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Let’s talk about the power of compound interest in ALL areas of your life – and especially, for those seeking a freedom-based business that leverages and divorces their time from their value.
Compounding is a financial concept that involves earning returns not only on the initial (monetary) investment but also on the accumulated (monetary) interest or gains over time.
Example: Let’s say you invest $10,000 today, and each year you earn 10% interest.
In year one, your total earnings is $1,000 on your initial investment, for a total of $11,000.
But by year TEN? Your original sum has compounded because each year, you have earned interest on not only the original $10,000 but ALSO on the 10% interest each year.
Your investment has snowballed to $27,000(ish) and the MAJORITY of that is made up of the interest earned from the original investment.
They say compounding is the eighth wonder of the world, and there’s no wonder why.
In today’s podcast episode, we’re applying the concept of compounding to each of the building blocks required for a wildly profitable, time leveraged online business, and how you can use it to create a genuinely freedom-based business (if you are willing to do the work up front).
Listen On: Apple Podcasts | Spotify
Let’s discuss the building blocks:
- Compounding Profit: In a lifestyle business, you are ultimately optimising for cashflow. What that means is choosing an enough number, optimising for profit over relentless scale and revenue, and then using that cash flow to fuel your current and future life.
The concept of compounding from a financial perspective is particularly important for lifestyle businesses. The earlier you can start prioritising PROFIT in your business, and then investing a portion of that into assets outside of your business that compound, the earlier you will be able to make work optional for yourself.
- Compounding Work: Lifestyle businesses should invest their time ONLY in work that compounds. Which means that the initial TIME investment pays back multiples of time in the future. For example, when you created a leveraged IP asset, you are investing time up front – and sometimes, a lot of it – but that initial investment will compound in the form of more profit over time in a way that is divorced from your value.
- Compounding Time: Similar to the above, a freedom-based business invests their time heavily into assets that, although involve more initial upfront time investment, will pay back dividends in terms of reduced time OVER time.
- Compounding Authority: Savvy experts will invest in creating content that not only works for them when they first post it, but also works for them in the months and years that follow. Authority isn’t a tap you can turn off and on like ads, it is something built piece by piece over time, and it gets more valuable as it matures.
Of course, none of this is easy. If it was, everyone would do it.
It’s also not QUICK. And honestly? That’s okay, too. One thing to be mindful of when investing your money, your time, and your energy is that there is usually a flatline at the start. You’ll be investing more time, energy, money or effort for the return, and it won’t feel worth it.
This is true in finance, and it’s true in building a leveraged business.
The trap? Giving up too early.
For example, it’s well known in the finance world that it takes a few years before investments gain “money momentum” and the initial investment starts to really snowball.
Beware the flatline.
It’s a normal part of the journey, and for those willing to last the distance?
It’s beyond worthwhile.
SIDE NOTE — Our Four Week Business Model Mini-Program kicks off TODAY! If you aren’t registered yet, there is still time. We will be talking about concepts like this, and what it takes to build a freedom-based business that gives you time, freedom and happiness in spades (but that doesn’t sugarcoat what it takes to get there). Sound like your jam?
When you do, you’ll get access to our free community too – where we can continue the conversation on this podcast!
