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"The Truth About Your Money Multiplication"
Back in May of 2008, I did an article called The Rule of 72. In that article I did an illustration that showed what a big difference just a few percentage points can make on an investment that you make. I also showed the astronomical amounts of money that banks can make by having people invest in them, guarantee them a small amount of money, and keep the difference. Today I want to talk about the same concept, not necessarily in banking terms, but in business terms.
First let us do a quick recap. What is the rule of 72? The Rule of 72 is a mathematical formula that demonstrates how quickly your money will double, based on the interest rate that you get on your investment. For example... if you put some money into an investment and it is making you 6% return, then you can take 6 and divide it into 72 and that will let you know that your money will double every 12 (72/6 = 12) years.
Now just be patient with me, because I want to do an illustration and I just want to get you thinking a little bit. Since the time of my last article, I have noticed that people get ALL BENT OUT OF SHAPE when I use 12% as a rate of return to do an illustration. And I can certainly understand why that is, considering the current economy, and how people often don't know where to look to find good performing funds. So... today I will back off and use 9%. Well, actually my reason for using that percentage is deeper than what I feel that a person could make in the market.
Instead of using the $2,000 that I used in the last article, I want to use $33,000. I want to use that number because right now that is the approximate income of people in America. My illustration (like in my last article) will go for 48 years. Most people work that many years in their lifetime. Let us carry on.
If you were to put $33,000
into an investment making 9%, how much money would
you have after 48 years? Well... 72/9 is 8. So that basically means
that your money will double every 8 years. So... After:
Wow... now that is a lot of money! As a matter of fact, it is SO much money that it got me thinking. You know, I'm a business man myself. So I'm normally receptive to opening a business. And of course, if I were to open a business and the business was or eventually got big enough, I may have to hire some employees. Now... more than likely, my employee salary range will be somewhere around $33,000. So I'm really having second thoughts about this. Why would I ever pay someone $33,000 when I could just invest that same amount of money and be a millionaire? The bottom line is, that if I was willing to pay someone $33,000, it would only make sense for me to do it if it would eventually put me in a position to be a millionaire (whether 100% of the money came from that business or whether some of the business profit was taken to invest in different vehicles)! But, let's look at 48 years (bringing someone from a young age to retirement).
Let's pull out a financial calculator like this one.
If you were to put $2,750 per month (or $33,000 per year) into an investment vehicle paying 9%, after 48 years you will have a whopping $26,761,659.78. WOW! Over 26 million dollars. So once again I have to ask, why would someone pay someone all that money when they could invest that same amount, and make that much money?
The answer to this question is very simple. Businesses DO MAKE THAT MUCH MONEY! You see, one of the reasons that I used 9% is because business owners will tell you; if you aren't making 9% profit on your business, then your business is not worth having. Why? Because you would be better off just investing the money!
I do want to put this illustration in the proper perspective. Yes 26 million dollars is a truckload of money, but it is over 48 years. And a WHOLE LOT of this money is ultimately not pure profit; because it will go back into the business to keep it running (you have to keep paying the employees plus benefits and expenses every year). But, nevertheless,... the owner(s) of a successful business will be RICH (even if they only end up with 10 percent of this)! My purpose for doing this illustration was to demonstrate to you how much your time is REALLY worth. While you are "slaving" away at your 9-5... or 9-7... or 9-9, the owner of the company that you work for is somewhere chillin... and makin a KILLIN!
The moral to this story and the moral to the Rule of 72 article is one in the same. You can give someone else your time and let them make the money and give you the "guaranteed" piece (since you don't want to take the risk), or you can go out there and do it yourself! You can put your own salary in the calculator and see what just may be goin on.
Now you may be sitting there thinking to your self, WOW... my time is really worth a lot. And of course it is. This is why you see people struggle mightily (all their lives for some) trying to do their own thing (while you sit there and wonder, why don't they just go get a job). And while it is definitely easy to take this route, some people may just not want to give their time away to make somebody else (who doesn't care about them anyway) rich! So why not consider starting your own business. It's really not that simple now is it? Most of them fail for various reasons. And of course the rulers of the Middle Class Matrix have the system designed to "funnel" you into corporate slavery and debt.
So... if you are interested, let's talk about some ways that you can get the party started if you choose.
Find Your Passion
Still don't know what you were put on this earth for? You may want to find out! The minute you start saying to yourself... hmmmmm what kind of business should I start? You've already failed. You have to find something that you have a PASSION for. Businesses are hard, and if you don't have that desire, then you will fizzle. This business has to be YOU. This way, working long ridiculous hours, which is what you will have to do in order to succeed, will be fun because it's not really work. This is imperative because most people who start businesses do so on the side of the job that they already have. So the hours will be long.
