Saturday, April 29th, 2017

Financial Freedom: Can Starting Your Own Business Ruin You?

2

Holly and Jacob Weinstein started a computer sales and service company in February 2007.  Jacob cashed out his 401(k) from work (taking the penalty) and used the money to set up shop in a little store front on a busy boulevard.  “It’s a perfect set up,” Jacob said.  “Holly can watch the store while I’m out doing on-site service and sales, and then when the kids get home from school, I’ll take over the store.”

Financial Freedom: Can Starting Your Own Business Ruin You?

Financial Freedom: Can Starting Your Own Business Ruin You?

They both worked very hard, and soon they had a small customer base of repeat business.  Unfortunately, overhead was higher than they’d expected.  The service side of their business did very well, but sales didn’t – they couldn’t compete with the prices and features offered by the larger chains.  Their seed money ran out mid-summer.  They borrowed from Holly’s father and ran a big advertising campaign for the holidays, but by January, they closed the doors for the last time.  Jacob went back to work at a large corporation, and Holly took a part time job in a retail store.

If you’re considering starting a business of your own, you need to be very mindful of these things:

  • You need to be prepared to “feed” it for 3-5 years. Realistically, you won’t be able to draw out profits and sometimes even a paycheck until your business is well established.
  • You’re the last to get paid. You have to pay the bills, and you have to pay your people. So you’re the last one in line when it’s payday, and you have to hope the money holds out until your turn.
  • Although you may have more control in terms of scheduling, expect to put in very long days. New businesses tend to be very demanding and labor-intensive.
  • Unless you can afford to pay the experts, you will be doing all of your own marketing. And your success will depend on you being good at it.
  • Costs for employees and overhead are higher than you may realize or expect.
  • 80% of all businesses fail within the first 2 years. Yes. 80%.

Are you one of the lucky/skilled/determined 20%?  Will you be able to keep your doors open?  I’m not suggesting that no one should start new businesses.  Those twenty percent that do survive are immeasurably beneficial to the economy of our nation.  As with real estate, if you are the right person doing the right thing at the right time, you could find financial freedom very quickly.

As you make your investment decisions, I’d like to help you sort through all of the information.  Success in 5 Minutes a Day will lead you to the wealth that you’ve never thought possible.  Join the affordable program Success in 5 Minutes a Day and learn how you can put leveraging to use.

Comments

2 Responses to “Financial Freedom: Can Starting Your Own Business Ruin You?”
  1. This is an excellent post, I will be adding your site to my morning routine!

  2. Nice post. Liking this blog going to have to bookmark it.

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

CommentLuv badge