In life we are all either kings or pawns, business owners or consumers. Which are you? Frankly, thinking like an entrepreneur takes training and learning, but mostly it takes courage. Find out if you’re a business owner or consumer, a boss or a @#%#% (well, you get the point).
At the end of the day it is more of a mindset, and just because you are a so-called business owner, it does not necessarily mean you act and think like one—especially the select few that pay the price to think, learn and act like a true business owner.
The Consumer Mindset
The vast majority of us grew up in middle class or poverty-stricken families where we all grew tired of hearing phrases like these from our parents: “money doesn’t grow on trees,” “we can’t afford that,” “a penny saved is a penny earned,” and many more scarcity-minded mottos. Debt and credit cards were particularly looked at as evil, foolish things to take on due to high risks and those who used them improperly, having such dramatic failures.
So there we were as little kids, watching our parents try to make sense of the reality that they lived by which is: go to college, get a good job, put your retirement in a smart 401(k) and buy that great investment known as your primary residence. Also, make sure that you are grateful, because people around your city and the world have it so much worse than you do.
At the end of the day, we heard “follow the status quo, be a sheep, don’t be a rebel, follow the yellow brick road and soon you will arrive at the promised land.” The promised land would be retirement when finally, the thinking goes, we would be able to relax and enjoy a great life. There’s just one problem: for the overwhelming majority, easily 80% of the US population, the results are never what they were supposed to be.
Life is sure to throw unexpected challenges like the massive real estate recessions we saw in 2008 and 2009, massive job losses, and credit that dries up. So when life’s unexpected trials show up, it throws the stats quo to just be a good boy or girl and follow the system’s ideas into the toilet.
Even if these ideas actually led to the intended result, what kind of life is it that you get if you are 65 and have no ability to really enjoy the fruits of your labors? At least nowhere near the way you could have enjoyed them years earlier.
What the Professionals Say
Two of the more well-known financial gurus of our day are Dave Ramsey and Suze Orman. They give wonderfully conservative advice to help consumers avoid the pitfalls of debt and financial decision making.
Their advice is perfect for the consumer: save as much of your money as possible, invest it in those smart and safe IRA’s and 401k’s, avoid debt like the plague, and whatever you do, do not take risks and it will all work out for you. Except it rarely does.
Even families that make six-figure incomes struggle to cover the costs of rearing a family in today’s ever-increasing costs of a technologically driven world in which we pay hundreds of dollars a month for cell phones, internet and other gadgets that our parents and grandparents simply did not have.
Let’s say you live anywhere around New York, Boston, Miami, Los Angeles, Seattle, Washington DC or San Francisco and make $150,000 a year. An income that high would put you in the top 10% of incomes in the US and probably the top 5% in most places.
After you cover housing, food, fuel, autos, child costs and other living bills, you may have a very small amount of money left over to invest with and actually build wealth.
The Business Owner/Entrepreneur Mindset
Business owners understand finances differently than consumers do. Where a consumer has been taught to avoid debt, the business owner knows that debt for wasteful personal crap like costly apparel and consumer products is foolish. They understand that debt to jump-start a business that generates massive income from that growth capital is smart debt.
Google was started by Larry Page and Sergey Brin, and they were able to launch their world-altering enterprise thanks to a few credit cards they had. So-called financial gurus would likely advise against such “risky” moves, but it certainly worked out well for Google’s founders.
Debt like credit cards and other funding sources, when used with a business that has earned its proof-of-concept, is one of the ways business owners think differently than consumers.
A consumer mindset might be to finally make that bold decision to buy an investment property, and then use all of the profits and excess savings to pay off that mortgage as fast as possible. An entrepreneurial mindset would say go ahead and take the profits and additional savings, and buy more cash flow properties and businesses.
A savvy business owner who knows their business understands that if they spend 100k on advertising, employees and equipment, they can often turn that 100k into 200k in new sales in the next 12 months and perhaps pick up additional momentum that can build towards a seven-figure business within two to three years or less.
The Choice is Yours
So which will you be? Clearly, not everyone is cut out to be an entrepreneur or a business owner, but understand it is not about a massive IQ, it’s not about whether you have a PHD. Many PHD’s have a scarcity, consumer-driven mindset and fail to ever achieve financial and life success.
Many who were told by teachers that they would never amount to anything now command large businesses and incredible lives simply because they went all in with their decision to live life on their terms, and it all started with building the right mindset.
The choice is yours: live forever with a life of limits and fear as a consumer, or invest in yourself and your education from those who have achieved greatness and become a business owner who controls their destiny!