Patience and perseverance will be key. There is no get rich quick scheme, so it will be a rough ride. This is why passion is important. When you love to do something so much that you will do it for free, then when you end up doing it for free (most businesses don't make money in the first couple of years) it will still be enjoyable. In a lot of cases, the most successful people are the ones that work the hardest.
P.S. I'm not trying to condemn anyone whose business does not make money in the first 5 years. You can very well make some money very quickly. So don't sit there and "expect" to lose early because you will attract just that. My only point is that whatever you do, it will not be easy. Whether you make money right away or not, love what you do!
When you were in school, they forced you to do your homework. That's what it took in order for you to get that paper so you could be certified to go make someone else rich! So why do so many business owners want to go into their OWN business without doing the research? You have to make that investment in yourself! You have to know your niche better than everyone else. This way, your knowledge, and subsequently your content or your product, will be that much better than the rest.
Do research on law (like contract laws and legislative requirements) in your business. Keep building this knowledge as it regards to law in your particular field. Making one mistake in law can bankrupt you real quick. And paying for legal counsel for everything in your business can bankrupt you also (depending on what field you are in).
Beat The Competition
Easier said than done... but not as hard as you may think. You see, when you follow your passion, then you already have 90% of the competition beat. Plain and simple... nobody can be you better than you. Most people enter a field because of money, power, clout etc, etc. But few people love what they do and, more importantly, were DESTINED to do what they do. By finding your passion you are already ahead in the game. Let's take it a step further. What does your business have or offer that no one else has.? You've got to have something that will separate you from the rest. If not, you will just be the rest. This question must be answered before your business even begins.
Do Your Business/Marketing Plan
Yeah, I know you've heard it. Most people don't plan to fail, they fail to plan. You have to write a business plan. Well, how do you do that? Simple... Do some research on how to write a business plan! Here is a start. But you can go on the Internet or to the library and look into it. You've got to put in that work. There is no need to be intimidated. Your plan doesn't have to have a thousand pages with graphs and charts. Keep it simple See (K.I.S.S.)?! Your business plan should factor in advertising costs, what you can and will charge for your service or product, your potential market and what regulations need to be met.
After doing this business plan, you may realize that it doesn't make sense to even go about your business the way you are thinking about doing it. This will also clearly show you the amount of money that you will need to save, or raise, so that you can get started. When doing this plan, you will always want to overestimate the amount of money that you need to launch and maintain. It's easier to raise and or save money beforehand than it is to do it after you start coming up short!
Keep Costs Low
At the end of the day, YOU are your best employee. Keep everything small and cost efficient (especially in the beginning). You will have to compensate for less money with hard work. This again goes back to #1. If you love what you do, you will have an easier time investing in long hours. Be real prudent about hiring somebody. Just like the earlier illustration, don't go paying out money unless you KNOW that you will get the proper return on your "investment."
Friends and Family?
Looking to get friends and family involved? Be careful. Remember... this is BUSINESS! Don't go into business with ANYONE who you wouldn't go into business with. Sounds like an obvious and redundant statement... yet people do it and fail all the time. Is that person reliable? Do they have the same passion that you do about your niche (the answer to this is no most of the time, but not all the time)? Are they trustworthy? You have to be honest with yourself on this one. Watch those "partnerships" too, especially when signing contracts! Don't get "bonded" with someone who will end up reaping the benefits of the business profit while YOU do all the hard work, and they slack off (because they are not that into it). Keep in mind that this is YOUR baby. Don't let anyone else play with it unless you have complete trust in them.
This is not necessarily in reference to hiring people. Your team includes everyone around you. You want to surround yourself with people who complement your skills, and fill in the gaps where you are lacking, so you will want to network, network and network. Networking isn't just about finding someone to trade business and clients with. It's also about linking up with someone who is like minded. Networking is also a great way to receive advice. There may be people out there who are doing something similar or have gone through a similar phase in business and can help you out. Go places that you can meet other entrepreneurs in lots of fields. Remember that business is business, so you can always gain wisdom from a successful business person. Always be open to receive advice and absorb knowledge.
Wealth is not just about money. It is the total package. What good does it do to be rich with messed up health? You must take care of your physical, emotional and mental state (mind, body and soul). This is key to being a successful business owner. So make sure you keep up a healthy diet, exercise and keep steadfast in your faith.
Obviously, even if you love what you do, you will have to do some things (especially in the beginning) that you don't like. So make sure that you manage your stress levels. The last thing that you want to do is get burned out before you start to profit. A lot of people quit their business right before it begins to take off, unknowingly, because they get burned out. So once again, balance is important. Make sure that you schedule some fun time.
You will never have a successful business if you don't start a
business! Don't be afraid to fail! As a matter of fact, there is
no such thing as failure. There is just an opportunity to learn
from your mistakes and get better. Believe in yourself.
And remember, nobody can be you better than you. Find your passion
and make it happen. But remember... you've only got so much time.
The clock is ticking!
Hope this article was helpful,
So until next time,
Free Your Mind... Online
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