A start up entrepreneur is generally FOCUSING on making a profit. He wants someone to pay him money in exchange for his product and services. Once the business begins to have a positive bank balance, the same entrepreneur begins to realize that they still feel INSECURE and begin to wonder what would happen to them once their products and services reach a maximum number if clients….if you are in a similar situation, let me share some practical knowledge.
1. Profit or positive cash flow is a life blood of your company. Try will all your might to bank at least above R50.00 a day on your worst days.
2. Every R10.00 out of the R50.00 goes into your payroll – your salary. If you do this, you will be separating yourself and the company into two separate entities that can exist SEPARATELY.
3. another R10.00 goes back into stocking your products and getting yourself into business activities, that includes going into business courses.
4. Another R10.00 goes into your book keeping services, rental and SARS.
5. The last R20.00 put into INACCESSIBLE investment portfolio to form part of your liquid assets and to be used in your future EXPANSION.
PROFIT comes in a form of money but a of PHYSICAL cash in the bank DOES NOT ADD VALUE to the business. Actually you only 20% of your total annual income in your account in CASH.
Buying your own office space, own company vehicles, buying Art work to decorate walls, owning additional buildings CONVERTS your cash into TOUCHABLE MONEY that you cannot loose easily EVEN DURING DIFFICULT TIMES. So these ASSETS are the REAL VALUE.
While you pursue PROFIT, desire MOSTLY for the ASSETS and you’ll have VALUE.
E.g. Motsepe is worth R40 billion. He may be having only R800 million in cash and the rest of valuation is made up of his assets, which he can sell for cash when gets ‘broke’ for cash.
