How To Start A Business
That Will Make You A Millionaire
For someone with nerves of steel and a good head for figuring out problems, it only makes sense to be an entrepreneur.
Despite the increased risk, entrepreneurship is pretty logical: research in Thomas Stanley's groundbreaking book The Millionaire Next Door shows that self employed people are over 4x as likely to be millionaires as people who work for others.
But that raises a question: with failure so rampant in the startup space and knowing that a majority of businesses don't last more than 5 years (source), how do you start a business that both guarantees a high income (let's put you at millionaire status) and won't fail on you?
If you're looking for a business idea, I recommend our post What Is The Best Business For Me To Start?
While this post deals more with the nitty gritty after having a business idea, that post is a lot better for the theoretical side: narrowing down a business idea and some practical tips on how to follow through to ensure you won't flop.
So here's how to start a business guaranteed to make you a millionaire.
How To Win A Horse Race
The power of past choices is not a mystery; you've undoubtedly heard many a people speak of their regrets and things they wish that they had done differently.
On a similar note, making the right decisions early on can have huge impacts later in life. The earlier you make good decisions, the better things will turn out as you grow older.
Here's where we're going with this.
In Scott A. Shane's book The Illusions of Entrepreneurship, he records that the vast majority of entrepreneurs do not pick their businesses because the industry has increased profits or revenues. In fact, Shane says that it's not just the minority who pick the most profitable businesses: it's pretty well nobody.
Yet In Thomas J. Stanley's book The Millionaire Next Door, he records a different piece of information: normal entrepreneurs don't pick their industries well, but millionaire entrepreneurs do. Stanley says that millionaires spend significant amounts of time learning of different industries so they can build businesses in the most profitable ones.
And normally, these businesses are pretty lame: meat packers, mobile home park owners, and farmers.
So in your search for your business to bring in the big bucks, don't pick any random one and, to be like a millionaire, don't pick a business based on your passion.
Incredibly successful business owners are realists: they see that the world is incredibly selfish and while you may truly love something, that does not mean that the world will pay you for it.
It's sad, but true.
The best way to win a horse race is to pick the right horse. In your journey to start a great business, find an area of need before starting your business, not after.
The Two Apps To Save A Dying Business
"Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish.’
Or suppose a king is about to go to war against another king. Won’t he first sit down and consider whether he is able with ten thousand men to oppose the one coming against him with twenty thousand? If he is not able, he will send a delegation while the other is still a long way off and will ask for terms of peace." - Luke 14:28-32
When starting a business, even Jesus has some advice for you: count the cost.
There are two ways we need to do this.
1) Start Up Money
Your start up money is what you're going to need to get the business going. Bootstrap as you have to, but calculate exactly what it is going to cost to get your business going. Do the best you can to foresee initial costs, future tools you will need, and even future problems that may arise and need some money.
Be extra harsh here. If you think something will cost between $100 and $200, budget for $200.
Once you have your final number, it isn't a bad idea to add 25% to that final number. I've found that adding a percentage (I've used as high as 50%) really helps account for a lot of unexpected things that rise up and need dealing with.
And a lot of things are going to need to rise up and need dealing with.
2) Living Money
When are you going to need this business to be profitable? If you have left your job or cut off other streams of income to pursue this business, calculate exactly how much the business is going to need to make for you to be able to survive.
Remember that revenue, profit, and paycheck are not the same things. Your business can bring in millions of dollars of revenue but have little or no profit. And if you aren't making much profit, you as the business owner are definitely not getting a paycheck.
As best you can, try to predict what this business will have to bring in for you to take home a living wage. If you accurately account for expenses such as employees, problems, reinvestment, etc., then the number for how much you have to make to live off this business will probably be disgustingly high.
And if you are now unemployed, you have an even bigger expense: time.
Know how much time you have before the business has to make X amount of dollars. If you don't have much time, I don't recommend starting a business at all. I recommend keeping or finding a job, because your business may fail or take much longer than you want to sustain an income.
