Earlier this week, I had lunch with my 84-year-old dad, who has been an entrepreneur his whole life. He gave me a bright commentary on business that I will customize for you. He said, “Brent, there are three things in business that I could have done better. These are the three essentials for success in business.” Those three essentials, according to my dad, are:
1. Financial capital. The first essential for business success is to know your balance sheet. Everything in business starts with revenue. Financial capital is what is needed to start your business, sustain your business and grow it. Potential does not pay the bills. Only money in the bank is the fuel that runs your business engine.
Focus on building up your cash flow so you can begin saving money each month. Save a little every month into short-term investments, like a bank savings account; intermediate-term investments, like a mutual fund or portfolio of stocks and bonds; and then your retirement account. Ideally save 10% into each of those three areas, or 30% annually.
Minding your cash flow leads to a healthier balance sheet you can watch grow every year. This capital should be outside of your business and owned by you personally. Your ability to save money will lead you to building an emergency fund in the bank of six months of your expenses. This discipline of saving will help you build up a portfolio of mutual funds, bonds or stocks. Finally, you will begin to save money in a retirement fund.
You may want to think of it this way: for every year that you successfully save money like this, you can count that you put aside enough money for one year of retirement. Save for 25 years and build up about 25 years worth of retirement funds.
2. Human capital. People are the most important asset you have to grow your life insurance or financial services business. When you can leverage your time and talents and draw from other team members’ experience and wisdom, your company is bound to improve.
Typically, a firm will develop from a sole proprietorship to a small ensemble. This may grow to a larger ensemble or a partnership of some type. Guy Baker, MSFS, CLU, 2010 MDRT president, said the most important way to achieve and maintain Top of the Table status is to apply compound earnings as it applies to people. By leveraging your human capital, three people may accomplish the work of five and six may do the work of 10.
Understand the strengths of your team members, and help everyone work in their strengths. Everyone has God-given abilities that are as unique as fingerprints. By understanding the different way people work and creating an environment of teamwork, you can achieve far more than you ever imagined.
3. Leadership. Once you have assembled a team of people to work with you, you need to lead well. Leadership starts with you getting your head on straight. Every day, you need to remind yourself who you are and where you are heading. Affirm and recite positive things about your life and who you really are. Pray, meditate, worship, praise, surround yourself with successful people, read truth and remain positive.
Leadership is helping others reach their potential. Giving them hope and direction and belief is essential to business growth. Help your team to work out their differences as adults in a constructive way. Nurture your team into a cohesive, intelligent, positive unit of service and innovation. Keep the mission, vision and value of your firm in front of your team. You can achieve what you believe. Don’t give up.
These were the three essentials of success for business that my dad passed on to me last week. Keep building and protecting your balance sheet. Continue developing the human capital around you. Lead well. These three essentials should help you move your life insurance or financial advisory practice from good to great. All the best to you and yours!