Wealth Creation, Step 5, Reinvest In Your Business
Investing makes you rich, reinvesting makes you wealthy.
Damn, how do I come up with these? LOL
I’ve noticed people don’t quite understand investing, they think of invested money as spent money.
How do I know?
I get a lot of emails, people like my blog, cause I talk straight and know what I’m talking about… most of these emails ask how to make money.
One day I said to myself: I’ll test how people’d react if I told them making money was free vs needed investing.
The investment emails – nothing.
The emails that talked about free – insainly popular.
I understand most people have no money to invest and look to get started for free… but I don’t understand why people don’t get there is no free.
But they really don’t get reinvesting which is why I wanted to write this article.
I was talking to a friend of mine the other day, we were talking about Apple and Amazon and they said:
“Apple have cash, they make money… Amazon lose money”
They are a smart fella, so I wanted to give them a chance to explain and asked what exactly they meant
“well, they reinvest all their money in new projects, they lose money”
I couldn’t believe they said that.
I told them that was called reinvesting and they understood, but I still find it hard to believe people don’t get reinvesting, even people who have money like my friend.
Having a job and getting a cash reward each month and running a business are different things.
Don’t be like my friend… If you want residual income, a big company constantly growing and a massive business, you will have to reinvest in business at least 20 % of your profit. Me, what I do is when I start a new company I don’t even try to collect profit… at least not the first several months.
When I reach the point when I’m satisfied with the company progress I sit down and calculate what is needed to constantly grow the company to the point where I don’t want it to grow (and by the way I don’t really think there is such a point) and all the money that’s needed I reinvest back in the business… I don’t even care about the percentage.
Let me give you a quick example:
Let’s say you start promoting a software, which you earn 70% commissions off of. Let’s say it’s 100 bucks, you make a sale and get 70 bucks for it. It would be a really good idea to reinvest at least 14 dollars out of the 70 (that’s 20 %) back to maybe get some tool to speed up your promotional process, or a book with valuable information that will get you ahead of the competition, or something like that.
This tool, or that book you will get will grow your business, they are assets, and not wasted money like most people think and fail. And if it’s me, in this example I would immediately reinvest back all the 70 bucks.
Once the company is big enough, I’ll start investing 50 out of the 70 in marketing (PPC, Paid ads, Solo ads etc.), and by doing this I’ll start making so much money (if I do everything right) that I won’t even care how much I’m reinvesting.
I think you got my point, but let me give you another example with a real life story of mine:
At the age of 21 I started my first company. I bought a fast food franchise for several thousand dollars. Then after six months I started making some serious money… but I reinvested all of it in opening another fast food and then another one, and at the end of the first year I had a revenue of half a million.
And this was because of not spending any of the profit on anything else but my business.
Reinvesting stops when you are satisfied with where you are. If making a thousand dollars a month is enough for you, then you stop there. However, as long as you want to grow, you have to reinvest in your business.
Proceed To Wealth Creation, Step 6, Get A Team
Back to step 4 – Marketing plan