I got a couple of emails from readers a few days back. The first email read…
Vishal, I would like to start a business of my own where I can put my passion of teaching Math into practice, and also earn my living out of it. I really love the way you are conducting your own business. So can you help me with the tools to start my own business?
The second email read…
Is it really possible to start a new small business that also becomes profitable over the years, given that there is so much competition all around? Also, do I really need to quit my job to start something of my own like you have done? I am not yet in a position to give up the security of a regular paycheque.
Well, here is something I wrote an year ago that is my best answer to the above two emails. I am sure many others also feel this constant urge of starting something of their own so that they can take their life’s control in their own hands.
If you are one of them, I hope you find reading what follows worthwhile and helpful in guiding you in your own journey.
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I Own the World’s Best Business, and So Can You
First, a question – Which is the world’s oldest and toughest profession?
If you don’t know the answer, well, it’s parenting.
Now what’s the most dangerous? Fishing, believe it or not. Along with flying airplanes.
The one with the worst pay? Well, that’s of dishwashers or labourers, who scrape the bottom of the income barrel.
If you’d rather earn the big bucks, you’re better off learning to knock people out. No, you don’t need to be a boxer to do that…just an anesthesiologist.
Or you can try becoming a heart surgeon or gynaecologist. Believe it or not, CEOs don’t fall into the top 10!
Now, if I were to ask you – What could be the world’s BEST business?
Before I get down to answering that, let’s first understand from Richard Russell, the founder of the Dow Theory Letters – Wikipedia writes it’s “the oldest service continuously written by one person in the business” – what makes for the world’s best business.
10 Rules of a Perfect Business
If you’re about to start a business or join someone else’s business or if you want to buy stocks in a business, the following list may help you.
The more of these criteria that you can apply to your business or job, the better off you’ll be.
So, here are Russell’s 10 criteria for a perfect business, in his own words…
(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state. In other words, it has an unlimited global market. By the way, how many times have you seen a retail store that has been doing well for years – then another bigger and better retail store moves nearby, and it’s kaput for the first store.
(2) The ideal business offers a product which enjoys an “inelastic” demand. Inelastic refers to a product that people need or desire – almost regardless of price.
(3) The ideal business has minimal labor and overhead costs (the fewer personnel, the better). Today’s example of this is the much-talked about “virtual corporation.” The virtual corporation may consist of an office with three executives, where literally all manufacturing and services are farmed out to other companies. Also, the ideal business enjoys low overhead. It does not need an expensive location; it does not need large amounts of electricity, advertising, legal advice, high-priced employees, large inventory, etc.
(4) The ideal business does not require big cash outlays or major investments in equipment. In other words, it does not tie up your capital (incidentally, one of the major reasons for new-business failure is under-capitalization).
(5) The ideal business enjoys cash billings. In other words, it does not tie up your capital with lengthy or complex credit terms.
(6) The ideal business is relatively free of all kinds of government and industry regulations and strictures (and if you’re now in your own business, you most definitely know what I mean with this one).
(7) The ideal business is portable or easily moveable. This means that you can take your business (and yourself) anywhere you want.
(8) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs. There’s nothing like being fascinated with what you’re doing. When that happens, you’re not working, you’re having fun.
(9) The ideal business leaves you with free time. In other words, it doesn’t require your labor and attention 12, 16 or 18 hours a day.
(10) Super-important: the ideal business is one in which your income is not limited by your personal output (lawyers and doctors have this problem). No, in the ideal business you can sell 10,000 customers as easily as you sell one (publishing is an example).
Overall, I think Russell has hit pretty much all the key points of a great business. And by that measure, I genuinely couldn’t imagine a better way to butter my bread than what I’m doing right now. That’s why I believe…
I Own the World’s Best Business
By the way, if you were to again read Russell’s points above, they strike a chord with how even Warren Buffett defines a great business…
- Has a durable moat – You are the moat
- Managed ethically – You cannot run any business for long without it
- Earns high return ratios – Explained above
- Generates more cash than it burns – Explained above
- Has clean balance sheet – See above
- A one-foot bar – See above
Anyways, reading Russell’s rules of an ideal business, I believe I am fortunate enough to own one – my writing / copywriting / blogging business.
Why do I think so?
Well, let’s get back to Russell’s rules and see whether my business fits into the mould…
(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state.
My writing clients – though very few owing to my focus on Safal Niveshak – come from around the world. So I have written for a small company in Sri Lanka, to one in Brazil and another in the UK. Even as far as Safal Niveshak is concerned, tribe members are spread across 100+ countries, including Syria, Kosovo, and Palestine. What is more, subscribers to my Mastermind Value Investing Course include a few Brazilians, Thais, Singaporeans, Germans, and Danes.
(2) The ideal business offers a product which enjoys an “inelastic” demand.
I can say this for sure for my writing business where I have raised prices at 50% per annum over the last two years (on a low base though), but people are still interested to hire me for the quality they receive.
