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Why You Should Aim to Make Your Business Financially Independent Of Itself
Most people in our society today realize the importance of becoming financially independent at some stage in their life. In other words they have a goal to set up some form of investment program that will produce a passive income large enough to meet their monetary requirements. It is interesting that very few businesses realize the advantages of having a similar goal.
I'd like to outline some of the advantages gained from following a goal of financial independence for your business.
The primary reason for a business to exist is to generate a profit for the business owner. It makes good business sense to protect that profit flow. By incorporating appropriate investment strategies into your core business model you can reach the point where the business has produced a secure, passive income stream independent of further contributions from the business. At that point in time profit flow to the business owner is secure whether the business itself continues in profit or not.
When a person has reached financial independence they no longer have the NEED to work but, if they are healthy enough, they still have the CHOICE to work. So it is for a business. When a business reaches financial independence it has secured an appropriate passive profit for the business owner but the business is free to operate as effectively as before.
Of course it is important to structure the investment ownership such that it is also independent of the business even though it was produced from business profits and/or business turnover. There are several ways to achieve this independence but that is outside the scope of this article.
There is a second advantage that is gained from targeting financial independence for your business.
A powerful consequence of goal setting is that once a goal is firmly in place the goal setter will find ways to make that goal a reality. Those ways will include many profitable strategies that would never have been found if the goals had not been there.
The act of setting a goal of financial independence for your business puts the wheels in motion for developing extra sources of profit and asset accumulation that would probably never have been developed without that goal.
You will start to ask good questions such as "is there a secure way that I can utilize the business turnover to generate investment profit?"
A third advantage from your business establishing financial independence is that, once this goal is achieved, the business is capable of operating without profit for indefinite periods if necessary. There are times where this could be a useful strategy, for example in establishing market dominance that later returns much greater profit.
I have outlined just three of the many advantages and now I want to pose a question; if there are clear advantages from setting this goal why do so few small businesses aim at achieving such independence?
The reason is exactly the same reason that most individuals don't achieve financial independence; they are too busy focusing on their day to day existence.
Any person can achieve financial independence if they take the time to set the goal, develop a sound financial plan, and then follow the plan. Most don't because they are distracted by their immediate financial needs. They are in reactive mode rather than proactive mode.
Most small businesses, and a surprising number of large businesses, are following the same pattern. When I talk to small business owners about taking their business to financial independence I usually get the response that it is hard enough to keep their head above water and they certainly don't have the luxury of the business developing its own investment portfolio.
This is confirmation that those business owners are in reactive mode. This is probably why they are just keeping their head above water. They need to shift into proactive mode for the benefit of themselves and their business and a goal of financial independence for the business could be the trigger to make that shift.
So I challenge you to set a goal of financial independence for your business. You may find that in the process of achieving that goal you develop the degree of proactive thinking that makes your business more profitable than you ever thought it could be.
About the Author: James Delrojo would like to help you by giving you his
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