How to Escape the Rat Race
Page 6
My philosophy about not spending more than I earn is to just increase the amount I earn! I focus on creating more value and revenue in my life rather than having a poverty outlook. The key is to make money faster than I spend money. That takes a lot of forethought and creative thinking.
I see so many people being penny wise and pound foolish in their lives, thinking that they’re building wealth. They throw the baby out with the bath water by not being increase conscious. Increase consciousness is your ability to focus on ways to increase your income, thus building wealth, even if these ways cause you to spend a little more than you normally spend.
For me, being wise about spending entails growing my businesses, not just reducing my expenses. For example, when I conduct seminars I chose to use high-end hotels. I used to use my basement to save money. My basement is large, clean, set up like a classroom and has tables and a small refrigerator to accommodate snacks and drinks that cost an arm and a leg at a hotel. However, I stopped doing the seminars in the basement because while I was saving money I didn’t realize that I was damaging my status as a wealth creation specialist. People would see me as a saver, someone with lots of financial knowledge making wise spending decisions, but not a wealth creator. They couldn’t see past the fact that I live in a lower-middle class neighborhood even though my home is large and immaculate. I didn’t realize that in order to grow my business and reputation as a financial expert and wealth creation specialist I had to exude wealth. I didn’t want to go out and buy an expensive house with a large monthly mortgage payment, so I spend the extra money and rent nice hotel meeting rooms, and I still feed the guests. That way they can listen to what I am saying and see wealth around them at the hotel. We will talk about starting businesses a little later.
Ways to Increase Your Income
When it comes down to increasing our income, we have to think about several factors. Some of these factors are:
· How much extra time do I have to dedicate to increasing my income? If you are already working 60 hours a week, you don’t have a lot of time to add additional responsibilities. Some people work jobs that require more than the typical 9 to 5 schedule; for them to increase their income they can either:
1. Ask the boss for a raise, which I don’t recommend.
2. Find other avenues of income while they are still on the job.
3. Find another job with higher pay, while they are still working.
4. Quit the current job and find another job, which I don’t recommend.
5. Quit the job to start a business, which I don’t recommend.
6. Start a business on the side and build it until the income from the business replaces the income from the job.
Asking for a raise or quitting one job and going to another with higher pay are only temporary fixes and may backfire on you due to layoffs and other factors beyond your control.
Quitting a job before you find another job or quitting a job to start a brand new business can get you into financial trouble because your bills are still due on a monthly basis.
· What skills do I currently possess, or can I easily obtain, to help me increase my income? If you have or can obtain skills that will get you a better job, a second job, or help you start a home-based business, you may want to consider these options. A computer operator with a demanding job and no time for family can start a computer service business on the weekends and grow the business to the point where he can fire his boss.
I have a friend who started and built his home-based business to the point where right before Christmas he went to work wearing a Santa Claus suit and told his boss, “I’m sorry but I’m going to have to fire you.” He took down the large bag he had on his back and proceeded to give the boss and his co-workers gifts. Next, he walked out and never returned, because he almost tripled his annual income with his new business.
Another example is someone who has a talent that they love. If you have a job that is totally different from the hobby that you love, you may be able to make a business out of that hobby and cash in on it. You may grow to the point that you don’t have to work overtime, or you can quit your job altogether. We will talk about the potential for hobbies as businesses later.
· What are the best ways for me to increase my income in the shortest amount of time? If you are in debt, selecting a solution that will start your income increase as soon as possible will motivate you and boost your confidence.
· For couples; what can we do together to improve the household income? A good way to increase income is for a couple to work together as a team and share in responsibilities in this quest. There are many couples who desire to find something to do together; it may be good for one of them to start off with a business that they both love, then quit the job and do the business full time. Later, the second spouse, who has been helping out during weekends and evenings, can quit their job after the business is consistently earning more than both of their salaries combined. This may sound farfetched, but couples determined to grab hold of their financial futures are doing it all over the world.
· Do I have any assets that I can put to work to help increase my income? Some people have assets they can put to work or even sell to increase income. Have you taken the time to look through your house to find items that may increase your income? Do you have any old coins that may be of value? Do you have an old car that someone would be willing to buy and refurbish? What about old jewelry you no longer wear?
It may be to your benefit to search your house or your parents’ house for things that may bring a little extra money to jump-start your finances.
I heard of a man who went to clean up the attic and found a box of old coins, which he took to a dealer and found out that he was sitting on over $20,000 in rare coins. I don’t know what he did with the money, but that surely would have been enough to start a new business or an investment portfolio. There is a television show that values antiques that you may want to watch for great ideas about valuables around the house.
