If you want to get rich, there’s a fairly easy way to do it. Run the same business for years on end. Just get down, put your nose to the grindstone, and do the work that it takes to build something. Eventually, you’ll have something worth talking about. You might spend years being broke. Generally speaking, it will still be worth it if you put in the work, and start the appropriate business for your country. Here’s why.
Labour is not scarce
The world is still experiencing positive fertility rates, and there is not a lot of innovation happening nowadays. This means that if you’re not interested in working long hours for low pay, you’re going to either need to accept poverty or start a business. Right now, labor is not very scare at all. People really don’t care much about you and your skills. Pretty much the only way to get ahead is to start a business. There are too many people doing the same things in this world. Employers simply won’t pay you a living wage for mindless work anymore.
Lots of people are poor
This is the truth of our current world. There are a ton of desperate poor people looking for a way out. They want to make money, and have no idea how. The truth is, they’re kind of blameless. At least those of us who are under 30 can content ourselves with the fact that a lot of the world is improving and developing quickly. But there are still a ton of poor people and the provide a lot of competition when it comes to acquiring the finer things in life. If you labour, you tend to fall behind. Everyone can work. The longer you can spend making money without a job, the better. Once you get to the point where you can make a full-time income well self employed, you’ll be wealthy and resilient by default.
A sale can put cash in your pocket
This is something to be aware of. If you liquidate, you get money. But if you can build a business that stands the test of time, you’re in the real money. Most people are scammers. Or they’re weak minded. They can’t spend the time it takes to build a real business in a poor country, or to run a top performing online business (basically the same thing nowadays). So they build something they can sell, or the try to sell Silicon Valley on some nonsense. You can try and copy some of the lucky ones out of this group. Me personally, I would rather not risk it. I would rather build a large, memorable business. In today’s world, you can build a super high net worth by running a large business properly, and avoiding the quick cash of a sale.
Knowing you have a higher net worth allows you to scale up more confidently
Just don’t get too big for your britches. You need to be realistic about what you can do. You don’t want to waste your whole life just chasing after money. But if your business runs smoothly and consistently, you take on some leverage to scale up to a certain size. As long as you keep working and keep your expenses low, you’re likely going to keep winning and improving your living standards.
EBITDA = Your net worth
Which means you have to go all out in order to make this worthwhile. But generally speaking, your company’s EBITDA and its multiple are going to be tacked onto your net worth. This means that having an active business makes you rich. Own multiple active businesses? You’re pretty much set for life. The only trick is figuring out how to create the consistency I was just talking about.
Years in business = a higher valuation
Maybe not on paper to the bank. But to me, a business that has run for 10 years is worth far more than 2.5 year’s earnings. A higher valuation should be synonymous with stability. Plus, you’ve already extracted a lot of value after 10 years. It counts if you’re making real money. Just don’t put all your eggs in one basket. If you’re going to own a single company, grow it big and make sure it’s a company that forces you to use a variety of valuable skills. If you work hard and build quickly, failing along the way has less impact. The skills you will have learned will allow you to bounce back.
If you’re broke at 25, start getting educated
This is what I did, and I think it’ll pay off, generally speaking. If you’re broke at 25, you probably need some sort of education or skills training to succeed. The question is in what? Me personally, I would just get an associate’s in Computer Science, or something related to farming or agriculture. These good industries upon with to hedge your bets. Although you have to be intelligent to a certain degree to get ahead in the computer science realm. That being said, more and more of the world is going digital. It might be hard to get a job as a software engineer right now, but I foresee more value going online than offline. Ecommerce, along with the fortunes of the super rich, are two things you can bet on. The best way you can capitalize on these two things is with education. A high level of education means your business is less likely to be automated, and you’re less like to have competition. Education is the key to success, and formal education can help you start your business in every way. If you’re in your mid 20s and don’t have money, focus on education.
