How to Get Rich: Start Your Own Business

Here's a quick quote from Managing Editor Eric Schurenberg in Money magazine's July issue:

The average self-employed American's family has five times the net worth of the average wage earner's. So the payoff can be high if you succeed. Only problem: Success comes hard.

Yep, if you develop a winning business, odds are that you'll do quite well financially. Yet the chances of developing a winning business are small.

But to improve you chances, I have a few resources you may want to check out. First of all, Money magazine offers a short quiz to help you see if you have the right stuff to be a successful entrepreneur. And for ideas/inspiration, the magazine profiles others who have done well in developing their own businesses. Finally, they list four steps to starting your own business including:

• Work two jobs - "Get as much of your new business as you can set up while you're still collecting a regular paycheck."

• Plan to survive on your new nonsalary - "Once you have an idea for your venture, you need to think realistically about how much money it'll take to get going and how you'll support yourself and your family while you're not drawing a salary. Expect that period to last a year or longer, so put aside at least 12 months' worth of living expenses. Another alternative is to moonlight during the first few years."

• Sell your family on the idea - "Running your own business is supposed to give you flexibility, but not when it's a start-up. It will chew up every minute. Whatever else your company makes, you can be sure that it will manufacture guilt at a steady rate. So warn your spouse and kids: You won't be around as much."

• Keep your benefits coming - "Don't forget to hold on to your health insurance; under COBRA rules you can extend corporate coverage for 18 months on your own dime. By then your company should be robust enough to afford a policy."

It can be a risky way to become wealthy (after all, a lot of businesses fail, so do you really want to leave a nice, secure job to risk your financial health?), but if you do it right, it can be quite lucrative.

What about you? Anyone out there thinking about (or already done so) starting your own business? How's it going?

Comments

[Lynnae @ Being Frugal]

Timely post. My husband is thinking of going into business for himself. His current sales job isn't going really well. We're not ready for him to completely take the self-employment plunge yet, so in the meanwhile, he's looking for a interim job that will give him a couple of weekdays off to focus on his self-employment venture. He'll do both until his new business reaches the point that it can support our family.

That's the plan anyway. We're still in the very early stages of discussing it, so our plan may change.

[Curtis]

Starting my own with some friends. Software is developed and ready, patent application is being put together by the attorney, website and marketing material is in the works, only thing left now is to start selling and making money!

[beastlike]

Good post... Just can't think of any lucrative ideas to go after right now!

[Katy Raymond]

My husband started his business on the side while still working in corporate communications for a major pharmaceutial company. He probably worked 20/hours per week for his own clients while still holding a full-time day job. When the pharm company moved its headquarters, it offered severence packages to those unwilling or unable to move across the country. The severence package gave us the "float" we needed to cover expenses while our own business transitioned into a full-time venture. Interestingly, one of his first big clients was the company he'd perviously worked for! We've been on our own for 8 years now, doing great.

[Katy Raymond]

I meant to write "previously," since "perviously" is not a word! Sorry.

[Aaron]

Good call reminding folks about their health insurance. The cost of going on your own can increase as you get older because of rising insurance costs. Sometimes it pays to spend a little time with a financial planner ahead of time to understand health insurance, disability insurance, buy sell agreements and so forth.

[Minimum Wage]

Former radio talk show host Bruce Williams (I assume he must be retired by now) used to describe buying a going sole-prop business as buying a job.

I've long thought this might be a great idea for a low-income worker with experience in the same field as the target business. If you're earning $15K, and a retiring business owner has a business which generates $50K net, that would seem to be worthwhile if you can get reasonable terms from a seller who doesn't need to cash out.

If you're accustomed to living on a shoestring, you'd have a lot of money left over to pay the seller and grow the business.

Is it feasible? I haven't seen this sort of thing written up anywhere.

If impervious is a word, imperviously should be a word. If imperviously is a word, shouldn't perviously be a word?

[Susy]

My husband and I started our business 5 years ago. It was originally started as a side business to earn money for his motorcycle. But then his job got really stressful so he decided to quit and try his business full-time. We had already bought all the necessary equipment and saved up a good amount for our emergency fund.

Our business took off and our income from the business is growing remarkably each year. Each year we try to find new streams of revenue for our business in case one stream dries up, then we have plenty of options for more revenue.

I do have health insurance from my job. I work from home for a small non-profit and they don't pay much in salary but the health plan is really great so that covers out health insurance. That can be a huge drain on business income!

[ryan]

fought with this idea when i got out of college, but couldnt get anything to float.

i then started researching real estate investment (not speculation). started my company at 24 and couldnt really do anything with it for a year (no money for downpayment). have been expanding mentally and physically for the last year, and am very optimistic about the next couple of years.

i am currently still full time employed, and am looking to find a new job where i can post up for another year or five, depending on how time consuming my real estate becomes. i plan to take it to where i do not have a desk job any more. i just need sustainable income enough to cover eating/health insurance/etc.

i would recommend starting a business, i would recommend real estate investment. if only for the tax incentives and cashflow. people NEED what you are selling.

[Harrison]

Hmmm... I start and run a business when I was 19. Yep, I didn't study in any university or even work for anybody. Now after 5 years of working hard, I can tell you from my experience that - starting a business is tough and much more than getting a steady paycheck from a job. However, if you do everything correctly and pass all the hard time, you will get the results. So starting a business is risky if you are giving up each time you have a problem. But if you know you can continue no matter what happen, then a business is not as risky as you think.

Of course, my case is different as my parent support me on this. I also don't have any life commitments such as a family. So I can take any kind of risks. But if you are different, then you must think probably, I think starting a part time business is a good choice for you.

[Alain]

Hey,

I'm looking for a no-cost business opportunity but I don't know where to find them? Do you have any recommendations?