Hey gang, Mike Roberts here again. In today’s how to get rich guide, I’m going to talk about starting a business. In a few short minutes you will have discovered how to unlock your mind and raise your financial IQ.
how to be rich: If you are interested in making money, you should do one of these four things. Win the lottery, inherit a bunch of money, invest (real estate, stocks, etc.) or start your own business. Although inheriting money sounds easier than the latter, it’s unlikely to happen. This reminds me of a story I heard once. One day, a reporter approached this rich man and asked how he had made such a huge fortune and how he had managed to overcome the great depression.
His response was, I only had 10 cents to my name and so I bought an apple. I spent all day polishing that apple and then I sold it for 20 cents. The next day I bought two apples and polished them and doubled my money again. By the end of the month he had made a small fortune of $1.50. Then the next month my father died and I inherited millions. So I guess inheriting money would be a much easier route, but it probably won’t work for most of us. Anyway, more tangent, let me get back to today’s how to get rich guide. Really pay attention to these words and let them sink in. There are four types of people; the Employee, Self-Employed, Entrepreneur and Investor. Each category has very different mindsets and once you get to know these categories, you will immediately start noticing which category your friends, co-workers, bosses, etc. are in. they are in
One of my many brothers is very intelligent. He can read and write better than me, chances are he’s better at math and has some pretty amazing accomplishments like a master’s degree just to name one. Despite all this, he has a limit on his income because he has an employee mentality. Now I’m not saying you’re poor or can’t make money in any of these categories, but the employee category and the small business owner category have by far the most hurdles and you’re just not going to buy that 100 foot yacht. what you want Although my brother earns a decent salary, he can’t find creative ways to increase his income. He is permanent and his income depends entirely on his boss. He must always keep his boss happy and do his best to ensure slow and steady gains. Also, as an employee, he has no real financial security. If the economy goes down, he could lose his job tomorrow. His boss has the final decision on his financial future. Now, if this sounds like the situation he’s in, he’s reading on.
The freelancer or small business owner mentality is the second tear. This is the person who is strong-headed, generally doesn’t like working for someone, and has a very specific skill. Self-employed people have more freedoms than an employee doesn’t have because they are their own boss and can usually make more money. But the freelancer’s problem is, well, the statistics. About 68% of businesses fail in their first year and 90-95% fail in the first five years. Also, a self-employed person—think dentist, fair, cape, etc.—is usually the heart of your business.
They have a specific skill that they can provide and if they don’t show up for work, they don’t make any money. Now, in addition to these two categories not making as much money or having any real financial security, they also pay a lot more in taxes. I just saw a clip on YouTube the other day about Warren Buffet. He was showing the reporter how he pays less in taxes than his receptionist. His receptionist paid an average of 31% per year in taxes, while Warren only paid about 16%. Wouldn’t you like to pay half less in taxes and earn twice as much? Have you already noticed that the Salaried and the Self-Employed are hindered? Do you know these people? You are one of them? Now, as you become aware of these people, you can open your mind and begin to change your thought patterns.
When I was 19 years old I had an employee mentality. I was struggling to pay the bills, buy groceries, put gas in my truck, or take my girlfriend on a date. I eventually got a decent job with all the benefits, but as my financial education increased, I eventually ended up quitting my job and made the leap from Employed to Self-Employed. I thought I had made the leap into the big business owner mindset or investor mindset, but I hadn’t. I started a cleaning company. I got a good customer base and eventually had 12 employees working for me. I thought I had made it to the big leagues. I mean, I was only 22 at the time, give me a break!
The thing was, I was paying less tax than as an employee, but my tax rate was still high. If I wanted to take a day off, I was usually paying a huge consequence (I had no one trained to replace my specific job position at the company), and I was working harder than ever. I would get up at 6am and come home around 9pm with occasional panic cleanings at midnight or 2am to get a house ready for showing. It was a tough business. I eventually fell into the hole that most self-employed people find themselves in. I started to be lazy. I was so busy working at my company that I had no time to work at my company. I stopped increasing my financial IQ and stopped thinking of creative ways to grow my business. In the end he wasn’t even as sure as he thought. I eventually lost a major account when the real estate market in the area crashed. Trust me, I’m glad this happened. Many times we can let the stress of day to day kill our desire for more and wear us down, but as difficult as it is, you must persevere.
Increasing your financial IQ is the only way to earn more money. So you can get out of the rat race and work on your terms doing the things you enjoy. Also, buying a yacht is just a bonus! The last two mentalities are the owner of the Great Company and the Investor. My definition of a great business owner is someone who can leave their business for an entire year and still have the business run smoothly and grow in sales. The personal way I have achieved this category is through websites. I have several websites that I haven’t touched in months, but they have actually grown in size and my monthly income has increased slightly as well. There are several ways to achieve this category!
The last category is the inverter. The investor has his money working for him! The Investor generally has real estate (or stocks) going up in value. He uses a little money to leverage large assets and can creatively generate income out of thin air. Sounds hard to believe? Let me give you a quick example. Let’s say this super creative investor, without giving any names, bought a commercial building. The down payment depleted his bank account, but he wanted to buy another commercial building. The average person might say, well, the first one is giving you enough money, you greedy bastard, or say something along the lines of “looks like you’re going to have to approve the second building and just save your money and buy something else in the future.” Right? WRONG!
What the “me” person does is think creatively and create money out of thin air. This particular investor came down to his new commercial building and met with his tenants. During his visit he noticed two things, one, the tenants had a pile of boxes stacked (not enough storage space), and two, there was a small to medium size parking lot behind the building that was not being used by any of his principals. So he saw an opportunity. He kicked the cars that didn’t belong in the back and got to work building some storage units. He got some offers and used the money he had left to build them. Once they were finished, he let his tenants rent some and filled the rest by placing an ad in the newspaper. Once all of these units were full, he had the bank go back and reassess the value of the properties now that the cash flow was even higher. The bank allowed him to take an additional $50,000 of equity against the property. He only used $10,000 in cash to build the storage units, so in essence, he created $40,000 out of thin air. (This allowed him to buy the second building he wanted.) Imagine this for a moment… he has the chance to travel the world, but he doesn’t have enough money. As an employee or self-employed person, he has few or no options, but as a business owner and investor he can create opportunities that generate substantial wages in as little as a month. Be creative, increase your financial IQ, read books, play educational games, subscribe to financial RSS feeds and stay up to date, don’t settle for low wages! You can have the financial freedoms you want! You deserve more, you just have to reach out and get it.
Starting your own business on your own is a start. Once you learn the techniques on how to transform a small business into a great business, you will be more financially successful than you can dream of. If you’re like me, then you won’t settle for an average income anymore. How to rich blog will be offering a course in the very near future on starting your own business. If you are interested, please visit our site and click the “Contact Us” button on the left. We want to help you increase your financial IQ so you can be as free as we are.