As someone who mentors entrepreneurs with fast-growing businesses, it’s a topic that comes up often. There’s no shortage of options, either: real estate, stocks, startups, cryptocurrencies, to name a few…
You want your money to work for you.
Only so much cash in the bank only makes so much sense.
Plus, if you keep hold of it, in time you’ll have to hand it over to the tax office.
So you invest. It’s not a case of if you should, but rather when and where. This is how you turn some cash into a lot. It’s also how you set your family up for long-term success.
HOWEVER…
There’s one important piece you’re forgetting about, and that’s that you are an entrepreneur. You don’t have a 9-5. Much of the advice out there is for those with a predictable salary. That isn’t your reality. You need to play by a different set of rules.
Once I understood this, it changed everything.
Not just for me personally, but my businesses as a whole.
So if you keep finding yourself wondering where and how you should invest your money, but you don’t fit the 9-5 situation that almost every financial advisor and piece of content you come across seems to focus on, keep reading because I have a few important truths to share with you…
This is What We’ll Cover:
- When To Invest in Your Business (and HOW You Should)
- Profit vs Growth: The Constant Balancing Act
- What is Growth Mode
- What is Profit Mode
- Profit vs Growth: Conclusions and Next Steps…
When To Invest in Your Business (and HOW You Should)
As an entrepreneur/business owner, you have to ask yourself three important questions right now:
- If you had a million dollars to invest, would you invest it into your business?
- Do you think you’ll remain an entrepreneur for the rest of your life?
- Who do you trust to make more money, yourself or someone else?
The world’s obsessed with investing. But rather than encouraging people to invest in themselves, everyone seems to advise you to hand your money to someone else because it’s safer.
Look, I’m not against investing in stocks, cryptocurrencies, etc…
I find these topics interesting and have dove deep in the last few years.
BUT I do not invest much money into them (only around 30% of what I reserve for investing, and that’s only risen so high in the last few years as my personal wealth’s grown).
It all comes down to control.
If I invest in my business, I have a degree of control.
If I invest outside of my business, I don’t.
I know investing in real estate, for example, will yield great results over a long period of time. But I don’t control this. So it cannot come at the expense of me investing in my businesses—something I do control.
Yet this is what most entrepreneurs do. Maybe you’re on them. If you are, don’t worry. You’re not alone. In fact, most people struggle with this—including me—and it largely comes down to your mindset.
Re-read those three questions above …
- Would you invest in your business if it wasn’t yours?
- Do you plan to commit to entrepreneurship for the long game?
- Do you trust yourself (ie: believe in yourself) to succeed?
Often, we invest in things like stocks and crypto because we fear we can’t match their returns. Even if you have a fast-growing business, you assume at some point it will hit a brick wall. As such, it feels safer to hand your hard-earned money to someone else. You’re basically passing over the responsibility.
Think about how insane that sounds…
You have a growing business, but rather than invest in it, you invest in someone or something else. Is that how you’ll achieve your dreams? Is that how you’ll fulfill your vision? Is that really what you want?
Realizing this changed everything for me. It flipped the script.
It isn’t that investing outside of your business is bad. Far from it. It’s a great way to diversify your wealth. BUT it cannot come at the expense of your business. Your business needs your investment: time, effort, and money.
The key is to realize what kind of investment it needs at any given time.
Because, as with most things in life, your business goes through seasons. Sometimes you need to focus on profit. Other times, growth. It’s a constant, ever-evolving balancing act.
Understanding how (and why) this works changes how you play the game!
Profit vs Growth: The Constant Business Balancing Act
Your business is unique. Not only that, the journey you’re on is unique.
It’s impossible to compare yours to another, and pointless to try and replicate it. You have to embrace the path you’re on and appreciate it twists and turns. You can plan and strategize, but it only takes you so far.
It’s a constant balancing act of:
- Paying yourself and those on your growing team…
- Generating new leads and delivering on your promises…
- Marketing/sales versus operations…
- Take care of today and identify how you’ll level up tomorrow…
It’s like placing objects on this scale but having no idea what each object weighs …
You place one on the left and counter it by placing another object on the right. Through trial and error, you balance the scales for a few minutes. But then a breeze tips one side, sending you reaching for new objects.
