Happy Friday!
This month we are diving into my version of Rich Dad Poor Dad’s cashflow concept – the difference between being employed, self-employed, a business owner, and an investor.
First, if you are happy and fulfilled in your career working for someone else – I’m not saying you are broke or will be broke! This exercise is designed to help you understand the financial limits of being an employee and to some extent being self-employed.
I’ve probably talked to thousands of people who have an intriguing business idea and want to jump into entrepreneur life – when I give them the reality of what life will look like once they are chief cook and bottle washer – the majority get scared and stay where they are. The few who are willing to be gritty are the ones that GO.
My role here isn’t to scare you into NOT taking the leap into entrepreneur life or revamping your current business if you are already there, but to give you the truth so you can make an educated decision.
Here’s the skinny – let’s flesh this out.
Being Self-Employed – is HARD, but it’s where you need to start.
- A good idea doesn’t necessarily mean it’s a good ‘business’ idea. You have to do the due diligence, the market research. Is this product or service something the market will pay you what you need to get? If Product X costs you $10 to produce but the market is only willing to pay you $5 – then it’s not a great business idea. Spend the time to test it – interview people, ask colleagues and find someone in the space you are trying to enter who is successful. Learn from them – even if you need to pay for it.
- If you are in a good paying job – don’t QUIT until you are already doing your entrepreneur gig and see that it’s viable. Yes, you’ll have to do 2 jobs at once, but not having money stress will be worth it.
- Done is better than perfect. What you start with won’t be what you end up with. At some point you just need to go…
- Risk is part of the game – every day. As a business owner, you’ll come to realize you are in constant decision-making mode and risk is part of it. You will make mistakes, you will have to pivot and make changes – if change terrifies you, entrepreneur life will be incredibly stressful for you.
- Money… Sometimes you won’t get paid. For weeks or even months. Sometimes you need to reinvest back into your business – the goal is to get to BUSINESS OWNER – where you can hire people and leverage their talents. Until you get there – you need to suck it up buttercup. Having a buffer of money will make this a whole lot easier!
- Self-Awareness is critical. You need to understand your strengths and your weaknesses. Capitalize on strengths and outsource the rest – this is your journey to get to Business Owner. In the beginning, you DON’T want to bring on employees, or even 1099s until you are clear on your business model – is it even viable. This may be a month or a year – it depends on how much time and energy you put into it upfront.
- Do Hire Experts. Attorneys, accountants, insurance professionals – don’t even think of skipping this part. Trust me – my first business failed miserably and cost me everything because I skipped this – don’t do it.
- You have to spend money to make money. This will be different for every business – and higher if you are a consumer product versus a service. At Red Barn, I don’t need inventory to sell, I sell my time and expertise and that of my team. So, there is no “cost of goods sold”. Everyone will have some expenses – back to #7 to start and marketing/sales materials such as a website.
- You need to sell. You could have the BEST life-changing/world-changing idea EVER but if no one knows about it, you’ll never make a dime. At some point, you need to SELL. At the beginning that will be you – as you grow, you can hire people. If you have the capital to fund a salesperson in the beginning because the word SALES is terrifying to you, do it.
- It’s a long game. You need to hit the 3-5 year mark before you can really get into a groove of what’s working and what’s not. Learning resilience and the art of being gritty is what you need. If you think you can put in a couple of weeks’ work and then it’s just going to fly by itself – you are being delusional. Sorry to be blunt – but I see it all the time. Starting a business isn’t Field of Dreams – you don’t just launch it and happy customers just keep coming, paying, and sticking. It doesn’t work that way.
The path from employee to self-employed is EXCITING! It also takes a lot of work, a ton of self-awareness, and self-confidence.
It’s also the path to get to being a Business Owner – or the right side of the earning square. If you currently own a business and aren’t where you want to be – sit back and take a hard look as to where your roadblocks are.
HOMEWORK:
If you are thinking of taking the leap to entrepreneurship from employee – take some time to create a rough business plan – what problem does your product/service solve, what are the financials, who will be your customers, and what talents will you need outside of you to make it happen. Then do some market research to determine price points. When that’s done – set up a call with me to flesh it out.
If you already own a business and you are stuck – let’s chat and flesh out the issue.
Grab a spot on my calendar HERE
Have fun!!!