Achieving financial freedom from your business: Financial Independence

A person becomes independent in their business by building assets.

Financial Independence

How does one become truly financially independent with their business?

Your main goal as a business is to build assets and then revenue from the assets (rather than building revenue directly). If you have just a product or service you will eventually hit the maturity and decline phase. However, when a business builds asset and then creates system around the asset to generate revenue, the business is sure to become a source of FINANCIAL FREEDOM. It also is a business that the business owner can sell if he or she so chooses to.

Assets could be tangible or intangible. When a business owner takes the time to develop systems so the revenue production process is not dependent on him, then he or she has built an intangible asset. This asset can be used to support the owners retirement goals.

Consulting/ Freelancing Model

In the freelancing model, the business owner derives revenue directly from the customer as shown in the diagram below:

become truly financially independent

The problem with this model is revenue is not preserved in assets. Therefore, as soon as the business owner walks out, the business dies also. This model cannot be used to preserve future revenue unless the owner was wise enough to take money out of the business to invest in other assets capable of meeting future retirement needs.