Business planning – income is the foundation of your wealth

Critical to business planning is the science of financial management.  Financial management is all about the source and use of money.  I refer to it as a science because whether in business or in personal finance, there are certain rules you must observe in every day financial management.

One of the foundation stones of financial management is:

Your career and therefore your income provide your wealth!

Your income is the foundation of all of your wealth building.  Therefore, your prime focus should be on generating income, rather than borrowing money.

Your focus should also be on saving your income instead of spending it.  It is the part of your income that you save that forms the backbone of your future investments.

It is most likely that you will make far more money from your business or profession than you will from your investments.  Your investments can make your future more secure and your retirement more prosperous, but without income, investments alone will not take you from rags to riches.

Only very rarely does someone make a large fortune from investments.  When that happens, it may appear to be a hot tip or good luck but it is generally achieved by someone with a high income and savings potential.

When planning investments, your priority should be to preserve what you have.  Preserving what you have will be an unlikely outcome if you pursue complicated schemes that promise high returns in the short term.

Until next time!


For an introductory look at Personal Finance it is hard to go past this book.

TURNING MONEY INTO WEALTH (5th Edition) by Arthur J Keown.

available now in the Amazon library → top right on this page →

This is an American introductory finance book written by a Professor of Finance at Virginia Tech Pamplin College of Business.  Although it is primarily a text book, it is a surprisingly easy read.

It has to be said that USA tax laws and other regulations contained in this book are different to those in Australia but the author provides a great presentation of the fundamental principles of personal finance, which are universal foundation principles.   That is valuable information if you are looking to enhance your financial education.

Starting up a business – The pitfall of giving away equity

When starting up a business, it is common to see inexperienced business starters with no financial management skills, prepared to barter away equity (ownership) in the early days in return for a much needed service.   For example:

They seek to establish a website as cheaply as possible, even to the extent of offering a e.g. website designer part ownership of the business in lieu of payment

Now I am not against website designers.  It’s just that new business owners think that a website is the first thing they need.  They often see a website as the answer to all their sales and marketing prayers.  Nothing could be further from the truth but that’s another story.

If this is you, consider this!  While giving away a slice of your business may seem to be a good idea at the time, you won’t think so in a couple of years time when you have a million dollar business and a business partner who bought a good slice of it for the price of a website (e.g. $1,000 – $2,000 or so), and now can do nothing else but e.g. design websites.

The first mistake you made was seriously undervaluing your business in the first place when you were starting up the business.  You took the pessimistic view and figured that you were giving away nothing in return for a website with a real dollar value.  What a great deal hey?

Silly ole you!  Deep down, you didn’t really think you would succeed did you?  You didn’t seek advice and you didn’t stop to think that a shareholder in your business is a permanent fixture; as permanent as a married spouse and potentially just as expensive to separate from.

Nothing deteriorates a business relationship faster than a person who doesn’t pull their weight.  After a year or two of having the website designer as a passenger in your business, you will be seriously regretting having this person as your partner.  Oh, a ‘silent partner’ you say?  Trust me, they are rarely silent.

Let’s say you gave the web designer 20% of your business in return for a $2,000 website when you mistakenly valued your business at zero.  When your business grows and is valued at $1M, that 20% share is going to be worth $200,000.   I hope it was a good website.

But wait, there’s more!  The shareholder may not want to sell.  By this time, you might be the best of enemies.  It may cost you a lot more than $200,000 to buy back your business.   And do you have that kind of money sitting in the bank for a moment like this?  The answer is usually ‘no’.

This is why it is so important to seek advice.  Any competent business coach or adviser will tell you that having a partner, with skills you may use only once, and who makes no other contribution except for a couple of thousand dollars of labour and expertise, is a bad investment and an even worse permanent relationship to get into.

For more reading on starting up a business and smart financial management, read my Life Balance series at

Until next time!

The Coach

Starting up a business – cutting corners can be a financial management killer!

Gary Weigh – The Coach

Cutting corners on a lean start up budget is a very common ‘kill your business’ practice.  When starting up a business, it is done because of lack and necessity.  However, in terms of financial management, it could be something you regret later on.  One of the most common examples of corner-cutting that I see is….:

Seeking the cheapest quote for equipment and technology just to get started, even though it is unlikely to handle anything but the lowest levels of activity!

Second rate equipment and technology may be fine for low levels of business at the time of initial start up.  However, they may not be able to handle the increased volume of transactions and information that could multiply quickly as your business grows.

It could all be obsolete in a matter of weeks or months.

As customers hear of your leading edge offering and sales activity increases, expansion is a certainty.  If you cut corners however, expansion may prove fatal.  It may mean starting again with a complete scrapping of your low rate equipment and technology.

This means that you will have to invest money twice over in the first few months of trading.  Not only that!  Expansion may also mean hiring people and finding larger spaces.  Expansion is generally a time of tight cash flow.  It could spell the end of your business.

It seems ironic that your business could fail at a time when you have just weathered the storm and things never looked better.  But it happens a lot.  It is one of the common causes of business failure.

For more reading on starting up a business, financial management and your path to financial wellbeing, start reading from the library to your right!

Also visit

Until next time!

The Coach

Financial wellbeing – 5 Common mistakes in financial management

  • The first common mistake in financial management is to rush straight into ‘a flurry of activity’ without first setting goals or doing any planning.  It is critical that your ‘flurry of activity’ is productive and prioritised towards achieving your goal of financial wellbeing.
  • The second common mistake is procrastination.  That is, doing the thinking, the talking and maybe even some planning but never getting around to doing any of the activity to make it happen.
  • The third common mistake is never committing plans and budgets to paper.  The problem with keeping it all in your head is that it is easily forgotten.  The plan in the head can easily change to follow an outcome.  The plan must be on paper, out there and shared.  That’s what makes it real for everyone involved.  The plan must come first and outcome second; not the other way around.
  • The fourth common mistake is learning (what passes for) financial management and wealth building from friends and family.  Unless the advice giver is a trained professional, the advice is next to useless.  Smart people surround themselves with much smarter people.
  • The fifth common mistake is to believe that debt is the answer to satisfying every immediate need.  Debt has its place in financial management but it must have a productive purpose; it always has to be repaid; and you must always maintain the capacity to repay it.

For more reading on financial management and your path to financial wellbeing, visit

Until next time!