The global financial crisis has a money-making silver lining for entrepreneurs.
The idea of a "silver lining" comes from the old proverb, "Every cloud has a silver lining". The proverb looks for some unexpected good outcome following some bad event.
For many entrepreneurs, business owners, real estate investors, and wage earners, the financial crisis is all too real, leaving millions with devastating losses.
What is the silver lining in all of this?
The good outcome following the bad event of the near-collapse of the banking system is that most of us know more about banks and banking than we ever did before.
Why does this knowledge help people in business?
Bankers know the difference between "making" and "earning" money. In common speech, people often treat these terms as equivalent.
Yet, the most basic meaning of "earn" is to receive payment in return for effort. In contrast, the basic meaning of "make" is to "bring something into existence". This means that "make" is equivalent to "create".
According to this distinction, when you "earn", you receive payment for your efforts, in the form of wages or salaries.
You receive compensation, but you do nothing to increase the amount of capital in existence. In contrast, when you "make money", you also increase the amount of money in the economic system.
The most important financial insight business entrepreneurs can learn from bankers is that bankers know that they are in the money-creation business.
And this is where many non-bankers get off track. Every business is in the money-creation business but not all entrepreneurs and business owners understand this.
Businesses get off track when they think that they are in the carpet cleaning business, or the real estate business, or the publishing business or any other type of business you can imagine. You are not in business to clean carpets, or buy and sell real estate, or to publish books.
The carpets and the real estate and/or the books are means to make the business profits, but they are not the real objective of the business.
Business is all about targeting your cash-flow and projected earning/profits (short-term, medium term and long-term).
The real objective of any business is to "make" money (referred to as profit)
This is where business owners get distracted. They get so involved in the means to accomplish this financial objective; the carpets, the real estate, and the books that they forget that they are in business to "make" money by providing something of value to potential buyers.
As financial guides, the bankers also got distracted. They knew that they were in business to manufacture money, but they ignored the critical element of value.
Business is not about telling the whole that you're a businessman; it's all about making alternative income and generate as much profits as possible.
How the banks ignored value in their relentless quest to increase profits is another story and doesn't change the most important lesson entrepreneurs can learn from bankers?
Business do not necessarily landed at the pub and/or karaoke all night long or every night; it's about public relation or when it's truly necessary and a mission to secure a contract.
For entrepreneurs, the most powerful silver lining behind the devastating financial losses of the banking meltdown is to think about your business with the money-making mindset of a banker. Business is not about spending lavishly but compounding your profits.
Thank you
The idea of a "silver lining" comes from the old proverb, "Every cloud has a silver lining". The proverb looks for some unexpected good outcome following some bad event.
For many entrepreneurs, business owners, real estate investors, and wage earners, the financial crisis is all too real, leaving millions with devastating losses.
What is the silver lining in all of this?
The good outcome following the bad event of the near-collapse of the banking system is that most of us know more about banks and banking than we ever did before.
Why does this knowledge help people in business?
Bankers know the difference between "making" and "earning" money. In common speech, people often treat these terms as equivalent.
Yet, the most basic meaning of "earn" is to receive payment in return for effort. In contrast, the basic meaning of "make" is to "bring something into existence". This means that "make" is equivalent to "create".
According to this distinction, when you "earn", you receive payment for your efforts, in the form of wages or salaries.
You receive compensation, but you do nothing to increase the amount of capital in existence. In contrast, when you "make money", you also increase the amount of money in the economic system.
The most important financial insight business entrepreneurs can learn from bankers is that bankers know that they are in the money-creation business.
And this is where many non-bankers get off track. Every business is in the money-creation business but not all entrepreneurs and business owners understand this.
Businesses get off track when they think that they are in the carpet cleaning business, or the real estate business, or the publishing business or any other type of business you can imagine. You are not in business to clean carpets, or buy and sell real estate, or to publish books.
The carpets and the real estate and/or the books are means to make the business profits, but they are not the real objective of the business.
Business is all about targeting your cash-flow and projected earning/profits (short-term, medium term and long-term).
The real objective of any business is to "make" money (referred to as profit)
This is where business owners get distracted. They get so involved in the means to accomplish this financial objective; the carpets, the real estate, and the books that they forget that they are in business to "make" money by providing something of value to potential buyers.
As financial guides, the bankers also got distracted. They knew that they were in business to manufacture money, but they ignored the critical element of value.
Business is not about telling the whole that you're a businessman; it's all about making alternative income and generate as much profits as possible.
How the banks ignored value in their relentless quest to increase profits is another story and doesn't change the most important lesson entrepreneurs can learn from bankers?
Business do not necessarily landed at the pub and/or karaoke all night long or every night; it's about public relation or when it's truly necessary and a mission to secure a contract.
For entrepreneurs, the most powerful silver lining behind the devastating financial losses of the banking meltdown is to think about your business with the money-making mindset of a banker. Business is not about spending lavishly but compounding your profits.
Thank you
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