A serious mistake an entrepreneur can make is identifying with their own business. It leads to bad management decisions and puts psychological barriers in the way of growth. In particular, it can strongly shape how the profit is distributed.
For a long time it seemed to me: “Why set aside part of the income? Better to leave that money in the business.” I thought that taking money out of Alisa, my store, meant taking it from myself, not believing in my own strength, in success.
My experience confirms what the gurus keep repeating: you must take money out of the business! And as early as possible.
Once it makes its first relatively large profits, the business left to itself will most likely spend them badly. I was “investing in working capital”, and it turned out I was bloating the warehouse. The result was a pile of dead stock, and no money for new products.
If the owner doesn’t take the profit out of the business, the money leaks away unnoticed. You easily decide on extra expenses that seem small. You’re less critical of big investments. As a result there seems to be a profit, yet there’s still no money.
On the other hand, if the owner takes the money out and only then considers specific opportunities to reinvest, the attitude to “promising projects” is completely different. Your demands on the return grow along with your vigilance.
You and your business are separate entities. A business becomes a business when it stops being part of its owner. Until then, let’s not fool ourselves, it’s self-employment, nothing more.
To sum up: develop the right attitude to your business. Raise it like a child. Cherish it and pamper it, but don’t let it get lazy. Teach it and, if necessary, put it on a strict diet. Distribute the company’s profit, even if you’re the sole owner and not listed on any exchange.