It should now be obvious that you need to get creative to find ways to increase your income if you are serious about fleeing the rat race!
What About a Home-Based Business?
The best solution for increasing income, in my opinion, is to start a home-based business while you still have a job. Even if you don’t have a job, a home-based business is a great way to increase your income.
It’s a new day! In the past, jobs provided most everyone with a dependable paycheck and long-range security. Now, along with diminishing retirement benefits, jobs are hard to find and hold onto; the alternative is to start a business. Obstacles to success are not as difficult when you start a home-based business, and you can even start without quitting your job. Become a moonlighting entrepreneur!
Millions of people all over the world have started and are managing successful home-based businesses. Statistics say that the average income for a home-based business is $37,000 per year in the U.S. This includes full time and part time businesses, and is an excellent trend; it may be the key to catapult you into economic freedom.
If you decide to start a home-based business, you will have lots of company. According to the Small Business Administration (SBA), over 50% of all small businesses are home-based. Your start-up costs are small, you can take your time to build up sales, and you can set your own hours. There’s less to lose and more to gain!
Based on whether you are single or married, have children or not, and several other factors, you may decide to pick a business that operates only on the weekend, only in the evenings, or both.
Here Is A Short List Of Businesses That Require Little Or No Money To Start:
· Consulting
· Deliver dinners for restaurants and clients
· Direct Sales / Network Marketing
· Event planner (parties and events)
· Freelance writing for media
· Gift baskets
· Handyman services (Consider focusing on a specialty.)
· Hobbies (cookies, decorating cakes, etc.)
· Housecleaning
· Personal shopper
· Photographer (weddings, parties, or businesses)
· Remodeling (specialized)
· Resume/document writer
· Senior care services
· Teaching/tutoring: computer, musical instruments, languages, etc.
· Transcription service
· Website design and management
Special Benefits of a Home Based Business
Home-Based Businesses Require a Minimum Investment
Operating from a spare bedroom or a garage, you can run a business with a minimum investment, and exit it with a minimum of obligations and risks if you decide that business is not for you. Thousands of people use extra space at their homes for full or part-time business. In my previous neighborhood, there is a family who has been running a T-shirt company from their garage for over 25 years. Many times when I would pass by in my truck, they would have the garage door open and I could see hundreds of T-shirts and boxes.
Communication Technologies Enhance Home-Based Businesses
The Internet, computer, and communications technologies now offer home-based entrepreneurs the same tools to operate as those used by multi-national corporations! If you have a cell phone, laptop computer and a good Internet connection, you can operate your business from anywhere in the world. When I go out of town, nobody knows that I am gone because my businesses don’t depend on me being at my home. Even when I go out of the country, as long as the Internet connection is decent I can continue to manage the businesses.
Your Business Can Start Small and Grow By Compounding
Start with one order at a time and grow by the power of compounding. For example, if your first six months produce $1,000 per month, you may grow by 20% each month to reach $370,000 annually in five years. The mistake most people make is taking on too much business at the beginning and then getting overwhelmed with orders. Avoid this temptation, because if you spread yourself too thin, you won’t give your customers the best products and service and your business will fail. I have seen many times where greed and ambition drove a start-up business to ruin because customer service totally collapsed due to the owner biting off more than he could chew.
You May Already Have a Potential Organization
If you involve your family, it’s possible that you will become closer by spending time together; you have common goals and can utilize individual and collective family skills. When I had a CPA firm, my children helped out and I paid them, and they enjoyed their duties and learned a lot about business. Other family members have worked alongside me over the years, cousins who had a good work ethic and even did more work than asked, because they cared about my success. Don’t feel obligated, however, to hire or otherwise include family members in your business if you think that they are just after money; those relationships are worth keeping separate so that a permanent rift will not form in the family structure.
Home-Based Businesses Are Open to All Races, Ages and Situations
It doesn’t matter whether you have a degree or not, whether you are old, young, black, white, Asian or even if you’ve been in prison; if people want your product or service, they will look beyond the person, if they can even see you. Many home-based businesses are Internet-based, which we will discuss later in this book.
You Determine Your Success In The Business.
A home-based business depends on you, the owner; its success or failure is not dependent on a boss or other employees. You don’t have to wait for a board of directors to make decisions, and you don’t have to tolerate lazy and vengeful co-workers. You can go as high as you are willing to climb with your home-based business. Remember, though, to strike a balance between work and family time. In the end, nobody ever wished that they made more money rather than spend more time with their families.