This is your life as an entrepreneur.
Your business goes through seasons, sometimes requiring you to commit to growth and other times focusing on profit. Investing in your business is important in either situation. But how you invest changes.
Knowing this helps you identify bottlenecks, as well as opportunities.
It all gives you the confidence and belief to bet on yourself.
As I say, it changed how I play the game. So let’s dive deeper and explore how these differ…
What is Growth Mode
Growth mode, as the name suggests, focuses on growing and scaling your business. The details of this can take on many forms:
- Investing in and growing your team
- Building exposure through PR, social media, omnipresent ads, etc…
- Acquiring new businesses in your industry/niche
- Purchasing new equipment and/or tools
- to name a few…
In short, growth mode requires you to invest your time and money into your business—either directly, or indirectly by investing in your industry/niche.
Growth needs energy. Your money, sure, but also your time and commitment.
So don’t only think that this is about money.
Money plays a large role. But it isn’t the only factor at play.
As you can imagine, I’m a huge advocate of Growth Mode. For starters, it helps you have a bigger impact on those you serve. You reach more people. You make a difference. Yet it also prevents complacency from sneaking into your life.
If all you do is sit on money and invest it in stocks, your business loses its appeal.
Whereas a strong commitment to growth keeps you heading toward something important.
Yet this isn’t to say Growth Mode is always the right mode. I come across many entrepreneurs who continue to grow for the sake of it. They make more money but have no idea what to do with it. So they hire a few new team members, throw more money at paid ads, and invest in the latest trend.
I used to do this. It’s a large reason I ended up with over $1 million in debt!
I grew for the sake of it. I felt like I had something to prove. I figured if I wasn’t growing, I was failing. But growth with no vision or direction leads you nowhere. So as great as Growth Mode is, it has to have a purpose. It needs to lead somewhere, and the timing has to be right.
When To Commit To Growth Mode
In my experience, too many entrepreneurs drift away from Growth Mode too soon. They make a little money and focus on profits—as we explore next.
Yet all you do here is take a step back just as you’ve built momentum.
And building momentum isn’t easy. It takes time, money, and a lot of effort.
Let alone a little luck and fortune along the way.
So before you go further, consider the following questions:
- Do you believe in your business and how you help your customers?
- Do you believe in your industry and where it’s going in the next five years?
- Do you still have room to grow inside this industry/niche?
If you answer “YES” to these questions, chances are you need to focus on growth.
Maybe that involves investing in your business. Maybe inside your industry.
How and what you invest in differs from situation to situation. In my experience—both with my own businesses and when mentoring others—sales and marketing is where you should place your focus, followed by operations and delivery.
Yet this isn’t a universal truth.
Your situation is your situation.
You know your business better than anyone. At least, you should know your business better than anyone. More than this, you need to know your industry inside and out. The better you do, the easier it is to invest in the right things at the right time.
What is Profit Mode
Although many entrepreneurs drift away from Growth Mode too soon, it isn’t to say Profit Mode isn’t as important. In this phase, you take a step back and regroup. It isn’t that you don’t spend money, you just do so differently by:
- Investing in stocks, real estate, and other external businesses/funds
- Paying out dividends or bonuses to you and your partners
- Spending more time on planning, strategizing, and making your business more efficient
I went through a period like this in 2020, making more than $5 million and enjoying profits in excess of $4 million. This happened because I worked with certain businesses one on one and spent this time exploring what I wanted to do for the next few years.
I had an idea, but it wasn’t clear.
So I took a step back. I gave myself time to recharge and think. I came up with a plan.
I could have kept spending money and pouring it into growth for the sake of growth. But there was no point to it. I’d have simply wasted that money because I didn’t have a clear vision for it.
So I invested that money in my lifestyle (buying my family home) and in cryptocurrencies and stocks. I still wanted my money to work for me, but during that period putting it in my own business didn’t make sense.
