Income Choices: Own Business
One of the best ways to create your Perfect Lifestyle is to start your own business. If you get it right, your own business can give you:
• A much higher income than employment.
• The ability to do something you love and are passionate about.
• A lifestyle that allows you to earn business income even when you are not working.
• The opportunity to choose when and where you work.
• The opportunity to structure your work around family.By now you should be excited about starting your own business. Here are some key tips:
1. You are Unlikely to Make Profits Straight Away
Building a business takes time, patience and at least a little money. It is never a cash-tap. You cannot start a business and expect a week later to turn on a tap and have cash flowing out faster than you can count it. In fact, in the first year you might put more cash in than you take out.
2. Start While you are Employed (or Studying)
One of the great things about starting a business is that you can start small and grow bigger. If you are employed (or studying), start your business now and manage it in your spare time. As it grows and becomes profitable, you can reduce your employment or resign altogether.
When I first started my recruitment business, I worked two days as an accountant. This enabled me to keep going even though the business didn’t make a profit for over a year.
3. Do a Budget
It is so tempting to avoid this step because by nature people who start their own businesses are optimistic about its success. However, you must do a budget and be conservative.
You must know your average weekly expenses. You must know the amount of income you make on each sale (margin). You must know your break-even sales level (i.e. how many goods and services you need to sell to cover your expenses).
Your budget only needs to be a simple spreadsheet with the money you have available (capital), any money you have borrowed, all business expenses (including start-up expenses like a computer) and any income you are making or expect to make.
You need to budget a year in advance, and you may need to update your budget every month. Your budget will tell you where the financial strengths and weaknesses are in your business. More critically, it will tell you what you need to achieve in order to make a profit.
It is vitally important not to over-estimate your income. Let’s say your business is importing a new toy into the country, and you plan to sell it online. It is naïve to say: “There are 500,000 children in my target age bracket and 1 in 10 will buy my toy for Christmas, therefore I will sell 50,000 toys.” It is far wiser to say “I will try to sell 500 toys, if I sell out, great I will order more.” You also should ask your friends and family their opinion. They will help you to be realistic.
4. Avoid Retail Shops
I know that people make money in retail shops but I don’t recommend it. Here is why:
(a) Long hours: you become a slave to your opening hours, including late nights and weekends. You have to be open otherwise your customers will not come back. You can’t take time off easily, and you have to rely on staff.
(b) Staff: most small business owners will tell you the biggest headache is staff. Finding them, motivating them, training them, keeping them, and firing them! Try to avoid a reliance on a lot of staff especially while you are managing it all.
(c) Your lease: you are also a slave to your lease and your premises. If business is slow, the lease still has to be paid.
Remember the point of owning a business is to give you a lifestyle not more commitments. Starting your own café sounds romantic and easy. Ask a café owner
– it isn’t!Of course if you want to be a retailer, there is a fantastic way to do it – via the Internet.
See point 14 for more on this.
5. Set up Good Systems
From day one of your new business get your systems in place. For example:
• Technology.
• Accounting and tax.
• Database of customers.
• Ordering.
• Stock control.
• Invoicing.
• Banking.At the beginning is the time to get this right and learn about the things you don’t know. Once your business starts growing you won’t have time to go back and get this right. When times are busy you will need your valuable time to grow and manage the business.
6. Run With Your Passions
One of the most exciting things about starting your own business is that you can let it grow out of your passions, interests and hobbies. As I said earlier, when you were at school you enjoyed the subjects you were best at. It was more enjoyable to spend time on the subjects you liked and were good at. The same is true of work and business. You will enjoy going to work and building your business if you start a business in an area you already like.
Action Step 2:
On a blank piece of paper write a list of everything you are passionate about, every interest, and every hobby. Don’t think about business ideas, just write things down.
Now go through your list and think what possible business application there are. Here are some examples:
Interests Possible Business Applications
Tea Tea leaf import and online sales.
Sport Online memorabilia auctions.
Astronomy Subscription newsletter or web based home study program. Cars Online sales.
Golf Parallel import of golf balls.
Farming Arrange international experts to speak at conferences.
Movies Make your own advertisements for popular products and try to sell them to the manufacturers as advertising on YouTube.7. Leverage Your Knowledge
Statistics tell us that most people start their own business in an area they have already worked, or an area they have knowledge of. This makes a lot of sense. You are more likely to be successful if you start a business in an industry you know. You can probably spot a niche in your current market.
Example: Say you are a travel agent and your agency gets calls or emails every week from overseas people wanting a pre-organized motorbike trip of a particular location. Because there is nothing available, your agency has to turn them all down. While still working you set up a guided motorbike business, and on the day you resign you tell your boss about your new business and you offer their agency a generous cut of any business they send your way.
No matter what your interests are, there will be a business application. If you can’t think of any, go to Google and type in your particular interest or business and see what comes up!
8. Business Has to be Fun
One of the most motivating aspects of owning your own business is that it is fun. Successful business owners nearly always have a good time doing business.
If you are not having fun in your job or your business it is time you had a lifestyle change.
Life is too short to have a work week that is not enjoyable. How much you enjoy your work impacts the rest of your life. But if you own a business that follows your passions and interests, you are most of the way towards enjoying your work life.
The phrase “fun rut” is an oxymoron, it is mutually exclusive. You just can’t have fun if you’re in a rut, and if you have been doing the same old thing for years. In business you have to keep doing new and different things, and that is half the fun.
