3% of all business owners make 84% of all private biz income. Why? They’re not covering for unknown weaknesseses.
Your Freedom Number is the Only Number That Matters.
Info
This article was published on February 26, 2010. So far, 3 people have left their thoughts. Share your own thoughts.
Your business has the same issues as those I visited in Kenya. In the final analysis, there’s only one number in business that really matters, you’re Freedom Number. While I was in Kenya, I had seminars and workshops with everyone from large international businesses to egg vendors in the slums. I wanted to impress on them the importance of net profit, the money that is “left over” after you pay all your expenses including your income.
I wanted them to know that it’s the only number that matters in the long run (others might be more important in the short run), so I asked an egg vendor:
“Would you like to get to a point where you could choose what to do with your time and your money?” She lit up.
I said, “Wealth is simply the ability to choose what to do with my time. We need to figure out how to become wealthy, not rich (riches=money).” She agreed and recognized instantly that having more money, if it didn’t create a better lifestyle for her, would not solve anything.
Sound familiar? We struggle with the same issue, the decimal point is just in a different place. The key is Net Profit. If you have Net Profit, now you have the freedom to choose what to do with it – the seed money for Wealth. To drive this home I asked the Kenya business owners to switch out the term “Net Profit” with “Your Freedom Number”, and to report it to each other every month, along with how the were going to reinvest it to create more wealth. They got very excited about the idea and there was a lot of buzz about their “Freedom Numbers”. I also challenged them to have a long term Freedom Number – the accumulated Net Profits over time that would truly create Wealth – the ability to choose what to do with their time.
One of the big “ahas” from being with business owners in Kenya was that the Cycle of Poverty is identical here with seemingly successful business owners – we haven’t really broken out of the mental Cycle of Poverty. The decimal point is in a different place, but we’re mortgaged and leveraged to the hilt and Net Profit is something we use to go to the movies, not reinvest in our business. After all, how could $50 left over at the end of the month have any impact anyway? I might as well just use it to enjoy the moment.
The egg vendor had the same question. She figured she might have 200 shillings ($2.64) of Freedom Money at the end of a month. We did the math. If she reinvested it and bought 20 extra eggs the next month, and kept reinvesting her increasing Net Profit for 18 months, her personal income would go from 4800 shillings a month to 30,000 shillings a month, with 10,000 more shillings to still reinvest in her business! $2.64 is a great Freedom Number if you see it that way.
What is your Freedom Number (Net Profit) this month? What are you doing to create more of it? Are you reinvesting it to build Wealth or using it for short term comfort?
Net Profit is the most important number in your business – it’s your only Freedom Number. Focus on it and you’ll make more money in less time.
Add Your Own
Thoughts
Jeanne Male
03/04/10
Chuck, my spirit was exuberant and my head was nodding as I read this passage:
“Wealth is simply the ability to choose what to do with my time. We need to figure out how to become wealthy, not rich (riches=money).” …having more money, if it didn’t create a better lifestyle for her, would not solve anything."
Another symptom of our “Afflu-enza” or the success=money mind meme (discussed in my last blog post)are business owners who boast about their gross earnings – big numbers that tell us little about the health of the business. You’ve done it again – while identifying net profit targets is just good business practice…identifying a corporate and individual “Freedom Number” is brilliant.
Clarissa Winchester
03/04/10
This was an excellent post, Chuck! I asked my downline in December to find out their freedom numbers & share them with me. This way, we could work together and make it happen by this year! I’m going to share this post with my team! Th
Chuck
03/05/10
Thanks, Jeanne! I believe strongly that we make the mistake of focusing on the growth and success of the business itself, when we should instead always be focused on the growth and success of the business OWNER. A business isn’t successful unless it provides time, money and significance for the owners, until then it’s just an impressive prison.
Chuck
03/05/10
Clarissa,
I look forward to hearing how your team develops their Freedom Number. I have encouraged the business owners in Kenya to meet monthly and declare their Freedom Number and exactly what they are going to do with their Net Profit that next month to create an even bigger Freedom Number the next month. Keep me posted!