By Frank Tagarira
Is it necessary for entrepreneurs to invest in a confidence fund? What exactly is this confidence fund?
A confidence fund is money that any serious entrepreneur should set aside to boost their confidence. This money is not for spending but is a fund for your motivation and confidence. It will help you maintain the right mindset during difficult financial times in your business.
Let me explain this plainly. When one is broke, one tends to panic and when you panic you are likely to make poor, if not catastrophic decisions that will cripple your business. When we have money we feel more confident, more present, even your eyes sparkle with gleaming confidence. Why do we feel this way? Money gives you confidence because of the sense of financial security it gives you. One of my clients always says “red bull gives you wings but money gives you flight”.
It’s simple, money attracts more money.
The greatest fear ever known to mankind is fear of poverty. Fear of poverty is actually nothing but just a state of mind, but it is sufficient to destroy one’s chances in any undertaking. Having a confidence fund helps one from drifting into such a state of mind. Having money is not everything but honestly when most people are broke something happens to their confidence, and they may even start feeling inferior. Having a confidence fund set aside somewhere will help you revive and maintain a state of confidence in your dealings.
Imagine if you had to negotiate when you are flat broke. Normally most people will accept anything that is put in front of them (a true illustration of this is in Shakespeare’s Merchant of Venice) even if it is a pound of your own flesh. A man is a product of what he thinks. As a man thinks, so is he. If you think you are beaten, you are beaten. Having a confidence fund will help you to drift away from the “I am broke mindset” during lean times. It will give you confidence to look for business and negotiate reasonable fees for your services.
How then does one set aside a confidence fund? A confidence fund should be liquid cash or money set aside in an interest-bearing account with a bank or other financial institution. Let’s say your monthly business income is $10 000, you should set aside three months income aside gradually to create your confidence fund. Your confidence fund should therefore be $30 000. Imagine having 30 grand cash at any time in liquid cash. Let’s be honest here, I don’t want to sound egocentric but my confidence will definitely be boosted. If one has confidence especially in business you will have an upper hand in your negotiations and your dealings. You will radiate a sense of confidence and surety and believe it or not, people subconsciously want to deal with happy and confident people.
I know a client whose target is making $10 000 every day. This guy walks with $10 000 in his pocket. You should see the confidence this guy has. Maybe you have met him and you were wondering how he maintains such a state of mind. He radiates a sense of confidence and when he walks into a room you can even feel the positive energy he radiates.
Okay, this guy walks around with his confidence fund of $10 000 but if say your monthly income is currently $2 000, then gradually set aside your confidence fund until you have $6 000. If your income increases to $4 000 then raise your confidence fund to $12 000. Remember that this fund is not for spending. It is for your motivation, it boosts your business confidence and helps you to negotiate better and fare better in your business.
There will be times when any entrepreneur will go through lean times.
Business will be slow or perhaps at a seeming standstill. If you have money equivalent to three months of your average monthly income, it will help you maintain the right mindset. You won’t panic like someone who is completely broke. Panicking causes most entrepreneurs to make poor decisions and when this happens the whole businesses might even fall apart. Remember that many SMEs rely on the sheer initiative and motivation of the entrepreneurs. If this motivation dies, the business dies.
Start today. Build your confidence fund and start smiling. Be Bold, Be Brave, Be Excited.
Frank Tagarira is a Business Development Consultant and Business Coach.