Where Millionaire Entrepreneurs Put Their Money
Are you making a huge mistake by leaving all of your company’s money in a business checking account? Millionaire entrepreneurs know that, after expenses, it’s time to make your money work for you.
In this episode, Chris explains exactly where you need to put your money to maximize your business and meet your goals.
He shares where your money needs to go in each stage of growth, including specific investments you must be making.
You’re missing out on valuable returns and opportunities to skyrocket your company growth and personal wealth.
Tune in for the secrets you need to know if you want to use your money to be built to grow.
Our business is a vehicle to get us to the life we want to live.
In this Episode:
- How much money you should really be keeping in your business checking account
- How to set up a buffer account to protect your company and its assets
- Where you need to invest to grow your business after you have a buffer account
- The best way to invest in relationships with your clients to maximize your business
- Invest in what you know: How to determine your next area of investment
- One-off investments you need to make with leftover funds
Find out exactly what aspect of your company is the current weak link that, if fixed, will help you scale faster and more successfully.
Enjoy the show? Check out the most popular episodes of Built to Grow!
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- Avoid These Culture Killers
What do you do with the money that’s left over after expenses are paid in your business?
You know more than half of all business owners leave their money in their business checking accounts? I mean everything, right inside their business checking account.
What Millionaire Entrepreneurs Do with Their Money
But millionaire entrepreneurs don’t do that. In fact, they bust their butt to keep making enough money to keep achieving bigger and bigger and bigger goals with their money.
And that’s what we’re going to go over and we’re going to dig into in this episode of Build to Grow.
It’s true that most millionaire entrepreneurs don’t know where the best places to put their money that’s coming into their business.
And the sad fact is that most people get stuck spending so much time in their business. But in reality, our business is just a vehicle to get us to the life that we want to live.
So it becomes far more important to grow that business to the point where it’s funding every aspect of our life that makes us happy and more fulfilled. And that doesn’t mean that our business is not vital because, as millionaire entrepreneurs, our businesses are probably the best tool that we’ll ever have to get everything that we want in life.
Growing Your Revenue
But as you grow, and as more revenue comes in and in and in and in, you need to know how to best use that revenue so you can keep growing. And when I’m talking about growing, I’m referring to boosting your company growth and your personal wealth so you can do what you want when you want to do it.
And this is not accounting or legal advice; I’m just going to share with you, if it’s okay with you, I’m going to share with you the best strategies that I and the fastest growing companies that I work with know about where to invest our money as it comes in.
First Step: Setting Aside Six Months of Buffer
And the very first step is that all of our businesses have at least six months of buffer built in, and that money is usually kept in an easy-to-access account, kind of like a money market account or something like that.
So we may keep enough money in our business checking account, maybe for two months of expenses, and then everything else flows into a money market account up to the point where we have enough to fund six months of expenses in case anything goes wrong.
Second Step: Invest Your Net Revenue
And then after that, we invest our net revenue into growing the business using proven growth models that attract more or better or larger clients through things like maybe additional advertising or increasing our reach with social videos like this one.
And then we invest in growing our existing accounts through relationship marketing, like entertaining clients or sending gifts to our current clients. Things like that make our current relationships stronger.
And I detailed our full acquisition model and how to locate and negotiate buying other companies in the episode titled Acquisitions Made Easy. So if you’re interested in acquiring one of your competitors, then you need to watch that video.
Invest in What You Know
Now, after we pay expenses and then set up a small buffer account and then do something to maximize our growth on that specific business, like I just described, then I invest in what I know. And I don’t know much about the stock market.
I don’t know much about flipping houses or gold and silver, but I know how to grow companies. That’s what I’m good at and what I have a strong track record doing.
So our next area of investment is in other companies that fulfill the following two requirements. And again, I am only doing this because it’s what I know. If you’re great at real estate, then the next area would be put something into residential real estate.
But when I invest in a company, they’ve got to fulfill these two requirements: Number one, I have to have a strong core competency that will greatly benefit and grow that other company. And the company, it has to be owned and run by a great leader who I feel is a quality person and who could handle growth. Because I get asked to invest in companies at least once every single week, and the only time that I allocate company funds to investing in someone else’s business is when I like the leadership in that company and I believe I can help grow that company with the expertise that I have.
And our ownership or equity in the company varies according to the amount of time and resources that they need from me, meaning greater need on their end equals a greater percentage of ownership on our end.
Be the Guardian of Your Company
And finally, there are a handful of one-off investments that millionaire entrepreneurs make. Like, maybe, for example, commercial real estate because — and that, and by the way, that differs from what I said before, which was residential real estate. I don’t know anything about residential real estate, but with commercial real estate, I don’t really need to have a core competency there if I have strong connections who have great core competencies in commercial real estate.
It’s a different animal because if a company has a half-a-million-dollar tax burden at the end of the year, rather than paying that half a million in taxes, we might go out there and buy the building that our office is in, or invest in another qualified piece of commercial real estate that’s related to that business, because then a portion of that money which was going to go to taxes can go directly into the real estate owned by that company and that’s a big tax relief.
Plus it grows your company assets and your company value.
Now, that’s just maybe a five minute overview of investments, but I hope it gives you an idea of how to be smart with your money. Sit down with your accountant and look at places to put your revenue so that that revenue is constantly growing. Because just putting your revenue into a bank is like pouring water into a bucket with a hole in it.
You — your job is to be the guardian of your company, and that includes guarding your money and setting up some simple rules for it to grow automatically.
MEET CHRIS GUERRIERO
Chris is an entrepreneur, investor, bestselling author, and advisor to a handful of high growth companies.
He has built four 8-figure companies, developed winning leadership teams in six industries, and designed business systems that predictably grow multi-million dollar brands.
He’s been featured in financial periodicals such as: Success, Inc, Bloomberg TV, and in Entrepreneur as a top entrepreneurs of the time.
In addition to his own companies, Chris is also an advisor, investor and equity holder in companies across a variety of industries, including health, medical, digital advertising, legal and real estate.