Advice From The Bottom: What Losing A Million Dollars Taught Entrepreneurs About Finance

A million bucks sounds, to most people, like absolute security, because being a millionaire seems like it would put you in a strong financial position for life. If your car were to break down or you lose your job, a million dollars could solve those problems pretty easily.

Unfortunately, there are no guarantees in personal finance. Even a million dollars can go away quickly through a string of bad luck or poor decisions. Learn the lesson from these ex-millionaires to keep a tight grip on what you have.

1.) A million dollars can’t sustain a millionaire’s lifestyle

When most people think of a million dollars, they usually don’t think of the money in their accounts. They think about big houses, flashy watches and fast cars. Those things are part of the lifestyle, and they’re part of what makes the dream of a million dollars so desirable. The problem is, a million dollars disappears pretty quickly when it’s being used on those things while trying to grow a business.

Take the example of Joshua Lee, an internet entrepreneur from Texas, who had accumulated that coveted seventh figure at the young age of 28. Like most 28-year-olds with extra cash, he bought cars and watches, treated his friends to expensive nights out and did all the other things millionaires are “supposed” to do. His first million didn’t last him long at all.

Lee was able to recover, thanks to hard work and good fortune, but he offers a valuable piece of advice on the topic. Once you’ve decided on a goal, whether it’s having a million dollars in your account or getting debt-free, think about the parts of that goal that make it desirable. Once you’re 80% of the way there, take some time to re-evaluate. Figure out if the properties of that goal are sustainable. A million dollars looks and feels a great deal different coming from $800,000 than it does from $20.

2.) Keep an eye on the people keeping an eye on your money

Most people who get a million dollars do so by doing something other than working with finances. Even those who do, like successful investment managers, probably have someone else looking out for their money. Top earners in most industries have IRAs and other long-term investment accounts that are watched over by a third party. When there’s that much money, a professional can be indispensable in tax planning and long-term return maximization.

A millionaire can be too trusting, though. Millionaire retiree Jay Cee, a California resident, found out the hard way that not everyone who claims to be looking out for your best interests really is. He transferred his 401(k) from a previous employer and worked with a financial professional to do so. She encouraged him to put his money in a specific set of investment vehicles as part of an IRA rollover. The deal looked incredible, since there was no line on the contract for a commission. When he asked about her compensation, she told him that the company took good care of them.

That part was certainly true. The investment company charged nearly 3.5% in management fees, while earning a return of less than 4%. Jay’s retirement nest egg was growing at less than half a percent. He would have been better off putting his money into a basic savings account. Over the course of the year that his IRA was held by the company, they made $12,000 from his account, after just one 30-minute meeting. Talk about expensive advice!

Remember the golden rule of economics: If you’re not paying for a service, you’re not the customer; you’re the product. Make sure you know how everyone who gives you financial advice is compensated, and insist on seeing a detailed breakdown of fees before you sign any investment agreement.

Of course, the proper lesson isn’t one of exclusive self-reliance. Most people aren’t financial professionals. They don’t have the education or experience necessary to make expert, long-term financial plans. Yet people who make a great deal of money tend to see themselves as invincible. That’s how someone like former Major League Baseball pitcher Curt Schilling went broke shortly after leaving baseball. Schilling invested his money without a proper understanding of risk, then lost everything when the one company he’d backed went bankrupt. Getting advice is indispensible; just make sure it’s advice you’re paying for up front.

3.) Keep an eye on risk

There’s a certain glamour in having nothing to lose. When you’re starting a small business, you can throw caution to the wind – to a certain extent. After all, if your new business goes belly-up, you haven’t lost more than you’ve put into it. It’s fine to swing for the fences when you’ve got a fledgling start-up. That changes a little bit once you’ve experienced some success. You need to take steps to protect what you’ve got.

Part of protecting what you have is realizing that it can be lost. If you’re a successful entrepreneur, you have to realize that success took hard work to build, and without that hard work, it’ll go away. Risks to your business are always present, and you have to work hard to minimize those risks.

That’s one of the lessons to be learned from the bankruptcy of rapper Curtis Jackson, III, known by his stage name, “50 Cent.” Jackson was one of the most successful figures in the music industry, yet his stage name became equivalent to his net worth in 2015 as he filed for bankruptcy. One of the reasons behind the loss was his repeated entanglement in lawsuits. Jackson never stopped acting as though he had nothing to lose, picking fights with other performers and business owners who would then take him to court. Even if he won most of the legal battles, he’d still suffer the slow loss of money in legal fees and settlements.

Once you’ve “made it,” you need to change your strategy. You can’t afford to take those same wild risks. You need to find safe investments and know when to back away from a challenge. Slow growth is better than losing it all.

Sources:

https://www.entrepreneur.com/article/249881

http://www.financialsamurai.com/how-to-lose-a-million-dollars-and-live-to-see-another-day/

http://www.financialsamurai.com/recommended-net-worth-allocation-mix-by-age-and-work-experience/

https://www.entrepreneur.com/article/248863

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vCita: The all-in-one app to help your business flourish

Do you feel bogged down by the details of managing your business? Are you so busy with the nitty-gritty that you can’t concentrate on helping your company grow? Some high-tech help can free up your time and bring your business to the next level.

