Author: Sigrid

Are your investment decisions working for you? The key to enlightenment is to look at your results. But first let’s get back to basics.

When you are a business owner you can make investment decisions whether you’re aware of making that decision or not.

Lifestyle   The amount of time you use in your day to attend to tasks in your business, as well as the amount of “bleed” you accept all impact your lifestyle, your contentment and your well being. By “bleed” we mean the little things that you do in your own time that somehow need to be done but not intended to do which impact your me time (such as returning that phone call just as the first guests arrive to your BBQ).

Capital   In very simple terms this is the investment you’ve made in the business where you’ve contributed to the business in some way. This might be money you’ve put in over time, the purchase price you paid for the business, the earnings you’ve forfeited to invest further into your business.

Financing   This is the method you’re using to put that Capital into the business. If you’ve not gone on holiday to use the funds for a gizmo for the business, then you’ve funded that transaction and contributed equity to your business (you sacrificed personal cash flows for the business). If your bank gave you the money for that gizmo, then you’ve increased debt in the business and not equity, probably to ease your cash flow. In this case you’re potentially building equity over time, and betting that your investment will yield greater returns than it costs.

Have you considered the investment decisions you’re making and the impact they are having?

What dice are you rolling each day? Better choices are made when you know and are OK with how they roll. Take time out to examine how things stand for you.

Lifestyle   Is your lifestyle satisfactory? Do you get time out from your business? Are you confident choices made while you’re not there are in line with your plans?

Capital   Are you satisfied that you are getting the returns from your capital investments?

Financing   Are in control of your cash flow and satisfied with what’s happening?

If you don’t answer these questions with a 100% positive YES! then you should take some time out to consider your options to improve things.

An interesting challenge is to determine how much money your business generates for you for each hour you invest. If you include all that “bleed” time you will get a clearer view of the real cost to you.

If you have decided you want to improve your situation you don’t have to go it alone. We can help you analyse what’s happening, help you identify options to help you find the best solution for you.

If your business is your “retirement fund” or your key to a more passive income (that is, you don’t need to be there 100% of the time to make it work), then it’s essential you put some thought into how the business operates now and where it should head in the future.

If you want to take your business to the next level then proactively thinking about your plan will give you the key to taking advantage of opportunities that come your way.

We all know that plans don’t always work out the way you imagined they would; however the process of thinking through potential scenarios means that you are much more prepared to make the best decision for you in the moment that opportunities arise.

When you develop those scenarios and plans there are a few aspects you should consider.

Practicality. This is the actual execution of the plan. Do you have the people, skills, knowledge & resources you need?

Balance Sheet effect. How the plan impacts on your assets & liabilities. Does the plan build strength so that you achieve a return on your investment, get financier support and so on?

P&L effect. How the plan affects your business income, expenses, profitability and bottom line. What line items are affected by the plan and what might you need to do?

Cash flow effect. How the plan impacts your cash flow. Often there’s an upfront cost to recoup over time; how can you best manage that for you?

You’re the expert in the Practicality aspect. We’d love to be your sounding board in the other aspects so that you are clear on the ramifications & can plan your actions to get the best result for you.

Your “retirement fund” will love you for it!