“If your business depends on you, you don’t own a business—you have a job. And it’s the worst job in the world because you’re working for a lunatic!”
― Michael E. Gerber, The E-Myth Revisited
Many people start a business to gain financial freedom, but most of them never reach it and instead find a more subtle type of slavery.
Often, people create a business that requires more and more effort, all their time, and all of their attention to get profitable.
Instead, they would have to create a workforce to earn money even when they sleep.
Michael Gerber in his book “The E-Myth” writes about why people fail at starting small businesses.
An example, the story of John:
- John has some skills and wants to use them to earn money, so he decide to start a new business.
- He rally loves the idea of starting his own business: He can be free and have no boss.
- John quits his day job and open a business.
- With his new business, John can use his skills and earn good money.
- As the business grows, John becomes overwhelmed by the workload.
- John realizes that if he takes a break from working he won’t earn any money.
- John goes from working 30 hours per week to 60.
- John realizes that if he close his shop for a week, sales would drop.
- John begins to hate the work they once loved.
- John realizes that he is trading his old day job for a new day job.
The Solution: work on it, not in it.
As Gerber says, if you want to create a successful business you have “to work on it, not in it”.
This is a crucial difference.
To work ON your business means that you have to set up a system that allows your business to easily run and earn income even when you are sleeping.
To work in your business simply means that you must continue to show up every day to do your work. If you take a break, you don’t earn any money.
An example: your job.
If you earn money only by exchanging your time, then you have a workload.
You must show up, smile at your boss, be polite with your worst clients, and put in hard work to get some money.
If you want to be really free you need to be smarter and transform the way you work.
You need to change: You need to transform your workload to a workforce.
If you to change the way you earn money, you must Create Assets.
You’ll need to own things put money in your pocket, that work and make money for you even when you’re sleeping.
The easiest way to create assets is by investing your money in an Index Fund.
When you invest in an index fund, your investment will grow year by year, and, in addition, you will receive quarterly dividend payments.
Others prefer to invest in REITs. Real Estate Investment trusts own various income-producing properties and generate a solid income stream for investors. REITs are usually publicly traded like stocks, this makes them highly liquid (unlike physical real estate investments).
Others choose to invest their money in Rental Properties. They can be a good investment and have numerous tax benefits: you can deduct insurance, interests on your mortgage, and maintenance costs. The main drawbacks are the lack of liquidity and the cost of maintenance.
Many invest in Digital Properties. You can also choose to build your assets, and generate a passive income.
For example, a website with a good amount of traffic can generate a monthly cash flow.
You can also choose to invest in high dividend stocks.
This “Dividend Kings list” of high dividend stocks from Sure Dividend is one of the best resources.
You will reach Financial freedom when you acquire multiple assets that you no longer need a day job to earn your income, and the cash flow from your investments is enough to pay your monthly bills.
Through buying and building your assets you can create a workforce that earns money for you, even when you’re sleeping.
Create a Workforce.
To reach financial freedom you must create a workforce that earns money for you.
Starting your own small business isn’t easy: it requires much effort, dedication, and constant attention.
In addition, you could easily exchange your day job for a new day job with more new responsibilities.
The solution is to own multiple assets that earn money for you and runs smoothly even without your attention.
Don’t exchange a day job for another, build your workforce and make it works for you.