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  • Writer's pictureJoe Woodhouse

Value Yourself, As you would a Company

Imagine you are going to buy a business, what would you consider before you signed on the dotted line?



Cashflow


The first thing you would look at is cashflow, you’d know what the turnover is, what the costs were, and what the bottom line profit is. Would you want the business to have a cash pot available for disasters? 


Relate this to yourself, turnover is your salary, business costs are your outgoings, and bottom line profit is your surplus, or savings. And the cash pot is exactly the same, it’s your emergency fund.


If your company was on the breadline every single month, what’s the first thing you’d do? You’d cut costs, you’d trim the fat and look at ways you can save money - do that to yourself. 


Know what’s coming in, and whats going out. 



Risk


Imagine buying or investing into a company that relies 100% on their number one sales guy? What if he left? What if he was off work on long term sick? What if he died?


Most families have a main bread winner, is he or she insured if they had a serious illness or died. And is this adequate for you and more importantly for your kids, think of your children as the share holders of your own company, everything you do. Is for them. Now think what would happen to them if you weren't here. Would your family be taken care of?



Future Growth


Would you buy into a company that doesn’t invest in itself or the future? That didn’t innovate and keep up with the rest of the market, again, relate this to you, this is you, investing in yourself, and your own future.


So after going through this exercise, ask yourself, honestly, would you buy you, as a company. If not you need to make a change, and this starts and ends with you. And it relates back to the 1,2,3 of financial planning, which we’ve covered before.


1. Spend less than you earn

2. Protect against disaster

3. Invest wisely



Thanks for reading.



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