The two apps that can save a dying business are easy to find a simple to use: a calculator and a calendar.
Be careful of falling into the trap of starting a tower or going to war without counting the full cost.
How To Turn A Penny Into A Million Bucks
During decades spent living without a mortgage, a car payment, or any financial troubles whatsoever, DeMarco studied the attributes of businesses that failed.
And it turns out that knowing what not to do is just as important as knowing what to do. So DeMarco made a list.
This list included attributes that successful businesses have in common. In fact, these characteristics are so important that DeMarco calls them "The Commandments".
We're going to take a look at these commandments (text taken from this post on the best business for you to start) and then we're going to look at how to leverage those in your new business.
Every successful business applies at least one of the principles recorded below. The most successful businesses apply them all. And you can remember them just by remembering a penny: think "CENTS".
Commandments and descriptions taken from The Millionaire Fastlane:
Control: Franchises and network marketing companies make for weak businesses since they lack the aspect of control. Businesses need to be able to set their own prices and control which products are created, marketed, and sold.
The ideal business will be able to control both price and expenses (more on this and how it affects the value of your business here) and will be able to determine its own profit line. Because your skillset and business is unique to you, the best product for you will be different than the best product for other people and their businesses.
When you lose control of things in your business, you lose competitive advantage.
Entry: Ever wanted to pursue a business and been turned away by a price tag that's a fuzz higher than what you were looking for?
That's a good thing.
When your business is easy to get into, you have lots of competition. This is another reason why I'm not a big fan of franchises or network marketing companies (and I have been a part of both).
The higher of a barrier to entry your niche has, the more difficult it will be for others to compete with you. Ask any lawn care business, insurance franchise, accounting firm, convenience store, or any of the seven coffee shops in your town and you'll hear all about the dangers of too much competition.
Make it difficult for others to compete with you.
Need: The sad truth of the world is that people do not pay us for doing what we love. The world is an incredibly, incredibly selfish place and will only pay us for giving it things that it wants.
Make sure your business isn't a passion, a pipe dream, or a hot recommendation from your seemingly-savvy Uber driver. It needs to be something that your target audience needs, whether your target audience is your town, your country, or the world.
Time: Even though people who are self employed are undeniably happier, as demonstrated in the book The Illusions of Entrepreneurship, they work.
In fact, out of 25 countries surveyed, self employed people worked more than regularly employed people in all countries except two.
While you should expect (and enjoy) the hard work while the business is getting going, being a slave to your business is not a good situation to be in.
According to MJ DeMarco's CENTS, your business should ultimately be able to separate your time from your income. While early on this means you won't make as much, in the grand scheme you never want your time to be traded for dollars.
The Millionaire Fastlane calls that wage slavery and time prostitution. Both are avoidable.
Your business should be able to be automated or you should be able to hire tasks out to the point where your input is completely unnecessary. It may take time to get to this stage (it will definitely take time) but there's no need for you to simply create a new job for yourself with your business.
Scale: Finally, we reach what may be the biggest and baddest of them all.
The ideal business is able to reach far more than a few hundred people. It is able to reach thousands if not millions.
Because if you can make a million people feel or have something, you will be a very rich person.
Scale takes different forms: for restaurants, one of the only ways to scale will be to open more restaurants. For internet business, increase your users. Whether your version of scale involves opening different branches or maximizing how many users are in love with your product, scale is where the big money happens.
Make sure your business isn't crippling you before you get it started. Don't allow yourself to open a business with inherent limits. Start a business that can reach the world.
When you apply CENTS, your business will be infinitely more powerful.
Now let's step out of theory and get practical.
It is one thing to know all that before you start a business, but you need to apply it to your own startup now.
Or, even worse, you already have a business and are trying to correct course.
What's the best way to apply CENTS? Well, you can painstakingly go through the complete ramifications of every one of the principles above, or you can follow this simple Do/Do Not list.
