still making him wait 6 months or more for the money. But his expenses continued and he had to pay those quickly or risk shutting his business down. He moved to new merchant service accounts that had bigger fees and sketchy reputations.
Eventually, it just took one crooked MSP to abscond with the money and his business was done.
He had figured it wasn’t going to last long because of the nature of the business, so he’d built up other assets along the way. He’ll be fine.
This past week, someone posted in a friend’s Facebook group that he was so demoralized that his first Internet business was only averaging $1400 per month. Others commiserated.
“Define your avatar. Find out what else they need, and build out a product and service line. Get 10 lines making you $1400 per month and you’re making $14K per month.”
I learned from my clients. Be honest with yourself. Know what kind of business you have and plan accordingly. If it can be built to last, it’s probably a quiet one. Build it to last with a good attention to detail and watching your stats. You will be able to semi-retire with an income if you’ve built a good foundation.
If you have a flashy business, chances are it won’t last that long. If that’s the case, then build other assets that will last beyond the business. The same is true for a lot of professional businesses these days. It’s harder to sell a “job” then it used to be. Don’t plan on retiring off the sale. Build other cash flowing assets.
Your time is now. Build your assets (businesses or other forms of cash-flowing assets). If you’re already on that track, great. Build it to last. If you don’t have a business, start one.
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