(3) The ideal business has minimal labor and overhead costs.
I manage my entire business on my own – including all its functions…right from thinking, writing, technology, marketing, billing, and housekeeping…and still work 60% less hours than what I spent at my job 3.5 years back. Plus I face no ego and expectation issues from anyone apart from myself. 🙂
Also, I bear zero costs on office rent, zero on marketing, zero on employees, maintain no inventory, no other working capital, no interest on borrowings – all in all, very clean P&L, Balance Sheet, and Cash Flow statements.
(4) The ideal business does not require big cash outlays or major investments in equipment.
The total money I spent to start my business in 2011 was Rs 10,000, and here is how I spent it…
- Domain name for 10 years – Rs 5,000
- Website annual hosting fees – Rs 4,000
- Personal independence day party with family – Rs 1,000
Since then, I have borne a few other expenses but they have been extremely low and far in between. Two recurring expenses I incur are – one, to host my website, and two, to send you my newsletters…but even those are negligible as compared to the invaluable connections I make with you.
The biggest expense I incur is that of my time – but that’s something without which no business in the world can survive.
(5) The ideal business enjoys cash billings.
My average receivable days would be less than 5, as a majority of revenue is earned before the service is offered. So I operate on a negative working capital.
(6) The ideal business is relatively free of all kinds of government and industry regulations and strictures.
Yes, I pay my taxes honestly…but thankfully, the Indian government is yet to impose a “world’s best business tax” on me. 😉
(7) The ideal business is portable or easily moveable.
Without you knowing it, I have sent you my posts from Rishikesh, Mussoorie, Delhi, Amritsar, Chandigarh, Kolkata, Bangalore, Jaipur, Goa, Varanasi, Qatar, and Singapore.
All I need to run my business is laptop, Internet, and my brain – and I make it a point to carry all these everywhere I go.
(8) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs.
Reading, thinking, and writing is all I do to run my business of helping improve a few lives. What could be more satisfying, intellectually and emotionally?
I’m fascinated with what I do and thus, in Russell’s words, I’m not working, but having fun…or like Buffett says, I tap dance to work.
(9) The ideal business leaves you with free time.
I work for just 3-4 hours a day on my business and have the rest of my time free to do anything that pleases me more than work – playing with my kids, travelling, reading, thinking, and exercising.
(10) Super-important: the ideal business is one in which your income is not limited by your personal output.
My efforts to write this post or my Mastermind lessons do not change with the number of tribe members reading them. While I still need to be around to write my posts, the fact is that the operating leverage is huge here.
How Do the Financials Stack Up?
Now, any business, however great it is, consumes precious time. And in order to live a life of financial freedom (well almost!), your business must earn you money and be profitable.
Without getting into the nitty-gritty of how much revenue my business earns and how profitable it is, let me share that, last year, it earned me 3x of my last drawn full-year salary of 2010 (my last full-year of job).
I am not sharing these details to boast about my abilities, but just to share that a guy with…
- Average abilities,
- Average financial position,
- Average aspirations, but
- Willingness to take control of his life,
- Support from his family, and
- Lot of (created) good luck
…can be financially free and be extremely proud to share his ideas with the world.
I may never run the most remunerative business in the world, but I for sure run the “most happiest” business in the world…for myself and for those who matter the most – my family, and my extended family i.e., you.
But How Does It Matter to You?
Now, why am I telling you all this?
It’s because I sincerely believe that you, if you want, can also start your own version of the world’s best business.
It may be writing, teaching, or doing something else that you are passionate about.
But yes, I believe, you can!
In fact, at some point in your life, you must!
Stand Up, Stand Out, Make a Ruckus
“There are only two mistakes one can make along the road to truth; not going all the way, and not starting.” ~ Gautam Buddha.
In a recent book titled The Icarus Deception , Seth Godin – who has had a great influence on my life as a thinker and writer – writes about the story of Icarus, whose father Daedalus fashioned two pairs of wings out of wax and feathers for himself and his son to fly out of a prison they were captivated in.
Daedalus tried his wings first, but before taking off from the island, warned his son not to fly too close to the sun, nor too close to the sea, but to follow his path of flight. However, overcome by the giddiness that flying lent him, Icarus soared through the sky curiously, but in the process he came too close to the sun, which melted the wax.
Icarus kept flapping his wings but soon realized that he had no feathers left and that he was only flapping his bare arms, and so he fell into the sea and died
The Icarus myth is often used as an example of when hubris or over-confidence – of flying too high – can go badly wrong.
However Seth, in his book, points out that there is another part of the story – Icarus’s father Daedalus also told his son not to fly too low as the water could also damage his wings. So, as per Seth…
Society has altered the myth, encouraging us to forget the part about the sea, and created a culture where we constantly remind one another about the dangers of standing up, standing out, and making a ruckus.
However, he writes, settling for too little is “a far more common failing”.
