Apart from loving to read about successful business owners, I was particularly fascinated by this story because she said that she still fears failing financially, and wakes up every morning with a sick feeling in her stomach with the fear that she could lose it all.
How interesting is that? If Michelle Mone, one of our leading entrepreneurs feels like this, what hope is there for the rest of us? Actually it made me feel a little less dysfunctional and paranoid that it’s not just me! (It also made me feel like a total loser because she’s a year younger than me!)
It’s been going round and round in my head all week. Is this fear what keeps her business successful? And is it a healthy perspective or could it be damaging? Does it get us to play safe so we don’t risk what we have, or drive us to take more risk?
Obviously that’s going to vary hugely from person to person, and I think will be influenced by whether we have a scarcity or abundance mentality. I know I fight my tendency towards a scarcity mentality. Most people know my story; around 22 years ago l lost my house at the age of 21, and my parents lost their home and business. So financial security is very important to me, and Michelle Mone left school at 15 with no qualifications and a poor background so I guess we can see where her inbuilt fear of losing it all comes from.
So can we ever get to a point where we do feel safe? What would it take for us to settle that fear of losing what we’ve built and are building?
There’s a lot we can do
Well of course I’d say that, but the reality is there are lots of things we can do to build the financial security around us. We can do the obvious practical things; put plenty of money away into ISAs, pensions and investments, work up to having 6 months personal living expenses set aside in cash, at least 3 months’ business overheads in a reserve account. Do I really need to say that you should always have your VAT and corporation tax in a separate account? Never use this as part of your cashflow – a guaranteed way of not feeling safe is owing money to the tax man!
Protect your business from shocks and surprises by having fantastic management information that lets you see as far as possible into the future. The further ahead you can see on income and cash, the safer you’ll feel to drive your business forward. Free up the mental energy from worrying about losing to focus on growing and protecting what you have.
“Money is hard to make and easy to lose
And we shouldn’t become complacent” is Michelle’s view on her wealth and I think is a really good leveller. Whilst we don’t want to be driven by fear unnecessarily, we really do need to be conscious that long term business survival rates are LOW. The chance of your business becoming 5 years old is only around 40%. So the fear of failing is something we should take seriously and do all we can to protect against. Your business surviving this far is no guarantee it will continue to.
The biggest single way to keep your business safe is to keep cash. When you make good profits keep cash in the business, build up your buffers. Remember that cash buys you choices and options.
So my conclusion in all of this is that fear is part of what keeps us going but we need to keep ourselves in check and make sure we’re not coming from a scarcity mentality but one of abundance. We need to make sure we don’t make our decisions from a place of fear.