Starting a Home-Based Business Is Productive For the Unemployed
If you are unemployed, you can gain the satisfaction of being productive by putting your skills to work in a home-based business, and you can operate your business while still looking for a full or part-time job. The home-based business will help defray living expenses while you search for work. Then, once you land a job, if you still want one after starting your business, you can still run your business on your own time schedule.
Approaches to a Home-Based Business
The two approaches to a home-based business are (1) moonlighting, which means that you run your business while you are employed full or part-time, and (2) running a full-time home-based business.
Moonlighting
When moonlighting you can use the money from your job to start the business while you keep your fringe benefits. However, don’t quit your job until you are earning three times more money working your home-business. I have seen people who started a business at home, were very successful in the first year, then decided to quit their job. That turned out to be a premature decision in most cases, because after the initial surge the business leveled off and the income was not enough in the next year to support the household. Many of these people went back to jobs, though some kept their home-based business on the side, and others gave up on their home-based businesses. The ones that gave up didn’t seem to want to put forth the extra effort to move from survival mode to actually thriving. This was sad, because they could have worked hard for a time and then eventually leveled off their work and reaped a great reward.
Remember, never use time or tools from your job to do your home-based business when you are moonlighting. It is not ethical to use the employer’s time to do your business unless you have been given permission. Sometimes when work is slow you may have permission to read, research, and study for your own purposes, but don’t abuse that privilege. Also, don’t compete with your employer. If the skill you are using on your job is one that you can utilize in your home-based business, please find your own customers and don’t try to take the customers from your employer.
In my own CPA firm, I had several workers during busy seasons; two different clients called to inform me that the worker at their location was soliciting them for business on the side. I had to let these two workers go because I knew they were not operating in integrity and could compromise my business, and that I could no longer count on them to do their best job for my firm. They had their own agenda. When you start your home-based business while you are still working, please avoid this mentality.
Full-time Home-Based Business
If you feel like it is time for you to go full-time in your home-based business, please follow these steps before quitting your job:
· Work in that field first. If the field you have selected is new to you, take the time to work part-time for someone else doing that same job; you will find out if this is really something you want to spend most of your days doing. Some people learn a new skill and quit their jobs, only to find out that they hate their new profession. If you at least spend volunteer time working in that field, then you can get a good feel for how you like the work before launching out on your own.
· Write a business plan. Once you have decided that you want to start your business full-time, write a full-blown business plan. Even if you are not trying to get a loan, your business plan will clarify your mission, vision, and core values, and help you stay focused on your goals. It will also show others that you are serious about what you are doing.
· Prepare cash flow projections. Within the business plan, you need cash flow projections for one to five years. Based on your mission and vision, you will need funds to operate and grow; these cash flow projections will keep you on budget, plot a steady growth, and will also help you succeed by keeping spending within your original plan. I know of several businesses that failed because they received initial start-up funds and started spending wildly without waiting on the cash flow to “kick in.” Once the start-up funds were gone and the infrastructure was not in place to produce monthly cas
h flow, the businesses sunk fast.
· Get the business started. After you have worked in that field and completed a business plan, start small and slowly. Try to use social media and word of mouth to advertise; spending thousands of dollars on advertising does not mean that customers will come. Social media has become a vital way to let people know what you are doing, so there is no longer a need to spend lots of money for advertising.
· Have adequate accounting knowledge. One big thing that causes businesses to fail is the owner’s lack of accounting knowledge. It is not necessary for each home-based business owner to have a degree in accounting, but they should not depend solely on an accountant to handle financial matters. Smart business owners know about receivables and payables, they keep up with all bank account balances, and they know what types of business taxes are due and when they are due. Many home-based business owners have to learn these skills on their own because they can’t afford to hire an accountant. Even if you hire an accountant, you need to be able to know what they are doing.
I know a businessman who hired an accountant fresh out of college because she was cheaper than the CPA firms. She did not pay the quarterly business payroll taxes because she had not studied that in school, and because he did not have that knowledge either, the business all but folded. The taxing authorities came in and assessed three years of payroll taxes after the fact. When you start your business it would be wise to take some small business or accounting courses.
· Construct a Website. Once you get started, you must have a website. People will take the time to look on line to see who you are and what you do. When I need goods or services, I compare businesses based on their websites; unless I know the owner personally, I don’t even take the time to look at a business that does not have a website! Your business will suffer if you don’t have a website, and it will suffer if the website does not project professionalism.