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Operator, Owner, Investor—Which Hat Is Your Coaching Client Really Wearing?

Financial coaches, you wanna help your clients draw a distinction between investment and business. These are two very different worlds usually, and investment is something where you could just put money and you can get a return. Business usually is something where you not only have to put money in, but you gotta put time, energy, sometimes risk other things like reputation as well.
So many times my clients will mistake. A business for an investment. They call it an investment, but it's actually a business. And so I have to help them understand, look, you're gonna invest money, but you're also gonna put a lot of time, you're risking a lot more, this could be decades of your life that you lose to this, what you call an investment, which is really a business.
So if you really just want some passive income from some investment that you make, let's actually find investments for you rather than pursuing a business where you're suddenly having to give up. Hundreds or thousands of hours of your time because you're actively managing that business. You're not just an owner, you're not just an investor.
You're an operator of that business, and you have money at stake as well. A lot of clients that we work with are just not up for that. Or if they are, at least they know that's what's at stake for them and what they have to get onto. So they can succeed. 'cause some passive operator who thinks they're an owner investor type, but they're really just a bad operator, that is a recipe for failure and that's not gonna help their finances at all.
So draw that distinction between investment and business and make sure your client understands the difference and what they're getting into and what they want to get into, depending on their lifestyle and what they're willing to risk and put at stake in the matter of whatever that opportunity happens to be.

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These two concepts, though often intertwined, represent distinct pathways with varying levels of commitment and risk.

The primary distinction between investment and business lies in their nature. An investment is typically a more passive endeavor—you allocate capital with the expectation of receiving a return without significant operational involvement. Conversely, a business demands a deeper level of engagement. It requires not just capital but also time, energy, and often a considerable amount of personal risk, including your reputation.

Many clients frequently misinterpret these differences. They might regard what is essentially a business venture as an investment, a misconception that can lead to misguided efforts and unexpected challenges. As a financial coach, it is crucial to elucidate to your clients that while they may invest money in a business, they are also committing significant time and taking on a plethora of responsibilities. This could encompass decades of work and effort, which transforms a supposed investment into an operational venture.

For those seeking passive income, true investments are the path to take. Identifying viable investments can help clients avoid the pitfalls of inadvertently stepping into business ownership, which demands active management. When clients find themselves overseeing operations rather than passively earning from their investments, they risk losing countless hours and potentially jeopardizing their financial well-being.

Clients need to be aware of the stakes involved in running a business. For those not prepared for the challenges and demands of active business management, the outcome might be detrimental. A passive operator, who mistakenly considers themselves merely an investor, may find themselves ill-equipped to succeed, inviting failure rather than financial prosperity.

Ultimately, as financial coaches, it is our duty to ensure that our clients fully comprehend the spectrum of commitment each path demands. By guiding them to understand the true nature of their financial aspirations, whether it’s enjoying the hands-off benefits of investments or embracing the rigorous journey of business operation, we enable them to make informed decisions that align with their lifestyle and risk tolerance.

Ensure that your clients recognize what they're getting into, whether it's investing in an asset or plunging into the operational depths of a business. The clarity with which they understand these differences directly influences their financial trajectory and success.

By drawing a clear distinction between investment and business, you equip your clients with the knowledge to steer their financial futures wisely, avoiding the pitfalls of mismanaged ventures and seizing opportunities that align with their goals and capabilities.