Entrepreneurs Need To Understand The Principles Of Wealth Before They Will Be Successful
Boot Camp is almost a cliché nowadays, used by public figures, life coaches and motivational speakers. The image of military a boot camp as a living nightmare has been immortalized by countless Hollywood productions.
But a boot camp doesn’t come close to a true living nightmare such as poverty and living and surviving from pay check to pay check. That is truly a living nightmare and the reality for many entrepreneurs and people today.
The worst part is that it doesn’t have to be that way. We currently live in the best of times, and the economic opportunities available to us as young entrepreneurs today are light years ahead of what our forefathers experienced decades ago. If you make an effort and look around you, you will find an opportunity that matches your personal interests, skills, and income goals. But it is up to you personally to take courage, go out and give it your undivided and best endeavour.
Financial success in your own home business may be just around the corner. Just by reading some books by entrepreneurs – like Robert Kiyosaki, David Bach, Suze Orman, and Steve Scott – will show you the truth of the statement. As you read more you will not just learn from these entrepreneur’s lives, but you will also feel motivated and encouraged to take action yourself. All these entrepreneurs and authors will tell you the same thing:
“To get ahead in life,
you need to have more than one source of Income.”
As entrepreneurs achieving wealth is not about how much you earn, but how wisely you spend, save and re-invest from the income you earn. For example spending more than you earn in an effort to impress friends and neighbours with your material possessions is a recipe for financial disaster.
Additionally, lacking the patience to save money and invest for the long-term, develop action oriented goal statements, and failing to protect yourself with proper insurance and legal advice, are all indicators of poor financial management. Again, it’s not what your company earn, but what you do with your company’s revenue that matters.
One standard measurement of wealth is a six-figure income, which pertains to the number of digits in your annual income and turn-over. A six-figure income equals anything above $100,000. According to the U.S. Census Bureau, in 2004, the number of households with:
Income between $100,000 and $149,999 exceeded 11 million,
3.5 million American households had income between $150,000 and $199,999,
1.3 million Households had incomes between $200,000 and $249,999, and
1.7 million Households had income above $250,000 per year.
Unfortunately, “Wealth” cannot simply be measured by revenue…
According to an article written by David Francis and published in the May 23, 2005 edition of Christian Science Monito, nearly 20% of American households have either zero net worth, or actually owe more than they are worth. Furthermore, according to Francis, 25% of American households do not have sufficient cash reserves or other assets to support themselves above the poverty line for three months, and 33% of households do not even have an active bank account.
Currently people are killing themselves with uncontrolled and over-spending, easy credit, and a complete lack of budgeting or saving skills. The same can be said about entrepreneurs today that fails to re-invest capital back into their business for future expansion or new outlets.
But just exactly how do you measure your personal wealth or company’s worth? When does a person know if he or she has achieved “wealth?” The concept of “Wealth” is defined as an income level derived from passive sources that allow you to live without depending on a permanent job. Passive and residual income sources are any income sources that generate a positive cash flow, which you can bank or spend or re-invest.
For example, the cash left over from a rental property after all expenses are paid, is passive income. Likewise, interest from a certificate of deposit, or dividends from stock investments, are examples of passive income. With this definition in mind, the key for entrepreneurs to creating wealth is to figure out how to create and build passive and residual income sources. The measure for your personal or company’s progress in this area, use this simple formula:
“Total Living & Operations Costs” Equals “Your Wealth Proportion”
Download this free eBook which will show you the practical ropes how growing entrepreneurs can create their own residual and passive income.
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