Profit Mode brings a lot of benefits, as you can imagine…
For starters, it provides you and your family security. You don’t have to worry about paying bills, which is possibly a welcome sight after a few years of grinding the startup gears.
Yet Profit Mode brings many issues, too…
Much of this comes back to your mindset/outlook. You choose to invest your money in other people/businesses at a time your own needs it. Maybe it feels safer this way. As previously discussed, maybe you trust others with your money more than you trust yourself…
When To Commit To Profit Mode
In general, Profit Mode feels safer. Much of the advice you’ll receive guides you toward it. And for most people who have 9-5 jobs that provide a predictable career path and salary, it makes sense.
But you’re an entrepreneur.
This is NOT your reality!
All this phase offers is a false sense of security. It keeps you still at a time you often need to smash through the next glass ceiling. So take some time to reflect on the following:
- Do you have a clear vision for you/your business over the next few years?
- Is there room in your industry to grow and make more money?
- Are you able to comfortably cover your current lifestyle each month?
If you can answer “YES” to these, chances are Profit Mode isn’t for you (right now).
I focussed on profit during 2020 because I didn’t have a clear vision for the future. I needed to take some time to reflect and come up with a plan. This allowed me to double down in 2021, where I invested a lot of money in growth—my profit margins went from 70-80% to just 30-40%.
And that’s the real point here… you and your business go through seasons.
Sometimes you need to focus on growth. Other times, profit.
What matters most is knowing which mode you need right now!
Profit vs Growth: Conclusions and Next Steps…
If all you do is commit to Growth Mode, you’ll likely burn out and watch as your business crumbles to the ground. Whereas if you only ever focus on Profit Mode, you’ll stifle your business and grow complacent.
One isn’t more important than the other. But one is more important at any given moment!
That’s the all-important question here… which mode should you be in right now?
Throughout the years, you’ll transition from growth to profit and back again. A focus on profit allows you to create a plan and save up for growth. Growth then allows you to break through a few glass ceilings before you have to step back, stabilize, and repeat the process once more.
As a human being, you likely feel more comfortable in one mode over the other.
This is fine. But you cannot use this as an excuse. At times, you need to step out of your comfort zone and confront the one that you resist.
When your business needs to grow, you need to drive this growth.
When it needs to take a step back, you have to take control and slow it down.
It’s all about making the right decision—for you, your business, your team, and your customers.
I had to learn all this the hard way. I spent years growing for the sake of growing. It left me miserable and in debt. Today, I have greater control over the situation. I invest outside of my business and industry, but I do so in a calculated way.
For the most part, I believe in myself, the business I’m building, and the industry I’m in.
This is where I place most of my focus. But how much depends on the season I’m in.
Sometimes Growth Mode… others times, Profit Mode.
Much of this comes down to you identifying your current situation. You’re a human being with a past. You have a series of limiting beliefs you may or may not be aware of. You commit to certain truths that might not be true. All these control you unless you make a conscious effort to control them.
That’s what most of this is about.
It is about you regaining control!
Not just about the situation you find yourself in now, but your relationship with money and finances as a whole. If you’re like most entrepreneurs I work with—including who I used to be—it’s this that holds you back. You are in a battle with yourself, caught between what you need to do and what you fear.
It’s why I created this new program, specifically designed for entrepreneurs…
Just about every piece of financial advice out there DOES NOT apply to entrepreneurs.
It’s meant for those with predictable salaries, career paths, and situations. That is not you. It never will be—not so long as you commit to building and scaling your own business.
Profit Mode vs Growth Mode is only one piece of this puzzle.
The 60 Day Finance Upgrade For Entrepreneurs covers this and much much more!
Visit this page and explore the practical and essential benefits this interactive program offers…
But above all, reserve some time to reflect on this article.Don’t just read it and move on. Right now, your business needs you to make a commitment: growth vs profit. As the captain of your ship, it’s on you to make the right decision. Don’t close your eyes to this responsibility. Embrace it and commit to making the right call!
