Why Your View of Personal Finance is Crucial for Business Success
Over the last five Mondays, I reviewed five stages in realising your business purpose. It helps to have a separate financial purpose, informed by your view of personal finance. This encourages you to think about business finance independently of business purpose.
I often quote John Kay, a contemporary economist, who says:
“Profit is no more the purpose of business than breathing is the purpose of life.”
Breathing is not why you are alive but you must breathe! Profit is not why you are in business but you must make profit.
So, let’s deal with two mistaken positions.
Too Positive about Finance
It is possible to focus solely on money. You can accumulate wealth that generates income. If you do this you can, through activities such as real estate, trading shares, referral marketing; generate a monthly income for your old age. This way the need to work recedes as you grow older, meaning you choose when to retire or fund experimental business ventures.
This is not everyone’s cup of tea. I question this approach when someone accumulates vast amounts of wealth, way beyond their capacity to spend it. This has an adverse impact on the business economy.
Passive income is a viable approach to finance, possibly finance for your business. But note it is about what you do with your income. It is not about how you get finance from your business. You can choose to build passive income but my focus here is how you get the finance you need to build the passive income in the first place.
Question Money-Making Claims
The danger is financial concerns dominate business purpose. This is why I suspect anyone who guarantees vast sums of money if I follow their method. There are a number of very good reasons to question such claims:
- It is not possible for everyone to increase their income in this way, for reasons of competition or because there is not enough money in the economy.
- Your context is not the same as the person who is selling the method – they cannot know you will use it the same way they did or whether what you use it for works with their method.
- You may not, for very good reasons, commit to the approach. You have other demands on your time, perhaps you misunderstand it or find you can’t do it or disapprove of it or …
The solution is to work out your financial strategy as you design your business. This helps you assess the claims made by marketers.
Too Negative about Finance
The other common mistake to take a too negative view of finance. Obviously, taken to extreme, this will lead to business failure. If you are in business, you are open to the possibility to making money!
A negative attitude to money expresses itself in more subtle ways. These include low prices, giving services away free or at cut prices, fear of asking for money.
This attitude betrays a lack of empathy for customers and prospects. The problem is not so much your relationship with money as your attitude to people.
People pay for something if they believe they need it. They find the money if they need your offer. You want customers ready to make a sacrifice; they are the ones committed to the success of your coaching.
If you fear letting them down, you must ask yourself why you are in business. You can solve their problem and so they will pay for it if they want your solution enough. Your confidence plays a large part in conveying your ability to deliver the solution.
If you genuinely believe only bad people charge high prices, why are you, a good person, so determined bad people get all the money? It is monstrous to think charging high prices is somehow dishonest. We shall see in later posts other good reasons for charging high prices.
Conclusion
So, this boils down to pricing. You need to find a realistic price that delivers the income you need. You need confidence in your offer and its price to ask for money and close the deal
In my next post I look at pricing your offer and suggest price is integral to your offer’s credibility.
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