Q: I'm thinking about starting a business since that seems
to be how most rich people get rich. I don't have any business
experience or much money, but I'm a fast learner and have
lots of energy. Any free advice? -Peter J.
A: I 'm full of free advice, Pete, and here's your
dose of complimentary wisdom: don't quit your day job.
No offense my energetic friend, but to consider starting a
business with no experience and no money is a little like
playing football with no playbook or pads. Your various body
parts will be pounded into the ground by better-equipped players
and you will lose the game.
Now let's address your other point concerning rich people
who got that way in business. Anyone who thinks that going
into business is the key to riches needs to hear the story
of the boy who asked the rich old man how he made his money.
The old millionaire fingered his Rolex watch and said, "Well,
son, it was 1932: the depth of the Great Depression. I was
down to my last nickel. I invested that nickel in an apple.
I spent the entire day polishing the apple and, at the end
of the day, I sold it for ten cents.
"The next morning, I invested those ten cents in two
apples. I spent the entire day polishing them and sold them
later for 20 cents. I continued this system for several years
and soon I had a thriving apple business."
"And that's how you got rich?" the boy asked. "In
your own apple business?"
"Oh, heavens, no!" the old man replied. "I
lost my shirt in the apple business, but a few years later
my wife's father died and left us ten million dollars"
Moral of the story, Pete: you'd be better off finding a nice
girl with a sickly, rich daddy than to count on starting a
business that will make you rich. Of course finding a nice
girl with a sickly, rich daddy is easier said than done (trust
me on this one), but one can always hope.
That's certainly not to say that you can't make a great deal
of money in your own business or even get so filthy rich that
wide-eyed youngsters beg you to tell them stories of how you
built your fortunes. But most people who start a business
do not get rich. To the contrary, most make so little money
that they decide that going into business was not such a great
idea after all and then run screaming back to the security
of the job they once could not wait to leave.
While it is true that more millionaires got that way from
their own business ventures than through any other means,
to summarily assume that starting your own business puts you
on the road to riches is foolhardy.
Many entrepreneurs build solid businesses that provide a very
comfortable living and many others do indeed get rich. Others
simply find out that they have traded one job for another
and still others discover that business really wasn't for
them.
What should you really consider before starting a business?
Asking yourself the following questions will help you make
a wise decision.
Are you really cut out to be an entrepreneur? This is the
first question you must ask yourself because the grass on
the other side of the entrepreneurial fence is not always
greener (despite all the entremanure).
Ask yourself: Do you have a burning desire to own your
own business? Do you have the initiative to get out of bed
in the morning and be your own boss? Do you have the energy
to work around the clock? Can you persevere in the face of
adversity? Can you turn problems into opportunities? Can you
work alone without support? Can you get used to the idea of
life without a steady paycheck? Are you passionate about your
product or service? Are you prepared to run the company, do
the books, sweep the floors, empty the garbage, and do whatever
it takes to make the business a success?
If not, you're not cut out to be an entrepreneur. Learn to
love your cubicle.
Do you really have a "great idea?"
The key phrase here is "great idea." All businesses
- those that make their owners millionaires and those that
make their owners paupers - start with an idea. The problems
begin when that great idea turns to mush. Share your idea
with others and ask for honest feedback. You might find that
great idea is not so great, after all.
Is the timing right?
Is this a good time for you to start a business? Maybe you've
just retired or left a job and have the time to devote to
a business. Or maybe a rich uncle left you a bundle and you
are now financially sound enough to venture out on your own.
If the timing is not right, don't start a business.
How's your personal life?
Money and timing aside, your personal situation should be
the deciding factor on whether or not you start your own business.
Is your health good? Is your family supportive? Are you willing
to sacrifice current lifestyle for long term success?
How well do you handle failure?
Since the vast majority of businesses fail within the first
5 years this is the most important question you must ask yourself.
No venture is foolproof. Even with a rich relative (alive
or dead) no business success is guaranteed. If the business
does go belly up, can you still land on your feet? If not,
RUN!
So Pete, there's your free advice. Good luck finding a rich
father-in-law.
