A common trope among athletes and musicians at the height of their careers is to spend money by the truckloads. Given a few more years, many of these superstars file for bankruptcy, end up on the streets, or resort to much worse just to stay on top.
All books and experts relating to the topic talk about the same thing: plan ahead financially.
The stakes are almost identical when it comes to businesses because entrepreneurship is essentially a gamble. We can analyze the factors all we want but a business is just one bad day away from going bankrupt. That is the problem with inconsistent income. An article by Paul Sullivan for the New York Times talks about the need to be aware of this often unseen route. A lot of people who come into a lot of money usually end up losing it.
So Sullivan recommends covering your losses. If you’re in debt or are yet to close off your capital, don’t dive into more debt with the hopes that the payout will be greater. Be mindful of the fickleness of the market.
That’s a surefire way of Investing in long-term financial security. While those in employment can count on their checks to come in each month, entrepreneurs have to go out there and get it themselves. This often leads to a ‘get more’ mindset where income today serves as capital for tomorrow’s venture. On some days you earn twice the amount you were hoping for; on others, you actually lose more money than you’d get. This is the pitfall that many starting entrepreneurs mistakenly receive from lottery winners or once-in-a-lifetime success stories. That is not the case 99% of the time.
Be smarter with your finances. Do away with unnecessary expenses, forgo unnecessary risks. An inconsistent income against consistent expenses is the life of an entrepreneur.
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