Be an Investor. Not an Accountant.
Before I begin, I would like to point out that this post isn’t about poking fun at the accountants. But its more about getting people to think about adopting an investor mindset compared to that of an accountant where you see everything as an expense.
Accountants will be the first to tell you that how you classify your Cash Out makes it into an Expense or Asset. Expenses are kind of cash losses where you pay to get a product or service and can not be recovered. Assets are also purchased but provide sustained value over a longer period of time, and usually pay for themselves over time, depending on their classification and usage (Depreciation, etc).
Over the past many years, from my experience in sales and business, I have tried to make people think of using my services as an investment rather than expense. An investor has a long term strategic (growth or develop) focus and generally looks to reap the benefits consistently over a period of time. An expenditure has a short term non-strategic (survive) focus and generally looks to sell the business.
Investors tend to be risk takers and focus on intrinsic and extended value of a product – service compared to a less risky short outlook with little value and quick return on investment.
As a business owner, it is important to always prioritize what’s important based on urgency and need; but it’s also important to think ahead on building what your business will be in the next 2 to 5 years. If you’re in business and only worried about 6 months ahead, then your business will never grow nor will it be unique or innovative.
Here’s a quick comparison between the investment v expense mindset !
1. Investments can be risky but can pay higher ROI if planned and executed well.
2. Investments are based on solid advice from experts rather than gut feeling or tips for friends & family.
3. Investments are usually higher cost but pay their value over time through consistent ROI whereas expenses are usually sunk costs.
4. Investing in people is the smartest move and can be the best paying USP for your business provided you train and keep them in employment long enough to derive value from their ideas, enthusiasm and efforts.
5. Invest in self by putting value on what is your personal brand, and what changes you can make to influence your audience better, and present yourself as credible and an expert.
6. People who view things as investment tend to make 30 – 40% more profits than those that see things as expense (Higher Risk = Higher Reward).
7. Entrepreneurs and creative people make up the majority of investor-type mindset compared to non-investor type.
8. Arts and entertainment are the best paid investments over the past 30 years compared to share market, property and foreign exchange (based on ROI v Risk).
9. Investor type mindset is a positive trait in leaders and champions who are open to trying new things, and create new paths rather than follow others.
10. Losses and failure are seen as part of the process, rather than the stumbling blocks by those with this mindset. They fail more, but over time, as more successful.
Investor type mindset was the reason why the UK and US led the world in building infrastructure and economy. Over the past few years, China and India have adopted that mindset and are seeing themselves attracting more revenue from overseas as it’s seen as positive, empowering and change enabling.
A quote I always remember is, ” Millionaires have million dollar problems. And Billionaires have billion dollar problems”. It’s not the amount of money that defines your attitude but your mindset that sets the ground for what’s possible. Most rich and successful people invest in their people, their processes, their products and their marketing – branding to leverage the maximum value over a long term.
Be Smart. Be Patient. Be an Investor.