Be brutally honest with yourself
You have to know that the business you’re running has potential upside. Do your research. Learn your industry numbers. Don’t lie to yourself about online business. It costs a lot of time trying to run the wrong business. Start something consistent, that you think will be around in 10 years. Then be honest with yourself every step of the way. Business is hard. You need mental strength, motivation, and thick skin. If you aren’t self aware you are going to fail.
Real estate
If you can find a gap in the real estate market and consistently exploit it using the internet, you’re going to be rich. Real estate is saturated, but it’s one of the hottest niches out there. There are plenty of high-rpm real estate sites you can start: blogs, forums, price-trackers. Although the average young person isn’t buying and selling real estate at a consistent rate, real estate affiliate programs are very high ticket.
Finance
If you can get the necessary qualifications to do Financial and/or Accounting work over the internet, you should. Finance is a big money-maker. The only tricky thing about Finance is that you often need to get a degree. For this reason, it’s best to get into Finance young. Get a specialized education, live frugally, and fill your bag of money up quickly. That being said, you will end up quite wealthy if you can create longevity in Finance. It’s just like real estate.
Food
This you’ll have to go pretty hard at if you want to win. The food industry operates at scale. It takes a huge volume of sales to make money. But if you can figure out an end-to-end solution for selling food online, you’re printing money. Food is one of those things that are hard to get into. But if you can, you have license to print money.
Healthcare Research
This is probably a bit specialized, but it’s one you can run comfortably online. Healthcare research is a hard field to get into, which means that the fact that it is deflationary makes it good for people who are willing to work hard. It only gets easier to earn money with each passing year. And people are unlikely to copy you, due to needing significant brain power.
Alternative Health/Spritiuality
Random people really like to be assuaged by their online gurus. It sounds like I’m being flippant here, but I’m not. There are people who I listen to. The alternative healthcare and spirtuality sectors are booming and continue to boom. You can enter these sectors whenever and however you want. Just be ethical and avoid selling snake oil.
Services Businesses Sell For .5-1x annual profits
You can look the specifics up for your industry or location. Law firms and accounting firms in the United States do way better, for example. But this number holds true for small services businessed.
Private corporations tend to sell for 2x-10x annual profits
At least that’s how it goes in the world of blogging and ecommerce. Publically traded corporations sell for a lot more. Some businesses might go for less. You want to look for an industry where there are high enough multiples to suggest that the businesses run for a long time. From there, you want to committ a few years. Lock those multiples in for a higher net worth.
Watch Your Spending
This is really important. Generally speaking, you want to have 25x your annual spending for retirement. You also want to specific yearly goals when it comes to wealth. You want to make sure you’re on track to live the life you want by age 30, and certainly by age 40. Set clear spending limits.
Help Lower Costs
This is really the point of modern day capitalism. Lowering costs and making everyone smarter so that the prosperity that has been created in Europe and America can be shared. Figure out how you can help lower the cost of goods for people. The easiest way to do this is to focus on making incremental improvements in a niche or industry of your choice. Or taking advantage of outsourcing.
Don’t overvalue your business
If you want to build a business which sells for 10x, create a business that actually sells for 10x. In the case of blogs, 10x valuations start at the $1M per year in profit range. But that doesn’t mean you can go around saying you’re worth a quarter million because you make $25,000 in profit per year. Value your business properly. Keep yourself honest.
Don’t multitask
This is most people’s downfall. If you multitask and try to start multiple business, you lose a lot of the advantages that come with being comitted to a business. Comitt fully. Find your calling and see it through. It’ll take years, but you’ll be able to say you created something great.
If you want to get rich, run a business for a very long time. Be committed and in it for the long haul. In today’s world, we have a lot of financiers, and even more consumers. This is a great thing, because neither of these two groups of people want to work hard for their money. You can make immense progress just by outworking everyone and creating something new. Comittment and dedication can really pay the bills if you just don’t quit.
Thanks for paying attention.
