Like many people in this country I was raised with certain fundamentals and beliefs by loving parents that if I worked hard in school, stayed away from trouble and got a ‘good job’ the American dream of attaining financial independence was a reasonable goal. I must admit that I had many privileges that many cannot claim. I grew up as an only child in my home for most of my childhood and lived a very “Leave It to Beaver” life. Music lessons, car at sixteen, Eagle Scout, Co-captain of my HS Football team and most of my college expenses paid for, was my reality. I was grateful for my life, so I swore that I was going to make the most of my opportunities and be ‘rich’ some day. Well I am still working on the ‘rich’ part, but the reality is that after earning an engineering degree and an MBA I still have a lot of work to do on my road to making it ‘rich’ but I am on my way. I could blame my delay to reaching the holy grail of the rat race on having kids, a failed travel agency, living in the rust belt, and on and on and on. The reality is that I know deep down inside that I am extremely blessed to have my health and a relatively comfortable life. I don’t go to bed hungry, my kids are getting a great education, and my wife and I am comfortable in our modest three bedroom home. But like most forty something’s who grew up in a time when big was best and excess was the drum beat that we marched to, we all want to be a little more comfortable, have a little more security and most importantly have financial freedom so that we can eliminate one of the major causes for stress in most households and relationships.
I agree with many of the experts and noted authors in the world of financial success in that you must own something in order to reach a level of financial independence. That ‘something’ may be a business, a robust investment portfolio, real estate, etc. I have chosen to own a business, because in today’s economy the variety and diversity of offerings is extremely broad. There are three basic business models that the average person can enter into. This list is not exhaustive, but captures eighty percent of what is out there.
- A brick and mortar start-up: Been there and have done it. Let me tell you from experience that this option is a lot of work and takes a great deal of planning in our new world economy. Overhead is the evil of all evils. Rent, building out or developing a space, utilities all can add up very fast. This is all before you have the killer business plan and cash liquid clientele. There is a lot of risk in launching your own unique idea that has never been done before, but the rewards can be great if you have the super star product or service that everyone wants. Tread carefully as investors will be very leery of investing in start-ups, launching into uncharted territories that have not proven themselves. I learned a tough lesson post September 11th when I opened a travel agency in a loft space. It was going to be high tech and high touch bringing a new tech spin to the travel industry. I closed my business three years later after realizing that the travel had changed forever and that I had to move on.
- The franchise: This model is one that has been very popular for many years. It is fairly successful in that proven best practices are duplicated over and over by following strict policies and procedures. Success has come in the form of fast food restaurants, cleaning companies and even lawn services to name a few. The ‘turn-key’ phase is often thrown about when describing a franchise model, in that you pay your money and then success comes your way if, and it’s a big if, you follow the model. Many franchises do produce success, but it comes at a price. Usually a stiff price. McDonald’s franchises are said to cost millions to start. Even a Subway will cost a couple hundred thousand to get off the ground, not including the food. You also will have to invest heavily in your time and sweat equity to establish the business and train a staff. You must do a serious gut check before going down this path as to what is your motivation and if you have the right stuff.
- Multi Level Marketing (aka) Network Marketing: This model is as old as Avon and Amway and has many benefits as well as down sides. The greatest benefit is that it is relatively easy to get started. Compared to most businesses the barrier for entry is small. Enrollment fees can be as small as $25 to a few thousand. If chosen wisely, you may actually like the monthly products or services (often called an autoship) that you would be required to buy. If you don’t, its usually a good sign that you are not with the right opportunity. The overhead is small or negligible as most of these businesses are run out of the home and inventory, if any, is usually delivered directly to client’s home or business address. The greatest benefit of this business model is the ability to build ‘residual income’. This is the concept of receiving a percentage of the sale and profits that your recruits earn. There are many models and business to choose from in this model. The down side is that many people are not comfortable ‘selling’ or promoting themselves or a product, whether it is to their friends/family or to strangers. If this is the case, this business model is definitely not for you.
No matter what business model appears attractive to you, it is imperative that you do your homework first. Never make an impulse decision and above all else answer the questions about your own readiness. None of the above models will work if you are not bought into doing the required work with your heart and mind. Fortunes are made in tough economies like ours, but only for those who are ready to roll up their sleeves and do the work.
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