The crux of Seth’s book is that we all have the potential to do great work in life. However to do so, we need to leave our comfort zones – to fly closer to the sun.
What this requires of us is to have the confidence to take bigger risks and create new things.
This requires facing up to the pain involved in the process, and being open to possible failure and criticism.
All You Need…
Coming back to the world’s best business, here are a few things you need to start one of your own…
- A passion to create your own life
- A passion to help others improve theirs
- Bridging this gap by learning a skill that people would buy to solve a nagging problem they face
- Good luck – and luck, as you know, is a verb – that you must create through sheer hard work and persistence
- Your family’s unending belief in your abilities (without this, life could be hell!)
- Willingness to burn your bridges, so that you get into a “win or die” situation (it worked for me!)
As for the specifics of starting such a business, here is how to go about it (in brackets, how I did it)…
- Buy a domain name that relates to the nature of your business (You can buy one from Net4 India) – Approx. Rs 6,000 for 10 years
- Host your website (Bluehost) – Approx. Rs 4,000 for one year
- Create a WordPress-based website (Get from Bluehost) – Free
- Buy a clean and secured website theme (Studiopress) – Approx. Rs 5,000 one-time
- Sign up with an email delivery platform (Mailchimp) – Free for 12,000 emails per month
- Start creating good quality and focused content (I did it for investors, you can do it for students, engineers, marketers, CEOs) – Burn your midnight oil for this for some months
- Create your social presence – Facebook, Twitter, Google Plus – Free
- Work…work…work… and you will get lucky and succeed
Do You Need to Quit Your Job First?
I did it…but you don’t have to!
Here are the eight points why I say so. I had written these in my post on how I quit my job , but they are worth repeating here…
- Quitting your job must be the last resort, or when you find the burden unbearable and abusive.
- Quitting a job and living a fulfilling life isn’t as easy as those who have done it would make out to be. Things get scary at times.
- Quitting you job will affect others in your life, so it’s critical that you have an honest conversation with your family first and get their buy into the decision.
- Learn an important and saleable skill before you quit your job to start on your own.
- Quitting a job can be a path to hell if you get bogged down by failures initially. Don’t expect to get rich quick.
- Practice minimalism and lean living at least a year before you plan to quit your job. Instant compromises are heart breaking!
- Save money to use as initial capital for your business, and then keep your expenses low. Don’t borrow money for your business till the time you aren’t generating cash.
- Don’t believe people who tell you – “How I quit my job, doubled my pay and cut my hours in half”…or something like this. They will not help you if you reach a point of no return.
Now, Before You Start
Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. ~ Mark Twain
I believe there are two ways to live a fulfilling life…
- To have passion in your life, and
- To have life in your passion
I have chosen the second way, because that is where my heart lies.
Finally, here’s something I read recently that inspired me hugely…and can serve you a great inspiration as well…
Love Your Path by Paolo Coelho
- The path begins at a crossroads. There you can stop and think what direction you want to take. But don’t spend too much time thinking or you’ll never leave the spot. Ask yourself the classic Carlos Castaneda question: Which of these paths has a heart?
- The path doesn’t last forever. It’s a blessing to travel the path for some time, but one day it will come to an end, so be prepared to take leave of it at any moment.
- Honor your path. It was your choice, your decision, and just as you respect the ground you step on, that ground will respect your feet. Always do what’s best to conserve and keep your path and it will do the same for you.
- Be well-equipped. Carry a small rake, a spade, a penknife. Understand that penknives are no use for dry leaves, and rakes are useless for herbs that are deep-rooted. Know what tool to use at each moment. And take care of your tools, because they’re your best allies.
- The path goes forward and backward. At times you have to go back because something was lost, or a message to be delivered was forgotten in your pocket. A well tended path enables you to go back without any great problem.
- Take care of the path before you take care of what’s around you. Attention and concentration are fundamental. Don’t be distracted by the dry leaves at the edges. Use your energy to tend and conserve the ground that accepts your steps.
- Be patient. Sometimes the same tasks have to be repeated, like tearing up weeds or closing holes that appear after unexpected rain. Don’t let that annoy you; it’s part of the journey. Even though you’re tired, even though certain tasks are repeated so often, be patient.
- Paths cross. People can tell you what the weather is like elsewhere. Listen to advice, but make your own decisions. You’re responsible for the path entrusted to you.
- Nature follows its own rules. You have to be prepared for sudden changes in the fall, slippery ice in winter, the temptations of flowers in spring, thirst and showers in the summer. Make the most of each of these seasons, and don’t complain about their characteristics.
- Make your path a mirror of yourself. By no means let yourself be influenced by the way others care for their paths. You have your own soul to listen to, and the birds to whisper translations of what your soul is saying.
- Love your path. Without this, nothing makes any sense.
If you finally decide to start your own version of the world’s best business, and want me to help you decide or to play the devil’s advocate, my doors and windows are open for you.
As for my consultancy fee, you can pay me via a promise to share the learning with someone else in the future. 🙂