Fellow countrymen and women, the long list of millionaires you may know are people who have learnt to control their impulses, a factor that has resulted in strong control of their cash flow through frugal financial behaviour.
Indeed, one of the key findings of research by Thomas Stanley and William Danko, publishers of the The Millionaire Next Door, was that most of the wives of the millionaires were planners and meticulous budgeters, in fact, most of the millionaires interviewed thought that their wives were a lot more conservative with money than they were.
Money is a very powerful tool, as Robert Kiyosaki, author of Rich Dad Poor Dad, noted.
“If you use it well it will make you rich. If you do not use it well it will make you very poor,” he wrote.
Financially intelligent people can turn any amount of seed money into streams of wealth to meet the needs of several generations. You may have seen many people win millions in lotteries and return to absolute poverty, usually poorer than they were before they won the millions. This is because more money does not make you rich if you are unable to manage your cash flow.
The Hustler Fund is finally here. If you intend to take it to fund a business or boost one already in existence, a business plan is required. It is required for three important reasons. The first and foremost reason for having a business plan is to test the feasibility of the proposed project or business. Your understanding of the nine parts of the business as it is on the ground, or what it will look like on the ground, for a proposed project, is important. People are taking a risk on you, not just the project.
The second reason for having a business plan is the management tool element it provides. Your proposed activities and anticipated results are the measure of the extent of success of your plan. Checking the actual results against the expected output at certain times rests in the extent of achievement, as well as highlighting the positive or negative impact of changes of factors in the business environment.
Most people do not like bad results, which explains why they never get good results. You can only improve what is existing given the factors prevailing in the business environment. A business plan provides the meter for gauging what needs to be done next.
Finally, a business plan is a tool for fund raising for a business or business project. The financial section of the business plan sums up all the activities proposed in numbers going in as expenditure and coming out as income.
Where the business is profitable, it is visible in these numbers, which are prepared with sum assumptions of certain factors operating in the future. Cash flow is defined as streams of cash coming in as income and going out as expenses. Controlling your cash flow therefore means that you first take control of the sources of your income before you take control of where you spend it. For a small and medium size company owner, this may mean considering other business ideas before considering large spending on a home.
You may have seen a broke person expand a kiosk into a shop and soon into a supermarket chain. He or she sees the money as a seed and is keen to solve a problem affecting the society and for which the society is keen to reward his or her effort with more cash flow. This person is able to delay gratification today for consumption of the product of the seed tomorrow.
Many small businesses have been strangled to death by owners who divert cash flow from their businesses to acquire their world view dream homes and other liabilities too soon.
Incidentally, bankers are not trained to provide charity and would be the least helpful people to approach for help when you have committed such an offense. Remember that free things are only found in a mouse trap.
Patrick Wameyo is a financial literacy coach at Financial Academy and Technologies, and an entrepreneurship coach at The Entrepreneurship Center EA. [email protected]