VCita is a powerful app created with small businesses like yours in mind. It’s designed to help you with all aspects of business management, including scheduling meetings and appointments, interacting with clients, streamlining payments and more. Using vCita can save you valuable time, allowing you to focus on growing your company.

Here are some of the features you’ll find on vCita:

1.) Online scheduling

No more back-and-forth emailing. Say goodbye to telephone tag. With vCita’s online scheduling, your clients can now schedule consultations, book and pay for services and register for events all on their own. Clients can access your company calendar from any device with internet access, any time.

Customize vCita’s scheduling page to your liking, updating it with your availability as it changes. You can also add a vCita calendar to your website, emails and social media – you’ll get double the bookings with half of the stress.

2.) Personal client portal

Set up a personal portal for each of your clients through vCita. Clients can use their portals to reschedule appointments, pay for services, fill out forms, send reviews and more.

3.) Client management

Keep your clients at your fingertips with vCita’s client management features. Download the app’s customizable widget for your website and use it to communicate with all potential clients. No more promising leads getting away from you!

Also, vCita allows you to organize your communications with clients, initiate new conversations with a simple click, review client history, track appointments, add notes, automate follow-ups and more.

4.) Payment collections

Collecting payments from clients is now simpler and more secure than ever. You can easily add payment buttons and forms to your website, emails and social media accounts. When a client uses those buttons to pay for a service, the funds will be automatically deposited into your checking or PayPal account with no additional transaction fee. An easy-to-use dashboard will also allow you to view a client’s payment history, issue invoices and track payments in real time.

While vCita may be a wonderful business tool, some users have sharply critiqued its customer support. Many also find that its competitors, like ScheduleOnce, outdo it in features offered and in efficiency. So, be sure to research vCita and similar options carefully before signing up.

Also, vCita is not a free app. After a complimentary one-month trial, you’ll need to shell out a monthly fee for the service. Prices start at $12.45 a month.

If you’re drowning in the details of managing a business and the all-in-one app seems like the right fit for you, vCita may be just what your business needs!

Your Turn: What’s your favorite scheduling app and how does it help your success? Share your secret weapon with us in the comments!

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Business Book Review: E-Myth Revisited

Starting a small business is hard work; any budding entrepreneur can tell you that. Unfortunately, though, all that work is often for the wrong purposes.

People start businesses because they’re good at making a product or providing a service. That doesn’t mean they’re good at running a business! Michael Gerber takes on this “E-myth” — that someone can be an effective entrepreneur with much technical skill and little business sense.

The book is written as a step-by-step guide for thinking through building a business. The goal of any good business, according to Gerber, is to be able to hand it over to someone with minimal skills and have it run just the same – the franchise model of business. Gerber lays out many solid principles for achieving this goal.

It’s worth noting that the book is somewhat dated. It has little to say, for instance, about the power of digital marketing or social innovation. The text can also feel a little too sales-oriented, as Gerber regularly references his own consulting business. Some critics find the abstraction difficult to parse and the advice a little too general to apply to real world business operations.

Despite these limitations, “E-myth” is still worth a read. Taken with a grain of salt, there’s a lot of functional wisdom to be had in the narrative. If you’re starting or already running a small business, the concept of working ON your business instead of IN it is vital. Gerber clarifies what that means, and how to do it.

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Score.org – Free Business Mentors

Do you ever wish you could discuss your business challenges with a person who has real-world business experience? Do you want to tackle your issues armed with advice from someone who is familiar with your field, not just a good friend or random acquaintance?

Score.org does exactly that. This website offers free business mentoring and education in over 60 industries.

Working on a business plan.

Score.org can help provide personalized business help.

SCORE is a nonprofit association dedicated to helping small businesses launch and achieve their goals. The website is easy to use, with a clear search function for business questions. Users can search for mentors by area of expertise or industry, from accommodation and food services to waste management and more. You can choose the area for which you’re seeking assistance, such as accounting and budgeting or tax planning and technology. Mentors are available for face-to-face meetings, email questions or video conferences.

Score.org also offers workshops and live webinars in a range of topics. Expert speakers offer insight on the latest business strategies and answer questions from participants. Workshops are offered on everything from e-commerce and SEO to nonprofit planning and cyber security. You can also search the archive of recorded seminars by topic.

Aside from the standard search parameters — by industry, location or keyword — there is also an option catering to specialized groups, such as women entrepreneurs or veteran-owned businesses. Users can narrow their search by business stage, from pre-start to already in business.

The library on Score.org is chock full of useful advice, with an easy to browse functionality. It offers e-guides, templates, infographics and videos. In just five minutes on the site, entrepreneurs can read an article on “understanding business credit” and view a template for a pricing strategy worksheet.

Score volunteer mentors all have practical business experience. In addition, Score.org provides a Mentoring Methodology Training program to certify each of their mentors and provide them with valuable tools and methods to help equip others for success.

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