Financial Planning Essentials For Entrepreneurs
Financial planning for entrepreneurs and business owners is a necessary part of financial success in your business and personal life. There is nothing that will drain your business of its capital faster than spending and investing your capital in the wrong places.
Financial planning can go a long way to helping you realize your financial goals and dreams. In fact, it is absolutely necessary.
Athletes and entertainers sometimes don't realize that their respective industries are businesses. And, further in order to be successful in sports and entertainment from a financial standpoint athletes and entertainers need to think like entrepreneurs. They need to do financial planning.
When an athlete or entertainer is approached by agents, attorneys, promoters, advertisers, etc., these people think like business people, i.e., invest as little as possible and get as high of a return on your investment as possible. This means the athlete or entertainer gets the "short end of the stick."
The following article presents some compelling facts. You may be shocked by some its revelations.
"10 Ways Sports Stars Go From Riches To Rags"
The above article ("10 Ways...) states, "By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce. Within five years of retirement, an estimated 60% of former NBA players are broke. Numerous retired MLB players have been similarly ruined."
Sports stars operate in a business environment, but most have little business knowledge. However, and most importantly, they are being taken advantage of by people that do have business knowledge.
Athletes and entertainers aren't the only people losing their capital due to lack of business knowledge. Business owners and entrepreneurs that don't do their homework fall into the same exploited and financial failure class as athletes and entertainers.
The following are some helpful tips for
to avoid some potentially costly mistakes in financial planning and financial management.
- If there isn't a market for your product or service, don't try to be a miracle man and turn water into wine. Do your market testing first, and then proceed to give the market what it wants.
- Know that an automobile is one of the worst financial investments you can possible make. It starts to depreciate (loses its value) the instant you take ownership. Many name brand luxury vehicles lose 50% or more of their value within the first two years, even with low mileage. And, when you factor in
and other associated costs,
automobiles suck your money down the drain like a big tornado. The main redeeming value an automobile has is if it is used in business, and you can deduct its expenses.
- Real estate property can be the second biggest money drainer on your finances. In fact, houses aren't an asset in terms of their financial value, they are a liability. Why? Because if you pay out more on the house or real property than you take in, it is a liability on your personal balance sheet.
Most people, including multi-million dollar earning sports and entertainment stars get mortgage loans on their respective real property purchases. So, right off the bat you are in the whole financially with debt often near to or exceeding the value of the property.
real estate taxes,
and other costs on your property drain your financial resources. Your real property needs to put money in your pocket instead of take it out in order for it to be a financial asset instead of a financial liability.
If you learn how to manage real property in such a way that it brings in monthly income over and above its expenses, then your real property is a financial benefit.
- Ignorance with respect to the industry or business you are investing in is another financial killer. Get trustworthy people to advise you, but most importantly do your own homework. No one can do everything for you.
If you don't know what you are doing, or don't have an idea of the correct way to manage a respective business, then how will you know if the business manager you hire knows what he is doing?
- Learn accounting fundamentals, and do your own accounting everyday. That way you will know how your business and investments are doing all the time. A lazy, ignorant mind is the workshop of the devil.
The above are some of the major things business owners and entrepreneurs need to know and apply to avoid some common, costly financial mistakes. When you do your financial planning take these factors into consideration to help save your financial future both professionally and personally.
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