Advice for Those Thinking About Starting a Business

This is my first Steemit post from my actual profession (from which I recently retired). I came to a very important point of clarity about something recently that I've been sharing with my previous clients (and those still wrapping up), that I think would benefit more people to hear before they even begin the self-employment journey.

Lifestyle Business or Investor Path?

If you'd asked me 3 years ago whether you should bootstrap (meaning self-fund) your new business or get investors to build something big enough to attract investors, I'd have told you to bootstrap. There is a body of knowledge needed for dealing with investors successfully, and most people don't have it. It is also not information that is easily gained. Plus, the things that many people want to do are more lifestyle businesses anyway. Investors don't invest in lifestyle businesses.

If you want to do work you love, that makes a difference in the world, and live comfortably financially while doing that... and you don't particularly want to have multiple locations, many employees, a board of directors who can fire you, and millions in annual bonuses... then you want a lifestyle business.

With such businesses the main barrier to entry is knowledge that is applied consistently for long enough to turn a profit. If you don't have the subject matter expertise, don't understand how business gets done, can't be consistent in your work at something, or can't keep it up for a couple years at least before needing it to support you, then you may fail at even such a simple business to start.

My work was often to teach people these things and guide them in that application of that knowledge, so that they could in fact succeed with not only creating a lifestyle business, but funding that business with their earnings from a job or savings.

But now I see that things have changed in the last couple years, such that this just isn't a good business model anymore.

Where I used to always say, "start a business with a low barrier to entry," I now say the opposite. If you're going to do it at all, go big.

Why Bootstrapping is a Dead End Now

While there will always be some exceptions to the rule, for the most part, any business you can start with just know-how, the right personal qualities, and no more than $10,000 cash/credit is probably going to struggle to break through in the market. Sure, you can see some revenue within your first few months if you do enough things right, or are simply lucky enough. But for most fields, it is unlikely you'll be able to build up to a secure and plentiful income while working no more than 5 days a week.

That's because of the internet and how it has enable online instruction.

You see, 10 years ago if you wanted to be, say Life Coach, you might go to school for certification then put out the word where you live and socialize about what you do. You'd get some clients and those clients would recommend you to others, and you could support yourself just off word of mouth.

Then about 5 years ago that wasn't enough anymore. Those folks who had done well like that started struggling. Enter the world of "business by social media," where they learned they needed an email list, a website with testimonials, and maybe also a podcast or blog. Thus began the endless "more marketing" race that took the joy out of their business, but that now felt like a necessity to even stay in business.

Over the last year, what I've been seeing is that even this isn't working anymore. And that's for people who've been in the field long enough to actually have referrals and testimonials and contacts for an email list. For new people just getting certifications now and wanting to hang a shingle, things really aren't working. No one has enough clients. Many people have no paid clients whatsoever a year after graduation.

The culprit is the proliferation of online courses.

Now I'm not knocking online courses. I've made a couple hundred thousand dollars from them myself, so at one level I really like them. However, what has happened with the proliferation of these training tools is that the barrier to entry for many fields has been set so low that now there is simply too much competition for ANYONE to succeed.

Sure, sometimes someone will break through with a great marketing angle or some free PR for something newsworthy about what they're doing, but for the most part, everyone is getting lost in the noise.

Most business coaches will tell you to just do more marketing, so that you're louder in the chaos. Well I was a business consultant, not a coach, so I'll give it to you straight: it doesn't matter how loud you get when no one is listening.

Overwhelm

Everyone has too much. There are too many options, even very attractive ones, for people to say yes to any and follow through. There are too many things service providers feel they should be doing to attract those people. There are too many missed opportunities, because in the ruckus the key pivot points from inspiration are missed entirely.

What is needed is more focus and clarity, less hustle.

And yet, if you aren't making enough money to support yourself and have burned through your savings trying to start this bootstrapped business the last couple years, what are you to do? How can you stop hustling when you aren't even making enough now?

I can't tell you how to make those very hard personal choices. I can only tell you that doing more of what you're already doing is going to lead to decreasing returns.

