Roger James Hamilton, founder of the Entrepreneurs Institute and author of the “The Millionaire Master Plan,” saw nothing wrong with putting all his money into his publishing business early on in his career.
In his book, he recalls thinking: He was a young entrepreneur, and entrepreneurs are dedicated to their businesses, right?
Hamilton’s publishing business was in its first three years, and it wasn’t making any money. In fact, he was losing it.
It wasn’t until Hamilton received some advice from a millionaire that he realised he was being a little too dedicated to his business and not thinking enough about himself. Because he wasn’t making any money from his business, he didn’t have any money to invest for his future.
“If you want any advice from me, come back when you have positive cash flow and an investment portfolio,” the millionaire advised. “The reason you can’t make your business cash positive is because you’re not even making yourself cash positive. If you’re serious about building some wealth and being of value, begin with yourself.”
He had to focus on increasing his business’s profit, he realised, to then increase his own income. Hamilton realised that he could do this by concentrating on “enhancing” his business rather than only “expanding.”
I had spent my life trying to expand — to make my business bigger — as opposed to enhancing what was there and make it better. The difference is that when I was expanding, I was growing revenue but not profit.
When I was enhancing, I was focusing on the things I already had and asking, “How can I make it more profitable? How can I make more from my customers? How can I do this process better or make some little tweaks this way and that to pay myself a few extra dollars a week?”
With his new focus, Hamilton was able to start making shifts in his pay every three months. After six months, he had gone from zero dollars in net cash flow per month to $US400.
Two years later, Hamilton was able to raise venture capital and expand his business. Because he had made himself cash positive, he was also able to invest in property that gave him a high cash return. After three years, he had reached a million dollars in personal net cash flow.