Here are some examples of having fun in business:
Meeting people with similar interests and passions to you.
Writing your own advertisements.
Checking your emails to see how many new orders you have.
Answering the phone and taking the “money call”. For example a huge order.
Checking products you are selling on an auction site to see how many bids there are at what price.
Diverting your phone to your mobile phone and going to your favourite café with a friend. My motto is that if I have my mobile phone with me, I’m working. This includes going to the gym too!
Making big and exciting plans for your business.
For me, the most fun and rewarding part of owning a business is putting a successful deal together. It is a great feeling to think up a plan, put it together, have it work and make a nice profit at the end. I get a feeling of satisfaction that is far better than when I was a small part of a corporate success as an employee.You must start your business with a sense of excitement and fun. If you don’t have that – find a different business.
9. Surround Yourself with Positive People
This is a principle that applies to every aspect of life, but it is critical in business. Make sure you associate with people who are positive, encouraging and optimistic. You need a lot of energy and enthusiasm in business, especially when business is slow or when things go wrong. If you are surrounded by positive people, your energy will stay positive. But if you listen to pessimists and naysayers and people with no imagination, it will be difficult to get out of bed, let alone run a successful business!
10. Choose a Business Partner Carefully
I don’t recommend a business partner if you are starting a new business, but if you have to have one, choose carefully. A business partnership is much like a marriage. Both partners have to have the same aims and goals. Only choose a business partner who is positive, hard working and fun to work with.
11. Having Shareholders
In some cases you may need to finance your business to a much higher level than you can afford. In this case, it is an option to have shareholders (investors) put money into your business. This can be an excellent way to raise capital for your business. However you need to be aware that once you have shareholders you are likely to have to submit your plans and ideas to them before you act. This does two things; it slows down your decision making, and it can mean having to run big decisions past your shareholders for approval. If it is just your business you can make your own decisions. Sometimes in business you need to move fast.
Here are two examples of highly successful people who do not have shareholders:
Richard Branson – Hugely successful without shareholders. Took his airline company Virgin Atlantic public (i.e. lots of shareholders) and regretted it. He ended up buying the shares back.
Donald Trump – Hugely successful without shareholders.
My point is, you can be very effective and successful without taking on shareholders. Of course having shareholders can mean huge success if you have the right sort of product. Bill Gates (Microsoft), Michael Dell (Dell Computers) and Steve Jobs (Apple computers) are obvious examples and all are billionaires.
12. Long Term Planning and Exit Strategy
Remember life is about lifestyle. You are not just starting a business for fun and excitement. You need to have a long-term plan for your business. Your long term plan must involve giving you the lifestyle you planned out in Chapter One.
I can’t tell you exactly what your plan is because not everyone’s lifestyle goal is the same. However, it should include the following:
Financial Freedom
At some time in the future you need to have the financial freedom to do some things you really want to do for example aid work in the third world, a summer in Italy, voluntary work at a local mission, be a travelling fan with a sports team - whatever!
Time
One of the long term goals of your business should be to free up more of your valuable time:
• Time for your family.
• Time for your friends.
• Time for your partner.
• Time for yourself.
• Time for exercise.
• Time for spirituality.The key to happiness is working four to six hours a day according to a recent report. Dr Caroline West of Sydney University reported that while work delivers self-esteem, income and social ties, more than four to six hours a day will bring anxiety, exhaustion and a poor quality of life.
“We’ve structured our lives so the majority of our waking life is devoted to work, which might bring us more money but doesn't make us more fulfilled,” Dr West said.
“So long as there’s a trend to work these really long hours you’ll continue to see the plateauing and decline of people's wellbeing.”
Self Esteem
Your business should enhance the feeling that you are doing something useful, successful and something you are proud of.
You also need to think about your “exit strategy”. This means, what is going to happen to my business in the long run? Some possibilities are:
• Pay a manager to run it for you and live off the residual income.
• Sell it to a competitor.
• Sell the business to new owner.
• Let the business wind down and you retire.
• Franchise it.
• Leave it to your children.
• Make it a public company by listing it on the stock market.
• Keep running it into your retirement.13. Don’t Just Own a Job
A final warning – there is a huge difference between owning a job and owning a business. A dentist who goes into private practise owns a job not a business. His/her income is based solely on the hours worked and/or patients seen. Similarly, if you buy a retail shop, you own a job that requires you to work huge hours.
You only really own a business when:
• It allows you to live a wonderful lifestyle; and
• It still keeps making profits regardless of whether you are working or not.Sometimes it’s even better to be employed than to “own a job”. When you own a job you have long hours and you are responsible for the success of the business.
The exception to this rule is if you have a definite and written down plan to have employees take over the work you are doing, then for a short period you can own the job before passing it on to others and managing the business and keeping the profits.
You should now be excited and ready to start planning a new business. If you have some ideas going around in your head now, stop reading! Grab a blank piece of paper and start planning what you are going to do and how you are going to do it!
14. Two EBooks
If you are interested in starting your own business, or you want to understand the Internet and Social Media better, I have written two comprehensive Ebooks based on my years of online business and the tens of thousands of dollars I have spent on courses, education etc.
Book 1: Using the Internet for Business, Lifestyle, Influence and Income.
Book 2: Social Media for Business, Lifestyle, Influence and Income. They will be an invaluable resource. I recommend you get them now:
www.LifestyleBook.com/ebooks