That's because others in your field (whatever your field is) are starting to feel the squeeze too. And some are responding by deciding that instead of doing your profession, they'd rather teach others to do your profession. They create online courses and sell hundreds of thousands of dollars worth of experience for under $1,000.

As a result, more and more people pay that $300-600 to get training that allows them to present themselves as if they have hundreds of thousands of dollars worth of experience gained over years of practice in your field.

Now you of course are better at it than they are. You can deliver better results, because you do have a couple years of experience. But if they have better marketing, they can create the impression of being more skilled than you.

Now potential clients may not hire them instead of you, but they can introduce enough overwhelm, and therefore doubt, that the person simply doesn't hire anyone. Maybe they take a $200 online course instead themselves.

My Advice to Those Who Haven't Started Yet

If you haven't gotten yourself in this deep yet within a field of increasing competition due to it simply being too easy to start such a business, and if you simply MUST start a business of your own, then I suggest you go big.

Start a business that has a high barrier to entry.

Start one that not just anyone can do with $600 and a willingness to go hard at marketing.

High barrier to entry businesses require more capital to start, so most people will need investors. Before an investor is going to give you $500,000 of her/his money though, they'll want to see you've invested at least $50,000 of your own (whether from savings or friends and family).

You'll also need to be able to show that you've got a team behind you (not a sole proprietorship) and that you've got good financial projections for how the amount of money you're asking of them is going to actually get you to revenue at the very least. And they want to know that you have an exit plan for selling this business and giving them back at least 20x what they gave you within the next 5 years tops.

There's actually quite a bit more to it, of course, but these are the main things to have in mind before deciding to go down this path. If you want nothing to do with any of that, then the high barrier to entry business may not be for you.

You could also try keeping a full-time job while doing a side business, and hoping that will make the difference. But if it is a bootstrapped side business (which it necessarily must be, since no investor would touch it if you aren't full time at it) then all you're likely to be doing is squandering money that you could have been investing in ways that are much more likely to pay off than running the endless training rat race of online business training and coaches is.

That's the bad news. The good news is that you don't actually have to start a business at all just to do work you love and also financially thrive.

What's Old is New Again

Do you recall the idea of making money in a job, living simply, and setting money aside for an early retirement, at which time one would devote themselves to service work and creative projects that fulfilled them?

Maybe it wasn't to be from just a job. Real estate is how most people who have money either made it or how they hold it now that they've made it. It has served me well for sure.

Cryptocurrency also promises to provide a similar path to early retirement to many.

I've also done well with a few other types of passive income that isn't just about investment of cash, which you may not have. Though crypto can be just a $100/m investment that will eventually turn into something that could be the down payment on a house, which then allows you to profit from the potential of real estate.

The main thing here is time. You've got to be willing to work many years, saving for the future while building up the skills and connections that will later allow you to make your dreams come to life in the world. Are you that committed to the dream that you can live an inspired life like that?

I could go on and on about a number of topics I've covered in this post, because really there's a lot to this. To sum up without writing an entire book though, let me just emphasize that whatever you do, you want to aim to reduce competition.

You want to either do something that is hard to start doing even if you've learned the step-by-step of HOW it gets done, or something that is proprietary to you, your unique inspiration in this world.

Mostly I write about that last idea, though not in terms of making money. Really, it always comes back to making a happy life, which usually does include making money since we need it to live in most places. But whether I speak to money directly or not, know that I am always guiding you toward your abundance in all good things.

I don't have issues with thinking money is profane and that we must be above it to be spiritually mature. It's just energy, and it's a particularly fluid type of energy at that. It can be transmuted into many different forms of things we like. So let's welcome lots of it in.

Let's welcome in especially the peace and clarity of mind that allows us to find our way within these changing business and financial currents. You absolutely can do quite well in life and achieve your most important dreams. But bootstrapping a business then hustling hard until you make it is unlikely to be a successful path toward that end.

(Photo source: Pixabay)

Resteems always appreciated