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Tuesday, March 26, 2013

On Being Wealthy 4

Leap of Faith
To pick up where I left off on part 3 of these series; starting a business is a risky undertaking, but the rewards can be huge.  Nobody should start a business because they don’t like their present boss, or because they dislike being told what to do.  If that is your reason, then you don’t have the required discipline to run a successful business.  You have more people telling you what to do when you run a business then when you work for a living.  Here is a short list of who your business related bosses might be; landlord, customers, vendors/suppliers, tax revenue office, City license, internal revenue, and the list goes on.

Percentage of businesses that fail the first year is 25%, second year 36%, and third year is 44%.  Your chances of being in business after three years are right around 50/50.  In the many years of being in business (and I do mean many) I have failed once.  Six months into the business I could see that I wasn’t making the progress that I expected, and I immediately took the required action to begin the process of cutting my losses.  I bought myself out of the option to buy lease, and within one week the business was history.  I had a large loss but it was from my own resources (not borrowed money). With tax laws being what they were at the time, I was able to take a loss carry forward for seven years, and basically recouped my losses over 7 years.

Words from the song the Gambler; you got to know when to hold them, know when fold them, know when to walk away, know when to run.  Business can be very much a gamble, and I guess you could say that I have a poker face.  Not very many businesses stay successful forever; you need to know when to get out.  Consider that a particular industry is never too crowded; there is always room for another good or great business to open.  I have operated my present business for 22 years.

Some people are better off doing the second step that I did for myself and my family.  While gainfully employed and operating a family business at the same time, I decided to prepare myself for a better job (promotion).  I went back to college for a two year period and enrolled in Architecture Drafting, and Architectural CAD Classes (Computer Assisted Drawing).  Two big disciplines that got me through were; 1) the patience to study for two years instead of finding a higher paying dead end job, 2) spending so much of my time away at classes, and even while I was home I was behind closed doors studying, and doing homework (away from my family time).  What little time I did spend with my family was quality time.  I went on to enjoy a long career in a very lucrative field that is still paying great dividends for my patience, and perseverance.

For the second step that I describe there are two key words; 1) patience, and 2) perseverance.  Figure ahead the length of time it will take to get you ready (and commit to it), also have a plan for where this preparedness will fit in (will your employer promote you, or is there another employer that would offer you a job?).  We are not always a good judge on what to prepare for; the unemployment office is filled with college educated people.  Make sure that you do your “due diligence.”  What seems like a lifetime later, I am still managing the family business.

A few years back before the economy went down the drain and while the Stock Market was still thriving, my wife asked me if there was something wrong with how we controlled our finances, and I asked her why she asked.  She explained that it seemed that 80% or more of our friends and acquaintances had investments in stocks, and we didn’t.  At the time it seemed that’s all our friends would talk about.  A few years later when the market crashed, I explained to my wife that I was never much of a risk taker with the stocks, and that my perception had just been validated.  I feel terrible for my friends because most of them lost more than their shirts.  Remember good living, and hard and equally smart work habits always pay rewards. I’ve been called lucky many times in my life and my favorite response is, yes I am, the harder I work and prepare the luckier I get.  The best is yet to come…

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