Scott’s Thoughts

When should you “take out” money of your biz?

When should you “take out” money from your business?

Some people are going to say… pay yourself first…

Others are going to tell you to invest as much as possible outside of
your business.

It makes sense…

because, the answer is…

it depends.

So… what does it depend on?

These are the questions, I tell those I mentor that are deciding how to
invest in the future of themselves and their business…

Q1: What is the potential growth of your business in the next 3 years?

Q2: What do you need to spend money on in order to help it grow?

Q3: What potential return is that growth look like in terms of profit?

Q4: Would you invest actual money in your business, if you were an
investor?

Q5: Is there a tipping point in which investing more, won’t mean more
growth?

Q6: What’s the end-game of this investment? Do you want to get “out”?

Q7: If not investing in your business, where would you invest it? Why?

Q8: What’s influencing your beliefs of how you just answered those
questions?

Now…
Truth is…

I don’t believe most Entrepreneurs, if they are believe they are going
to have more than 40-50% growth, year over year, should take their money
and invest externally.

I’m sorry.
The market, crypto, real estate, or anything else isn’t going to have as
good returns.

But… “DIVERSITY”?
Yes, I’m all for that.

ONCE you have something that actually works.
And it’s much easier and faster to get something that works with focus.

Once you ask those questions, it’s really simple to understand where to
put your money.

Where to invest, inside your business.
When you start taking money out.

Generally? It’s best to take money out, when you simply don’t have the
ability to invest it inside of your own business because it won’t have
continued returns.

Further, it’s best to start taking money out, if you believe the
industry or market will start either decreasing, or the ability to
capture market share will be more difficult within 3 years.

As an example: In 2020, I simply didn’t have the ability to invest more
money into my business. So, I started for the first time, I doubled-down
on investing outside of it.

Why?
I had a limited product, no need for a larger team and a wait-list that
was over 6 months long.

Investment into marketing and sales, wasn’t needed because no matter how
many people I showed my “stuff” to… I couldn’t take more clients…

However, I knew that the way I wanted to do business was changing and so
in 2021, I made a larger investment back into the business to change the
way I did business.

Going into 2022 and because I have an extremely positive outlook for my
industry for the next 7 years, I’m increasing the investment inside of
the business, along with the fact that I now have business that has the
ability to keep up with scale, without having to resort to a wait list,
as much.

One last point for you… where do you invest the excess capital?
My best piece of advice, comes from a Billionaire that mentored me when
I was 17.
“Don’t invest in things you don’t understand. If you don’t have unfair
advantage with an investment, I can almost guarantee it won’t give you
the return you desire”.

🙂

  • Scott

Written By Scott Oldford

Updated Weekly

Four Frameworks

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