Many of us look at business owners and wish we were in their shoes. One of the reasons for such admiration is that business owners are often regarded as being financially stable or successful. Some of us may even believe that when our time comes, we can not only do as well as they do, but significantly better. But whatever our dreams may be, we should start practicing good habits at whatever level we are and realize that things are not always what they seem from the outside.
Many business owners struggle with personal finances and some are not able to enjoy the success of their business because of expenses such as those related to employees and other costs of operation. It is no secret that some business owners observe their employees living lives that said owners cannot afford for the above reason as well as poor money management skills. It is unlikely to find any business that does not experience income fluctuation over any given period, so it is important for business owners to establish lifestyles that would allow them to weather their worst periods. If they ignore that principle, they would be at risk of failing in their personal finances as well as business. (Note: Business income is derived from revenue and some companies do not even see income for some time or it fluctuates, so we are jumping ahead here by speaking of income but it’s for the sake of simplicity).
For the most part, those of us who are gainfully employed have traded the volatile income associated with business ownership for stable and predictable income. This gives us the opportunity to practice the disciplines that would be needed to run our own business. We must establish a lifestyle that our income can maintain as this would make it easier for us to transition into the self-managed business owner we aspire to become: one who is able to manage his income when it is volatile and overall unpredictable.
Simply put, we should create a lifestyle where we spend less than we make and save the rest. While doing so, our goal should be to gradually increase the percentage of the income that we save.
There are recommendations that we should be saving 15-20% of our income. That kind of ambition can be intimidating and therefore prohibitive for many of us. This is why I make so much noise about starting an automatic savings plan with $5 over any chosen period, because the biggest hurdle is initiating the plan. We should then increase the frequency and the amount over time and before we know it, we may have even exceeded the 15-20% recommendation. This would put us in a position to start running our own business. After all, if we cannot manage our personal finances, we won’t be able to manage the basic financial discipline required to start a successful business. Our bad habits won’t change just because we own a business.