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Is Your Business A Wealth Creation Vehicle or Is It Just Marking Time?

Are you really on track to get rich from your business or is your business at best simply providing you with a living. In this article we are going to take a look at the basic criteria for using your business as a wealth building vehicle.

The first question to ask yourself is whether or not you have a business. In order to help you answer this question let's look at the attributes of a business.

Here are the three most basic requirements for a successful business:

Requirement 1: The business needs to be providing a product or service, at a net profit, to an appropriately populated market.

The biggest mistake that small business makes when calculating net profit is that they include the working business owner's salary or drawings. If that business owner is actually working in the business then his or her salary is not part of net profit, it is a business expense.

To calculate whether or not the business is actually in profit you have to look at what the figures would be if the business was paying market value wages for the work that the business owner is contributing. If, after paying such wages plus all the other business expenses, there is money left over then that is profit. If not then the business is in loss.

If you are currently in a start up business then it may be unrealistic to expect to be in profit at this point in time but you need to be seeing hard and fast evidence that the business is moving toward a true profit situation.

Requirement 2: You need to be working on the business not in the business, or at least be progressing along a strategy to achieve this end.

If you are working in the business then you are self employed. Most self employed people are so busy doing the job that they are employing themselves to do, that they have no time or energy left to be working on growing the business profits.

The ideal position for a business to be in is that it can function profitably without you being there. If this is the case then you can spend your time and energy on developing strategies to grow the business profit rather than on keeping the business operating.

Requirement 3: There should be a pattern of sustainable net profit growth.

Unless you are already making all the profit you'll ever want then you need to have a genuine pattern of increasing net profits. Furthermore, you need to know why profit is growing so that you can ensure that the growth continues.

Let's assume that you have met all three of the above requirements. If you are going to get rich via that business then the business needs to have one, or a combination, of the following three attributes.

Attribute 1: The business is providing substantial profit in excess of what you are spending on your living expenses.

This is the most common business model. The business provides a substantial profit that you then invest in growing the business, or building or acquiring other successful businesses, or in some other form of investment, for example, property or shares.

Attribute 2: The business is a saleable business that can be readily sold at substantial profit.

With this business model you are looking to make your profit from the sale of the business. You are happy to reinvest all operating profits back into the business in order to grow the business as fast as possible then sell the business. Your whole focus here is making the business attractive to potential buyers.

Attribute 3: The business is in a position to be franchised or licensed at a substantial profit and there is a real demand for this franchising or licensing.

With this third model of business you are focusing on building operating systems, market place reputation and brand recognition. These are your true products. If your systems and reputation are good enough then you can franchise the business and make your profit from the initial and ongoing franchise or licensing fees.

Now to the original question of whether or not you are on track to get rich from your business. First determine which of the three models describes your business. Then look at the actual facts of your business structure and performance and look for the patterns. Then ask yourself if that business is progressing forward toward the particular goal for your business model.

If you are following the operating profits model, are you seeing a true net profit growth pattern?

If you are following the sale of business model, are you seeing a true growth in the factors that would make your business attractive to potential buyers and is that happening fast enough for your realistic potential sale profit to justify the time spent in building the business?

If you are following the franchise or license model, are you seeing a true growth in your brand recognition and market place respect and do you have systems in place that would allow a new business owner to operate a profitable franchise?

Most businesses are going nowhere because they have no business strategy and because they don't take a regular, honest assessment of the patterns in the business. Have the courage to assess your business patterns and then do what is necessary to get it on track as a wealth creation vehicle for you.

James Delrojo would like to help you by giving you his ebook "Unleash the Success Power of Your Mind" (valued at $27) completely FREE. Go to http://www.YourSuccessMind.com

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