In 2020, we saw an unprecedented number of small businesses closing down due to COVID19. As a contrarian, I have to admit that this is an opportunity for those willing to fill that void. And as more of us have had to work from home, shelter in place, etc., more of us have had more time to think freely and with that we probably came up with some brilliant idea that will change the world. So if you are brave enough to want to go once more unto the breach and start a business, I’m going to give you my advice having done that a few times in my life.
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1. In capitalism, we are all businesses
2. Business exists to solve problems
3. And for this, it charges people money to help them
4. The barrier to entry for starting a business in the USA is relatively low
a. Compare with other countries
b. Regulations
c. Registration
d. Taxes
e. Licensing
5. But the risks of doing this wrong are severe
a. Most small businesses fail in the first 2 years
b. Most are under capitalized
c. Most don’t address the 3 legged stool of business success:
i. Sales/Marketing
ii. Operations
iii. Finance
6. But most fail because the proprietor of the business just creates a job for themselves
a. Introduce Kiyosaki’s 4 Quadrant theory
b. The eMyth Revisited should be mandatory reading
7. Business can be dangerous
a. It requires a total devotion to the business
b. Family often has to be put 2nd in order to grow it
c. The buck stops on the proprietors desk
d. The concept of trust has to be established over and over again
e. People will let you down
f. Companies won’t pay you, or won’t pay you on time
g. Your govt wants your money
8. But business can also be fulfilling and can free you
a. It is why there are “serial entrepreneurs”
b. The startup and the exit strategy
c. What you can do alone, vs. what you can do with others
i. Owning 100% of nothing is worse than 50% of something
ii. A founder must be a great communicator and motivator
iii. You are always selling
1. To your customers
2. To your partners
3. To your employees
4. To your investors
5. Eventually to your acquirer
9. If you are uncomfortable selling, don’t start a business
10. The idea of a “side hustle” is stupid
a. All you are doing is advertising a concept to competitors
b. If you can’t devote 100% of your time to it, don’t do it
c. Business is all about leverage and you need to be willing to take something all the way
11. The idea of “steps” of growth vs. linear
12. You need a 1-5 year plan, and you need daily numbers
a. Changing strategies (pivoting) will be needed
b. You don’t know what the future will look like
c. You must be able to adapt quickly
d. If you find that you are just going through the motions, you should really consider if you have lost the plot and it is time to exit
13. Future punting
a. If you know it will take you 3 years to build up, don’t meet the demands of today because it will be 3 years old by then
b. You must be able to predict the future to take the gamble
c. What happens if you are wrong?
14. Financing & 3rd parties
a. Very few banks will give loans to businesses without personal guarantees
b. Leasing business premises doesn’t have the same “outs” that renting residential real estate does
c. Your obligations to the tax man never go away
i. If a creditor relieves you of a debt, that’s income you have to pay tax on
15. Health insurance
a. It’s on you now
b. Far fewer options
16. You better learn technology
a. The future of all business will be digital
b. If you are unable to manage a digital enterprise, then stop immediately
17. Become best friends with your attorney & your accountant
18. This is not for the faint hearted
a. Never start a business because you can
b. You need a solid game plan
c. You need to set realistic expectations
d. You need an exit strategy before you start
e. You better be willing to do what it takes, or it will be taken from you
f. Know that the time required up front is huge – it better all be worth it
19. But here’s the good news
a. There is no ceiling
b. There are no limits – you can go as big as you want
c. If you build it from the start to be self-perpetuating, then it can work like any other smart income asset
d. You don’t need a college degree to start a business
e. You will learn a lot about you and how you interact with the world
f. The confidence from doing this is huge
20. Comparing a business to Smart income
a. They can be one in the same if built right from the start
b. You don’t need to run a hardcore business to manage assets
i. Real Estate
ii. Systems/Machines
c. But if you are seasoned in hard business, it makes everything else much easier
Rich and successful people typically do the opposite of the herd. It is a choice. It comes with fear, doubt and uncertainty. Training your mindset to embrace these things is the key element of how you will get extraordinary results from an ordinary world.
In previous articles, I have stated that the concept of FI (Financial Independence) is flawed. Although the pursuit of it is admirable, the fact is that few FI followers have been able to do this through bear markets. Consequently putting yourself on that path has some dangers. I prefer to concept of "financial sustainability" and this article gives you tangible steps to take to achieve that.
Those following financial sustainability know about faucets. We all have experienced the “drip-drip-drip” of a leaky faucet. It’s not only annoying, but if left unattended, it could add up to thousands of gallons of wasted water and a very large water bill. Losing money through not being mindful of small leaks is bad. Additionally faucets are a great way to collect money, and with enough of them you can be 100% financially sustainable.