Welcome back to the Wealth Practicum – A practical application of tools, techniques and approaches to creating wealth in the 21st century. Millionaire status is closer than you think.
I wanted to share some key things I believe are essential in creating wealth. The first is Leverage. Leverage comes in many forms. As an employee, no matter howWell paid you are, you are a source of leverage for your employer. As a real estate investor, you utilize leverage by borrowing money from the bank (opm or other people’s money, right?) The more leverage you have, the less of your own money you’re using. The key here is that you will never become wealthy as an employee working for hourly wages or on a fixed salary. You are a SOURCE of leverage for your employer and are not USING leverage to build your own wealth.
So what does that mean for the average person that wants to create an abundant, prosperous lifestyle? Clearly you need to be in a position where you are maximizing leverage, and that means for most people, being a business owner vs. an employee. Did you know that close to 90% of all people earning over $100,000 per year are running their own business and that the Home Based Business market is growing at around 12% per year. Over 20,000 people a day are responding to “start your own home business ads”. Lets face it, most people are tired of working so hard for so little. The Rules are different today than they were just 10 years ago; if you are truly going to prosper you need to be entrepreneurial AND you have to have LEVERAGE.
The hard part is figuring out the best business to start and run. First of all you have to know that there is a lot of junk out there and I include Franchises in that mix as well. The internet has made it so easy to throw things up against the wall and see if they stick. There are all kinds of money games out there and you want to make sure you are picking something that has some meat on it. Also, there are a ton of people out there that are more than willing to tell you what to look for, that are totally unqualified to do so. Alternatively, I’ve been a home business entrepreneur now for 2.5 years, have done very, very well with it and I’m totally comfortable and versatile in the home business world — and happy to share my observations with you…
1. First lets start with you. You have to know that a real business is going to require your effort. If they are saying that you don’t have to talk to people or that its fully automated then be a little skeptical. Talking to people is still a necessary part of business. Also a business requires money to run it. If you have no money then starting and running a successful business is going to be a little tough unless you are someone who doesn’t mind going out and meeting people face to face, or you have access to capital (OPM). In addition, you have to market. There is not a business on the planet that does not have to do some form of marketing to get customers, no customers no business.
2. Remember, leverage is important in selecting a home business — here’s an example — what provides the greater degree of leverage? A) Coffee shop that costs $75K to open, $15K/month to run and throws off $10K/ month in profit? or B) Home business that costs $20K to start, $2K/month to run and throws off $10K/month in profit. Business “B” is obviously using leverage to a greater degree because it produces the same result with less money up front and less money ongoing.. Also, is there some form of residual income possible through the business — In other words, can you do the work once, and get paid on your efforts over and over again. There’s very powerful LEVERAGE in creating Residual income.
More to come next week with three additional points of leverage to identify when the next installment of Leverage is the way to wealth will be published.
Finally, there’s a lot to consider when purchasing a business but I will tell you the number one mistake people make when buying a business or starting a home business and that’s picking a business based on what it costs vs. leverage criteria laid out here. You can get into a business with very little or no cost, but it will likely not provide the leverage you require to really make a lot of money. Remember — look for the leverage in any business decision and watch your bank account grow.