Tags: entrepreneur | financial | freedom

Entrepreneurship Is the Path to True Financial Freedom

Entrepreneurship Is the Path to True Financial Freedom
(Dreamstime)

By    |   Thursday, 17 October 2024 09:57 AM EDT

People want financial freedom, but don’t know how to achieve it. Whether it’s with our clients at Fund&Grow, a podcast audience, or even attendees of an event, the topic comes up for me every day, and almost every time, my answer on how to get there is the same—start a business.

Don’t get me wrong—starting and running a business is hard work, and it’s definitely not risk free, but if you do things right, you can be looking at unlimited earning potential and significant tax advantages. I’m talking about the kind of wealth that can change the financial trajectory of your family for generations to come.

The most common response I get here, though, is, “But I don’t have the money to start a business, Ari!”

On one hand, I can empathize with that. But on the other hand, it’s the wrong mindset to have.

There are two reasons for this. The first is that it’s a defeatist attitude because you’re taking your first step with an excuse. But the second is that you absolutely can get funding for a brand new business—so you do have access to the money to start a business.

There are some negatives as well though, so running a business isn’t for everyone because of the challenges it brings. The first is creating a healthy work/life balance, which tends to skew heavily towards the work side of the equation for entrepreneurs. In fact, there may be times when your business will require all of your available time, especially in the beginning. There’s also the risk factor. If your business doesn’t do well, you could lose everything you’ve put into it.

You also need to have the right mindset. As an entrepreneur, you need to be courageous because you’re going to face a lot of uncertainty. You won’t always know where your next paycheck will come from, and unlike in a corporate job, you’ll be responsible for everything in your own business.

That’s a heavy burden to bear. Entrepreneurship also requires a high level of commitment because once you get past the glossy surface, running a business is hard, gritty, and repetitive. This is where discipline plays a key role. Often, you’ll run out of motivation, especially during those long, lonely nights at the office, and that’s the only thing that can pull you through.

But finance can be one of the toughest topics for new entrepreneurs to get a handle on, and within that, there are a few subtopics that are especially important, which I’ll address next.

Taxes

Most of us pay them and all of us hate them, but as an entrepreneur you have to account for taxes differently.

While working for a company, your employer pays half of your income taxes, and handles the payment of both their share and yours to the Department of Revenue. When you run your own business, you have to prepare for this so you’re not blindsided come tax season.

This means putting money aside each month specifically for taxes, but it also means working with a tax professional throughout the year to ensure you’re putting enough aside in the first place.

It’s also important to work with that professional to minimize your tax burden, which requires you to be proactive and make certain strategic financial moves throughout the year.

Funding

You might be able to bootstrap your way to a successful business, but that typically takes a lot longer and leaves less margin for error than new entrepreneurs expect. Business funding, on the other hand, enables you to create a greater impact more quickly, and offers a degree of financial padding to soften the impact of the ups and downs of business.

Knowing this, it’s no surprise that a lack of funding is cited as the cause in 38% of all business closures—the top single reason.

Most Americans today lack basic financial literacy, and that includes how credit works—but it’s even worse when it comes to business credit because so few people have any experience with it. To make matters worse, business credit is counterintuitive because it works very differently from how personal credit works, so it’s easy to make mistakes in this area.

Cash flow

While landing a new client is always exciting, seasoned entrepreneurs know it doesn’t really mean anything until that money is in your bank account. Cash flow is the lifeblood of a business and that’s why predicting and managing it is so important.

This can be a delicate balance though, because you have to account for numerous variables, including the industry, time of year, economic conditions, your marketing efforts, and even the specific customer, to name just a few. In other words, you need to be very knowledgeable on a wide range of topics in order to effectively predict and manage the cash flow your business will generate.

It’s also worth noting that when you understand business credit, you can have a lot more flexibility with cash flow because you’ll have access to additional capital.

Closing thoughts

I believe in the American Dream because I’m living it every day, so when I tell you that starting a business is the answer to achieving financial freedom, I say that with my full heart, but at the same time, I want to emphasize the importance of getting the education you need to maximize your chances of success.

Entrepreneurship can completely change your financial situation, but you need to be properly prepared.

_______________
Ari Page is the CEO of Fund&Grow, which helps entrepreneurs get the business credit they need to run and scale their companies. She is recognized as one of the leading experts in the industry, and is regularly asked to speak on the topic on stage and in the media.

© 2024 Newsmax Finance. All rights reserved.


StreetTalk
People want financial freedom, but don't know how to achieve it. Whether it's with our clients at Fund&Grow, a podcast audience, or even attendees of an event, the topic comes up for me every day, and almost every time, my answer on how to get there is the same.
entrepreneur, financial, freedom
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2024-57-17
Thursday, 17 October 2024 09:57 AM
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