A Treatise On Being Executed
The difference between an entrepreneur and a wantrepreneur is a small, subtle thing. It is so easy to talk about yet so difficult to execute that many live their whole lives not truly being able grasp this concept.
The difference between an entrepreneur and a wantrepreneur is action. And not just a little action, but a lot.
In a study of geniuses recorded in his book Creativity, Mihaly Csikszentmihalyi found that once a certain level of intelligence is reached, world-famous achievers aren't actually smarter.
They simply put in more hours than other people.
Other similar findings in the books Daily Rituals: How Artists Work (by Mason Currey) and Managing With Power (by Jeffrey Pfeffer) echo this sentiment: world class achievers aren't massively intelligent, lucky, or better than the rest of us.
They just work more.
So if you're looking to be an entrepreneur, science has some advice: get to it. Don't let up.
In the long run, being a workaholic is bad for us. (source 1) (source 2) But working hard on a project you feel is meaningful (as any good entrepreneur will know that their business is) only boosts your sense of happiness according to Eric Barker's research in his book Barking Up The Wrong Tree.
So in your meaningful business, don't be afraid to put in too many hours. And if your business is successful (as it most likely will be, you spending lots of your free time on it and everything) then you can eventually sell or automate it and will never need to work again if you don't want to.
Instead of spending 40+ hours a week at your job for 40 years to retire at 65 (55 if you're lucky and never eat out), you may spend 60+ hours for 5 or 10 years to retire immediately after.
This early investment of time in your business pays off big in the long run, so don't be afraid to apply some elbow grease.
But how do we make this time most effective? How can we do in 8, 6, 4, or 2 hours what takes everyone else 10?
While I wish I could tell you that I've found a way to harness my inner superpowers, that's (sadly) not the case.
But we don't need superpowers to be more effective than others. We need better orientation.
People are busy. And not only are people actually more busy, but people today feel busier. In a recent poll by Gallup, Americans were shown to be significantly down in overall wellbeing across many indicators (source). And even though we're working a lot (source) and free time is down (source), we don't seem to be all that productive.
In fact, we seem to be wasting a lot of time. A recent study shows that during our significant hours spent at work, only about 39% of that work is spent on time that is role specific.
This means that in an average workweek, the Americans work on a product that fits their job description 39% of the time. (source).
Obviously, there is quite a bit of room in the remaining 61% of busy work for quite a bit of a productivity boost.
We get that extra 61% not by working harder, but by better time management.
Sadly, people aren't capable of our peak productivity all the time. Cal Newport reports in his powerful book Deep Work that even at the expert level, people are probably only capable of high intensity work for a maximum of four hours per day.
Newport's research also indicates that while in a state of maximum productivity, or "deep work" that any interruptions cause our brain to literally run off track, changing our entire thought process. Getting back into deep, productive work once again strips our brain of energy and hinders us from being maximally productive.
Since we can only produce maximally for a short period every day, we need to avoid falling into the trap of everyone else and wasting our lives on busy work.
To do that, I propose that you split your tasks into three different categories: Most Helpful, Most Needed, and Can Be Finished Quickly. Let's take a look at these and see how they can benefit your new business.
Most Helpful: This category exists for the tasks that provide the maximum amount of value for your new business. This may be time spent in tasks like product development, article writing, advertising, or structuring your team.
Guard this spot jealously. Only the most productive, powerful, and helpful tasks can go here. These tasks need not be urgent, but they do need to be done.
Most Needed: This is where the urgent tasks go, and this is where we end up spending most of our time in the modern work day.
Everything in modern jobs are "necessary" from answering emails to attending the infamous meetings your boss sets up for seemingly no reason.
Yet in your business, you are the one who determines what is necessary and what isn't.
Use this box for the things that are only really, really necessary. Aim for wildfires, not kitchen fires in this one. This can include rampant employees, software bugs, problems with your payment systems, or other things that needed a solution five minutes ago.
