by James Whittaker, author of “Think and Grow Rich The Legacy: How the World’s Leading Entrepreneurs, Thought Leaders, & Cultural Icons Achieve Success“
Some entrepreneurs do all the right things: have a great solution to a problem, build a strong team to amplify their efforts, and start to find an audience for their product or service. However, with their focus increasingly drawn towards the demands of the business, startup founders and staff can begin to neglect their own personal finances. While it’s important to have the highest of aspirations, not all startups go on to FANG-stock fame.
The reality, according to the Bureau of Labor Statistics, is that 80% of small businesses in the U.S. fail, even higher (at 90%) for tech startups. The last thing you need after giving a significant chunk of your life to a startup is to discover that you neglected your personal finances along the way. Fortunately, a simple plan can hedge this risk, securing your personal future while you continue to kick goals professionally.
As the world’s most accomplished entrepreneurs note: success in any field starts with you always. Here are seven things that all entrepreneurs can do to get their personal finances on track.
1. Get clear on what you want.
Making plans is much easier when you have a destination in mind. Think about when you open a navigation app on your phone, you simply enter the destination and it shows you all the steps required to get there in the most efficient manner. Your life should be no different. Fill out a goals sheet and then share it with the people closest to you, maybe a spouse, parent or friend, so they know how serious you are about your future and can support you. Then, at the start of each day, think about what action you will take that will inch you closer to your goals. Before you go to bed, review the success of your day and calibrate accordingly. You are the only one who is responsible for your future, so commit to a timeframe and stick to it — no matter what.
2. Pay yourself first.
From every paycheck, make sure a portion is set aside for your own future. For even better results, make the process automatic. Talk to your bank about having a portion of your paycheck transferred to an account you cannot withdraw from. An alternative is to use one of the many mobile apps that can not only save money but allocate it to an investment in line with your age, income and risk profile. Paying yourself first not only keeps you success-focused, it enables you to achieve your goals quickly, efficiently and consistently.
3. Spend less than you earn.
Comedian Will Rogers once said, “Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.” If you don’t know where all your money is going, comb through recent bank statements and get into the habit of using a household budget. Where possible, eliminate your reliance on credit cards, gradually pay down bad debt, and start to free up unnecessary expenditures.
4. Focus on consistency, not complexity.
The key to long term success is to aim for small wins consistently. Over time, these add up — to a lot. Look up a compound interest chart to see just how powerful this can be. Most people take massive action, before finding out they were too ambitious and quickly slip back into their old ways. When you’re trying to master your money, developing the habit is far more important than the dollar value — there’ll be plenty of time for loftier goals down the track. As the Brits say, “Look after the pennies and the pounds will look after themselves.”
5. Surround yourself with winners.
As with any goal, your environment should support your daily actions rather than tempting you into failure. If your goal is to lose weight, it would be futile having gallons of soda and junk food in your cupboard. Surround yourself with people who believe in you, who support your goals, or who have already achieved the success you want so you can learn from their example. While it can be difficult to end a toxic relationship, friendship or get out of your comfort zone to start a new one, you’ll be far better off in the long run if you know what you want and pay the daily price—the hard work and sacrifice — to bring it to life.
Enjoy the process.
With anything worthwhile, adversity is guaranteed. Congratulate yourself for making the decision to change your life and to positively influence those around you. When times get tough, remember it’s just an opportunity to prove how badly you want it. Embrace the struggle and persist until you hit your goal.
Winners take action. Stop procrastinating and start now!
James Whittaker is the author of “Think and Grow Rich The Legacy: How the World’s Leading Entrepreneurs, Thought Leaders, & Cultural Icons Achieve Success“. The new book is fully endorsed by the Napoleon Hill Foundation and is the modern-day version of the original classic “Think And Grow Rich“. It includes detailed interviews with Barbara Corcoran, Grant Cardone, Warren Moon, Sharon Lechter, Bob Proctor, Rob Dyrdek, John Lee Dumas and many others.