Why Start A Business?
There are three ways to generate wealth: save more than you spend from your wage, invest your savings in something like shares or housing and growing a business that generates profit. You should definitely be aiming to do 1 and 2, but you might want to also give option 3 a go. I’ve been busy in the past 4 months getting 3 businesses off the ground. I’ll share more about those in a while. So why start a business?
Earning Potential When You Start a Business
Start a Business because businesses have far greater earning potential than anything else. Sure, you can earn a big wage, at least some of us can. But wages have earnings limits, no matter how high up the corporate ladder you climb. Businesses however can scale and grow. Think about a mowing business. You may begin on the neighbours backyard, but you can end with an empire like the Jim’s franchise.
Here’s a conversation I’ve had with my teens. ‘I want to get a job, maybe at maccas’. ‘Why don’t you mow lawns?’ ‘Why would I want to do that?’ argues my teen. ‘Well let’s say you have 10 lawns, you could make $600 or more a month’. ‘I can get that much at maccas,’ they reply. Well what if you get 20 lawns and you pay a contractor to do them and you make $15/lawn, that’s $450/month to do nothing but a few phone calls.’ At this point their ears prick up. What if you grow that to 100 lawns and you make $2000/month or more and don’t do any of them at all. What about 200, 300, 400……
Now that’s a simple business, but you get the point. There’s nothing like a business for potential wealth generation. Even the ones that start small can scale to be something very significant.
Making Money From Scratch
Shares, housing and other investments make money from having money. Businesses make money from scratch. Yes, you have to do something, sell something, offer something, but they essentially create wealth from nothing. You don’t have to have a huge bank balance to get started with a business. It just takes some hard work and a great idea.
Your The Boss When You Start a Business
You can work for a boss or you can be the boss. Earn an income, or you can build a wealth generating asset that will keep earning long after you stop. You can earn for the time you work or earn for the time everyone else works and while you sleep. Would you rather work at maccas or own a maccas franchise? Mow lawns or employ 20 others to do the mowing? It makes no sense to me to work in some other person’s business when you could have your own. Be your own boss.
Become Financially Independent
There’s no quicker way to reach financial independence than through a growing business. Businesses can increase their profit with time and the income essentially becomes passive. Say you need $80 000/yr to be financially independent. Some of that can come from investments, but if you can grow a business, you can have that sized income stream coming in year after year. And if you want, you can sell that business for 8 to 10 times earnings if you’d rather not have the hassle of managing it anymore.
So Why Don’t More People Start a Business
If the financial benefits are so glaringly obvious, why aren’t we all doing this? In short, fear. Fear that the business might fail. And yes, many do. But failure is the stepping stone to a successful business. But more than anything it’s the fear of losing a stable income. Businesses take time and hard work to grow, especially at the start. It might mean working nights while holding down a job. It might mean going income-less for a few months or more. The fear of losing that dependable wage check is the thing that keeps us slaving away at our jobs.
Where and How To Get Started A New Business?
If you want to start a business here’s a few steps to get you started on the journey.
- Start with a pen and paper and start writing ideas.
- Develop those ideas and talk them through with a critical and skeptical person who will pull them to shreds.
- Get rid of any ideas that, depend on wild success immediately, require high initial capital outlay or that can’t scale.
- Don’t think you have to know everything to run the business. You could run a plumbing business and not know anything about plumbing if you hire the right people.
- Get down to your best two ideas and make concrete plans and a clear business case for each. Think through how you will get started, how much will you charge, how will you scale, what is the competition, how will you market and advertise? Who knows more about this that you can talk to? You’ve got to get down to nuts and bolts of how it will all work with a detailed plan.
- Then start small and begin to build from there.
Some Good Places to Start and What to Aim For?
A good business to start with should be one that requires very little capital. This probably means a service industry or website based business. These are very cheap and if they fail you lose very little. This blog is a business. It earns little, but more than enough to cover costs because it’s not capital intensive. You don’t want to risk it all, just risk a little.
A good business should be able to scale. You want to be able to see how this business can grow from something small to something large. How can it grow and expand. A good business can scale with time.
A good business is one you can eventually give away. You want a business that overtime your managers and employees can run without you. The aim is to create an ongoing stream of annual income with minimal input from you. It won’t be that at the start, but that’s where you should ultimately head.
What I’m Doing?
As I said, over the past 4 months I’ve been getting 3 businesses started. I began with hundreds of ideas, some I’d love to give a go in the future, but you can’t do everything at once. Why 3? Well I wasn’t sure what would work, so figured I give a few things a go and drop the one or ones that didn’t show promise. As it turns out, one of them I’m going to wind down. The other two are moving forward. So what are they? Well they are both capital light, can scale and eventually run themselves. One has provided immediate cash flow, the other will take longer to build but has massive earning potential. I’ll share more of the details in future posts. But for now I’m living off not very much while the businesses get off the ground. I’m no longer receiving a weekly paycheck. My goal is to have a living wage by Christmas. I’ll let you know how I go. Would love to hear your stories of starting your own businesses?