This box isn't useful for growing your business, it's useful for saving it. So try your best to keep this box to two or three things maximum. Make sure that these things are both big and need to be solved quickly. Take care of these things first, ASAP, and move onto the items in the third box:
Can Be Finished Quickly: This box is just like it sounds. It is used for items that are neither helpful for urgent but do need to get done. I usually say that if anything can be done in 10 minutes or less, it goes in this box and gets done right after the most needed urgent tasks.
These tasks have a habit of piling up or growing more severe with time; prevent future conflict (and future wasted time) by dealing with these as quickly as you can.
The only way we can be maximally productive is to segment our time.
I prefer to handle my tasks in this order: Most Needed --> Can Be Finished Quickly --> Most Helpful.
I do it this way so I can put out wild fires, eliminate future distractions, and then spend my time where it really matters: in the most important, yet least urgent box named Most Helpful.
And a special note needs to be made about tasks that are maximally efficient. In Gary Keller's book The ONE Thing, he makes a surprisingly simple argument about efficiency.
Keller argues that every day should have a "ONE Thing" that is the most important, most urgent, and most efficient tasks on our schedules.
We find the ONE Thing by asking "What can I do that will make all my other tasks easier or more productive?"
Efficiency and hard work need not be filled with busy work, but with strategy.
Find your ONE Thing that makes the rest of the day easier, then strategically execute the tasks remaining.
Building a business is hard and will definitely be time consuming. But that doesn't mean that you have to flounder around, wasting your time, wasting your money, and wasting your life.
But the most effective thing you can do today is simply to start. That is your ONE Thing. Whatever your task in front of you is, execute it ruthlessly by starting and not stopping until it's done.
Slavery Upside Down And My Favorite Noise In The World
To the great detriment of every girl I've dated, my family, and anyone who has ever been in a car with me, I have a bad habit.
Any time my car passes a car quickly, gets passed quickly, goes around a turn quickly, or does anything that can be done with some speed, I make a certain noise...
It's like this:
Nyyyooom is the noise that car engines make when the engines are working hard and the car passes you quickly.
And just like a fast car getting to the finish line, your business needs some nyyyooom in it.
We already talked about the importance of getting started, but now I want to shift our focus to what needs to happen after you take the first steps: you have to work.
And in your business, you are going to be competing against the greatest in the world; established companies with existing supply chains, leadership, and income will be your competition. The only way you can compete is to out-think and out-work your competition.
You, as the owner, need to become your business' loyal slave. "Slave" is undoubtedly a harsh word, but I chose it for a reason: as a business owner, you will rise before dawn and go to bed after dusk working. You will bootstrap to achieve whatever needs to be accomplished. You may go hungry, your checking account overdrafted, for days or weeks so your business can survive.
You may work 60 or 80 hour weeks, you may not take vacations ever, and you may be mocked by those who are closest to you.
It will be slavery upside down; where you as the owner bleed, sweat, and cry until your business is built and sustainable, until you can live off your labor.
The importance of hard work cannot be ignored and it should not be forgotten, for by your hard work your business will thrive and survive.
To nyyyooom past others, you have to start early, work hard, think smarter, and move faster.
If you aren't willing to do that, don't become an entrepreneur.
The shortcuts in the world of entrepreneurs may take 5 or 10 years to be fulfilled, but the shortcuts in every other lifestyle may take 40 or 50 years.
Be willing to wait that 5 or 10 years, working hard every step of the way.
Thanks for reading!
While starting a business isn't easy, it is worth it. There isn't a key or a silver bullet to success and there certainly isn't a one-size-fits-all solution for you, but starting a business can be incredibly rewarding.
Let me know in the comments: what are some practical steps you've taken to start a business? What business are you trying to get going?
Stay awesome. Have a great day.
Are We "Best Content On The Internet" Worthy?
No annoying popups, no frustrating spam begging for your email address.
If you don't think we publish the best content on the internet, we don't think we deserve to get to know someone as great as you.
If you do, well here ya go.
Copyright Information: Copyright Elite Happiness. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.elitehappiness.com. Please contact us for permission to reproduce this content in other media formats.