Owning your own business is widely recognised as one of the best ways to achieve financial freedom. With the right knowledge and skills, you can cultivate a successful business, hire staff to help it grow and put your money to work for you. That said, starting your own business is by no means a guaranteed path to success. By tying your fortunes to the success of your business, you are naturally shouldering a higher burden of risk than you would if you merely collected a paycheque from someone else’s business.
However, with the proper financial planning and effective growth strategies, you can fall under the label of companies who increase business profits and manage returns sustainably enough to secure true financial freedom. Read on to learn more about achieving financial freedom through long-term business growth.
What it means to be financially free
To have achieved financial freedom is to have reached a point when your passive income is greater than your expenses. You need to own assets that can generate their own income each month. These could take the form of investments such as rental properties, retail businesses, or stocks. To become financially independent, you must create an income-producing asset that can sustain itself long-term. If your business earns $10,000 in monthly revenue with expenses of only $5,000 per month, and you have a dependable cash flow after paying those expenses, you can consider your business financially free.
How can your business achieve financial freedom
1. Make profit from passion
Business owners rarely start a business from nothing. It takes years of hard work, commitment, and serious passion to make the dream happen. While it’s important to have adequate knowledge and skills within a given industry, it’s just as important to be passionate about your business. This drive to pursue the ideas you’re enthusiastic about prevents you from jumping from one idea to the next. Even the most profitable ideas can fail when you don’t love what you’re selling or offering.
2. Track spending to maximise savings
Study and analyse your business’ spending habits and investments so you know how much to spend on operational costs and how much to actively save for when a rainy day comes. Gather your investment statements, tax returns, insurance documents, and loan documents, and study your spending history. Determine your business’ cash flow and income needs. From there, you can determine which aspects of the business to focus on and cut back on so you can make income projections that help build your savings!
3. Pay off debt
Paying off your business debt is one of the ways you can call yourself financially free. If you have $50,000 cash in the bank but have $100,000 worth of debt, you still can’t claim financial freedom. Ensure that you have a clear plan when it comes to paying off business debt and decide what works best for your company.
4. Create an online component to your business
The digital era revolutionized consumer spending habits and gave birth to eCommerce. With a vast majority of transactions done online, you can invest in digital marketing, website creation, app development, or a suitable online platform that will help connect you to leads and gain potential customers. By investing digitally, you can reach customers internationally, reduce operating costs, and earn passive income.
Achieve financial independence with Bartercard
Maximising savings and knowing where to invest are all integral parts of a business’ sustainability. But to be truly financially independent, you need to look for avenues where you can put your money to work for you. And this doesn’t have to be just in the stock market. Invest in platforms that diversify your business, allow you to generate extra sales, help your business grow, and become financially independent.