Blair Singer walks through financial definitions for entrepreneurs starting fresh in 2021. Sales equal income, income equals cash flow, and every expense, asset, and liability should create income. He names poor communication as the biggest liability holding businesses back.
Okay, so going into 2021 from a financial perspective, start with a clean slate. Clean slate. Clean slate means clean definitions. Here are the definitions. Keep in mind, write these down and use them as a guideline for the rest of 2021 and you'll be in great financial shape if you're an entrepreneur. Okay, number one, sales equals income. Sales equals income. If you can't sell, there's no income. That's where the of your business, the lifeblood of it. Okay, so sales equals income. Now the purpose of income is to create cash flow. So income equals cash flow. Right? So income isn't to be spent necessarily. Income is to create cash flow. And we'll explain that in a second. Number three, expenses. The purpose of an expense. Listen to this. This is courtesy of Tom Wheelwright. One brilliant rich dad advisor says that the purpose of expense is to create income. Purpose of an expense is to create income. Not for anything. If you're, if your expenses are not creating income, get rid of the expense in 2021. Do yourself a favor, go through your numbers and take a look. That could be an eye opener. Okay, now an asset. Let's go to the balance sheet. An asset. Purpose of an asset. An asset being property, could be intellectual property, could be equipment, could be a lot of different things. But the purpose of an asset is to create income, not necessarily to appreciate in value and all those things. But if you're going to be rich, if you're going to become financially free, if you're going to be able to support your business. Purpose of an asset is to create income. So then what's the purpose of a liability? Great. Purpose of a liability is to fund or create an asset. That's it. Now going through these definitions, if you've got liabilities that are not creating assets, you probably want to take a second look at that. If you have an asset that's not creating income, you better take another look at that. If you have an expense that's not creating income, take definitely want to take a look at that. And if your income is not creating cash flow, and what I mean by cash flow is a steady flow of surplus income after all your expenses. If you don't have that, then why are you even in business? And of course the lifeblood of the whole thing is sales equals income. Last piece of financial clean slatingness. Getting on base. We talk about income and expense. Talk about balance sheet assets. Your two most powerful important assets are, number one, your brand. Your brand, who you are as a person, your reputation, your consistency, what you deliver what the community sees you as. I think Warren Buffet said it really well. He says 20, 30 years of building a reputation can be destroyed in minutes. And when you start thinking about that, it changes the way you operate. So think about that. Your brand is critical because your brand creates income, asset. You've heard me say this many times. It's your team. Your team is your greatest asset. A small entrepreneurial team can take on the world if they're an aligned team driven by a mission code of honor and a core set of values and great leadership, of course. And on the liability side, your greatest liability is the lack of communication. Your inability to communicate, your inability to communicate with your teammates, inability to communicate through sales and marketing. But probably the most critical communication of all is you. Communicating with you, that little voice between your ears, that's your biggest liability. Okay, so with these financial terms going into 2021, understanding them, applying them, and if you have any questions, for sure, ask me, go to blairsinger.com. ask me any question that you can about them. I'd be happy to answer them. Or talk to the advisors and have them answer them for you. Understand that 2021 could be the best year of your financial life. Be amazing.
