Are You Building Wealth via Your REAL Business?

Are You Building Wealth via Your REAL Business? In Blackboard Fridays Episode 124, Jacob talks about Commercial Vision. Need this implemented into your business? Talk to the international business advisor who can do exactly that – Contact Jacob, Learn More, or Subscribe for Updates.

Who is Jacob Aldridge, Business Coach?

“The smart and quirky advisor who gets sh!t done in business.” Back independent since 2019.

Since April 2006, I’ve been an international business advisor providing bespoke solutions for privately-owned businesses with 12-96 employees.

At this stage you have proven your business model, but you’re struggling to turn aspirations into day-to-day reality. You are still responsible for all 28 areas of your business, but you don’t have the time or budget to hire 28 different experts.

You need 1 person you can trust who can show you how everything in your business is connected, and which areas to prioritise first.

That’s me.

Learn more here. Or Let’s chat.

Transcript

My belief, certainly my experience over well over a decade of business coaching around the world, is that there is no asset class with more potential to grow your wealth than through private enterprise, through owning your own business. And yet, for an awful lot of small and medium-sized business owners, the business is actually a drain on their finances.

They still have this aspiration, this hope that one day they will be able to sell. But they live in a reality where that’s just not a reality. Where short-term cash flow needs are creating pressures. What I want to do in this episode is help shift your mindset. If wealth creation is part of what you want to build for your life and your family then this is absolutely a must watch.

We’re going to start over here with your current business. If you’re like most business owners, you have one business. This is your focus. The first question you’ve got to ask yourself is am i running this business as an income business or as an equity business where it actually has value and the potential to be sold one day?

Most business owners had a dream of selling their business. But in reality, they’re not doing anything to actually significantly make their business worth any kind of value or investor-ready.

When it comes to the money that comes into the business, ask yourself, do you spend what comes in and and save, reinvest, what’s left over, or do you invest first? Do you take that off the top and then set a budget based on whatever might be left? It’s a little bit like the home budget. There’s an awful lot of families who save whatever’s left at the end of the month and surprise surprise that there’s never any money left at the end of the month.

So in your business, what I’m going to encourage you to do, is to start to ring-fence, to take a portion, maybe it’s 5%, 10%, off the top, that you’re going to put aside for reinvestment. Here’s the mental exercise I need you to do right now.

Understand that your business is not your real business. Your real business sits over here. What I’m calling in my case the Aldridge Family Trust. Now don’t get caught up on structures, you know in terms of like bank accounts and companies versus trusts or any of those kind of things.

Mentally just understand that your family wealth sits in a separate conversation to your business. This is where your real wealth is going to be created. So you’re now taking out some of the money from your business and taking it there for reinvestment. Mentally.

You don’t actually have to transfer it out of a bank account, you don’t necessarily want to send it from your company into a family trust or any of those kind of things that might trigger tax issues. But mentally, I want you to think, if I take that money let’s say it’s a $100,000, and I take it out of the business and I ring-fence it in the family trust, mentally, where is the best place for me to invest that $100,000?

Now as I say, my experience, the best returns are almost always back in your business. That’s why I say you don’t actually have to transfer any money, you just mentally have to make that decision. Because if you’re going to get a better return by investing in property, investing in shares, rather than going back into your business, then do that. If your business has potential for growth to create future income, future equity value, then absolutely invest in your business and get that growing.

Eventually, because of that growth, because you’re reinvesting, you’re going to have surplus money that is available. The business doesn’t need an infinite amount of money to get invested in it. This is where you can start to build your portfolio. If you go back to one of our very first episodes, we looked at the wealth quadrant for business owners, and we talked about that wealth quadrant being where you build all of your different assets.

So maybe you’ve got a house, maybe you’ve got an investment property, maybe some shares that you own. And each of these you’re investing in, and over time, they’re generating a return. They’re bringing money back into the family trust, that allows you to continue to reinvest, to continue to make more choices. In fact some of those choices may be to set up other businesses, become a portfolio entrepreneur who has this one business, which was your first business, but it’s no longer your only business.

This mindset of not just focusing on your business today but focusing on the wealth of your family and the potential to have multiple assets for the future, not only has the benefit of helping you create that long term sustainable wealth, which is probably part of the reason why you started a business in the first place, it also actually has a benefit for this business today. Because when you start thinking long term, when you start making decisions based on equity, not short term income, your business will be better for it, your family will thank you as well.

Next Steps

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1 Comment

  1. Complete Blackboard Fridays Business Video Series on February 22, 2022 at 12:44 pm

    […] Episode 124, Are You Building Wealth via Your REAL Business – https://jacobaldridge.com/business/are-you-building-wealth-via-your-real-business/  […]

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