Bill and Okoth are friends and have met to catch up. Okoth is a business owner and Bill is a successful corporate lawyer at a global organisation. As often does when people meet up the conversation turns to money. In this particular instance, there’s a story on social media about someone who has bought a car in cash for seven million shillings, which is by any standard a lot of money.
Bill goes on and starts talking about the absurdity of being able to come up with that kind of money and how very few people would be able to do it. He says he could never fathom spending that kind of money on a car and definitely not all at once. He even suspects that the person may have done something illegal. Bill is very senior in his organisation and earns a staggering one million shillings every month. Even then a seven million purchase beats his understanding. Okoth on the other hand is unmoved by that amount. His car is nowhere close to the kind of car in discussion. Bill actually drives a more luxurious car than he does. He does not earn anything close to what Bill earns. His regular salary from his business is about Ksh. 200, 000 per month. If the business does very well he can sometimes get more but also in bad times he may not even be able to pay himself anything. Despite that he does not think that it is that hard to raise seven million shillings.
The question is why do Bill and Okoth who are in the same social circle think so differently about this? Well, the reality is business people have a very different relationship and association with money than people who are employed or rather whose only source of income is a salary which is why entrepreneurs find comfort in having money discussions with other entrepreneurs. This difference comes with both positives and negatives for both groups of people.
When you run a business your concept of money completely changes (Click to Tweet this thought). For Okoth his business turns over about forty million shillings a year. This is revenue, not what he takes home. However, because he does see it passing through his business i.e. he receives it and also pays it out, it doesn’t seem like a lot of money. Whilst he has not taken it out of his business to buy a car, he has dealt with seven million shillings over and over. He has invoiced people in millions and received payments in millions. He thinks, plans and even spends in millions. He is accustomed to it and has access to it. If you ate your favorite meal every day, it would cease to be special.
Bill on the other hand has a very high paying job but doesn’t interact with money at that level. He doesn’t have that close a relationship with his organisation’s funds. He may deal with transactions for his employer that have that amount but it’s from a detached perspective. He doesn’t control or have access to the funds. The money he has that relationship with is his salary and hence his perspective of what is a lot comes from there. Bill does not have another source of income hence in his mind, the one million shilling he earns is his current maximum. The thing is, Okoth views the Kshs 200, 000 he takes home as his minimum income. Should his business get to the point where it can afford to pay him that same one million shillings, he would still view this as the minimum amount he can earn. Okoth also looks at possibility differently. Chances are that if Okoth decided to buy that car in say a year’s time, he can figure out how to do it. He knows how to make seven million shillings and more already. He would just need to work backwards to see what else the business needs to do so that he can buy this car. How much more does he need to sell for that to happen? From the time you start a business, you are the one responsible for generating the revenue so you naturally start thinking about how to make the kind of money you need.
Simply put, entrepreneurs become used to making money with time. Whether it’s Kshs 10, 000 or Kshs 100, 000 or one million or ten million shillings. They get used to figuring it out. That is why business people commit to things even when they don’t know where the money is coming from. Every day they ask themselves what needs to be done to achieve the things they need to. However, there is a serious downside to this kind of thinking. Many business people end up with relatively little wealth because of this kind of thinking.
Business money is not your personal money (Click to Tweet this thought). Running a business may equip you with a great attitude and focus but many people don’t learn to properly separate themselves from certain aspects of the business. In this case let’s work with Okoth as an example. If the business stops what does Okoth have? He may easily find that he can no longer come up with the same seven million shillings. It is very likely that if Bill plans and invests money properly, he can be wealthier than Okoth because he takes it home.
My advice to Bill and others who are employed is to think beyond your salary and don’t view it as your maximum earnings. If you have a consistent salary, it can be a powerful resource but be conscious of building investments that grow or generate income. Apart from the financial benefit your perception of money will also open up. For Okoth and other business people, remember what the business makes is not yours so don’t get caught up in the illusion that you personally have a lot of money just because you know how to make money. Depending on how we interact with money our perceptions may be different but as I’ve quoted before, wealth is what works when you’re not working. It really doesn’t care whether you are employed or self-employed. The challenge we all face is turning our sources of income into wealth which is why i am more than willing to share my knowledge through Centonomy.
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