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What Keeps Me (And Probably You) Awake At Night

As a solopreneur, money is a constant obsession. Some nights I can’t get to sleep, with all the what-if’s and how-can-I’s running around in my head.

I fantasize about winning $50 million at LottoMax, what I would do with it. Of course I would give a million to each of my brothers, as well as my mother, and endow an educational trust for my nieces, nephews and their children (as well as any kids I would have or adopt someday, in the unlikely event that should happen). But what would I do with the rest?

I read the stories of lottery winners, how they say they will buy a new house, a new truck (it always seems to be a truck, doesn’t it?), go for a trip down south, then put the rest in savings. Several even say they would not quit their job (yeah, right).

But not me. It would all go into my business. I guess that is the difference between employee thinking and entrepreneur thinking.

How are the money worries of an employee different than that of an entrepreneur?

And, even more importantly, will my money worries ever stop?

The money mindsets of the “employee” and the “entrepreneur” are diametrically opposed.

The employee sees money as something fixed and finite, doled out monthly or weekly by a higher power (the employer) in exchange for time (per hour, per day, per year). You get the same as everyone else with a similar job description, regardless of the effort you put in. If you’re lucky (or have a good union), you get a small increase each year, only to see it clawed back by increased fees, taxes and inflation. The only hope to get more money is to get a promotion or to work overtime. And someday, at age 60 or so, you retire and hopefully there is enough pension/RRSP/government aid/investment income to cover your expenses and survive until death…

Robert Kiyosaki has a great definition of wealth: “the number of days you can live at your current lifestyle level without trading time for money.

The entrepreneur mindset to money is the opposite of the employee. Money is elastic, with an infinite upside…and a total liability for the downside. Entrepreneurs build cash-flow systems, investing time, effort and money up front in the hopes of the machine generating cash over time. The entrepreneur loses sleep about how to keep the cash flowing, like blood coursing through the arteries and veins of this living creature that is the business project.

Many of my money worries happen when I confuse the “employee” and “entrepreneur” approaches to money. If I focus on what I have in the bank account, then I am in a crisis situation, because using the Kiyoaskian definition of wealth, I am not wealthy.

Like most solopreneurs,  I have not yet made the full transition from employee to entrepreneur. I am in a state of limbo where my main income still depends on trading time for money, getting clients and selling my services to them for a time-based amount (so much per session, per hour, per day or per project).

Trading time for money is okay at the early stages of a solopreneur project, but it is not a solution for the long term. I see too many solopreneurs in their fifties starting to realize that they are reaching a literal dead-end: the days they can continue trading time for money are coming to a close, either because they no longer have the energy to be out there hustling to get and to serve the next client, or worse, the market no longer values their time compared to the time of a younger (and probably more up-to-date) competitor.

This is something to lose a lot of sleep about.

And there is no easy way out of it. No matter what you may find about “building a seven-figure business” or adopting a “millionaire mindset”, the only way out is to complete the transition from Employee to Entrepreneur and build cash-flow generating systems.

Solopreneurs like you and me have a great asset: the experiential knowledge in our heads. It is this asset that allows us to consider jumping off the S.S. Corporate in the first place.

The easy part is to monetize our genius with a time-for-money model. But we cannot stay at this stage, because it is a dead-end. The next phase, one that takes lots of courage, effort, and every single penny you have, is to convert your knowledge into free-standing products and services that multiply the value of what you offer.

As an solopreneur, money worries will never go away, they are just different. When I start worrying about 15 or 20 years from now, when I am “supposed” to “retire” and survive on my nonexistent pension or social benefits… that’s when I panic. Because I don’t really ever intend to have much money socked away, even though every RRSP season the need to save for retirement is drummed into us.

But when I remember that I’m playing a different game, the “Cash Flow” game, then this specific fear subsides. The rules for the solopreneur are different. My money worries can shift to something more immediate: establishing the products and the systems that will generate cash flow independent of how much time I trade for money. Every time I earn money (or win the lottery), a good part of that will go back into my project to ensure I build solid systems for the long term.

One thing I know for sure. You could offer me a million, a billion, even One Hundred Trillion Dollars to abandon my vision and go back to a white-collar middle-management job, and I would refuse. I have chosen the entrepreneurial lifestyle, which has caused me to grow so beyond the box that to force myself back into a corporate cubicle would require amputating large parts of who I have become. I have burned the bridges to the employee world.

This is the dilemma of the solopreneur. I’ve signed onto a lifetime project, with no safety net to rescue me, no offramp to a corporate salary, and no retirement date. The price is the loss of certainty about where my next dollar is coming from. I can not afford to coast. So I have to move forward.

But in exchange, I’ve gained the freedom to transform my big vision into a legacy… and this is priceless.

For more information

The “thot” I tweeted that started my train of thought about this topic:
http://twitter.com/coachdavender/status/10974446076

And an article that I saw soon after “Is Your Small Business More Than Just A Job?” (NYTimes.com)
http://boss.blogs.nytimes.com/2010/03/29/is-your-small-business-more-than-just-a-job/

I like Robert Kiyosaki‘s “Rich Dad, Poor Dad” philosphy of building assets instead of liabilities (however I choose to build a cash-generating business first before diving into investing)
http://www.richdad.com
and the book
http://www.amazon.com/Rich-Dad-Poor-Money-That-Middle/dp/044656740X/

Another resource I recommend is Michael Gerber‘s “The E-Myth”
http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About/dp/0887307280
and the site http://www.e-myth.com

CAUTION: With Kiyosaki’s and Gerber’s books, even though there is a lot that I like about them, there is also a lot to be cautious about. If you want to discuss these books with me to find out more about what I recommend and what I don’t, simple give me a call or drop me a line…

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