Author Topic: Radical Personal Finance  (Read 2733 times)

Captain Cactus

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Radical Personal Finance
« on: April 25, 2022, 12:46:09 PM »
Hey gang,
I love listening to Radical Personal Finance.  I don't always agree with Joshua, but I love listening anyway.  On his recent friday Q&A episode, he mentioned that owning your own business is probably the quickest way to financial independence (vs working for someone else and investing over time in index funds, etc...).

He made a passing comment and I would have loved to learn more.  He mentioned to one of his callers that investing in yourself is a smart move (I agree) and there are many businesses that you can start in 1 to 3 years that can make you a lot of money and allow you to be your own boss.

Would love to learn more about this topic, as owning my own business has always been of interest but I've always defaulted to employee status  due to ignorance, fear, etc...

Any thoughts on this topic?  Are there in fact businesses that one can truly start in 1-3 years (presumably without previous experience or specialized knowledge)?

ixtap

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Re: Radical Personal Finance
« Reply #1 on: April 25, 2022, 12:52:05 PM »
Starting your own business can be very fruitful, or it can be a fast track to bancruptcy. Just like other investments, increasing the potential return involves an increase in risk. This is especially true if you choose to put all of your portfolio into a business over a diversified stock portfolio.

Starting a business for the sake of starting a business isn't likely to be lucrative. But if you have an idea or a skillset and some reserve funding, you may have a chance at making the most of your money.

Captain Cactus

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Re: Radical Personal Finance
« Reply #2 on: April 25, 2022, 01:43:20 PM »
Thanks Ixtap.  For what it's worth, no interest in cashing in my retirement portfolio.

My whole life I've been an employee (Army officer, then sales, then marketing...18 years professional work experience so far!), so my default thinking is always "how can I recreate my current job as my own boss".  Obviously that doesn't make sense.

But I wonder... If I invested say 6-36 months into myself in the form of training/certifications, etc... are there solopreneur opportunities on the other side of that?  Something where I could be my own boss, control my own schedule, etc...  I really have no idea on where to start that process to identify something along those lines.  I welcome ideas or resources I could use to explore.

For example, there are some universities that offer nursing home administrator certification courses... they take many different backgrounds... as long as you have a BA and can pass the class and the exam at the end you can get a job running a nursing home.  My BIL did that and he's been quite successful (not my cup of tea, but a good example of the type of thing I'm talking about).

Regarding my aptitude/interest:  Learning to code is not in my future.  I explored that previously and I simply don't have an interest there.  Also, I know I can start buying up rental properties, but I"m not going there at this point... real estate inflation is getting to the point of being offensive. 

Smokystache

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Re: Radical Personal Finance
« Reply #3 on: April 25, 2022, 02:27:58 PM »
Thanks Ixtap.  For what it's worth, no interest in cashing in my retirement portfolio.

My whole life I've been an employee (Army officer, then sales, then marketing...18 years professional work experience so far!), so my default thinking is always "how can I recreate my current job as my own boss".  Obviously that doesn't make sense.

Actually, I think this makes a lot of sense. What are some skills in marketing and sales that you're really good at? What are some tasks that the companies you've worked for had to hire out? What is something where the companies you work for/with are being really inefficient?

The way to create your own job where you can make significant income is choosing a topic/area that is very "scary" for the company and costs (or could cost) them a lot of money (or earns them a lot of money). This is where you can provide specialized services and/or consulting that is highly profitable. A second-best plan is to find an inefficiency in a system that you know is there and then find a more efficient/lower-cost way to provide it OR provide a significantly better service for the same price.

I would agree that one of the best ways to earn more money to FIRE sooner is to be self-employed. But I personally think it is much better to find solutions in a field that you already know than to try to come up with a solution or service for a field that is new to you. Examples you see on Shark Tank where an accountant comes up with a new device to make pools cleaner and makes a million on it is almost like buying a lottery ticket. What is much more likely is you looking at your field and finding a new or better or leveraged solution to a known problem with known costs.

Imagine if your supervisor came to you and said, "We've just hired ABC to provide XYZ." After you look into it, you realize that XYZ will increase your profits by 20-50%. Your job is to think of XYZ first. Also, don't be too afraid to tweak a solution you see that someone else is offering. As long as there are plenty of customers and you're able to provide some clear differentiation in service, price, etc., then that can be a clear sign that there is a market for that type of service. That's exactly what I did: I offer social media services for a very specific niche industry. There are lots and lots of social media firms out there -- but no one is providing my price + service to this niche. I didn't know social media very well (but learned), but I did understand the needs of the niche. 

vand

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Re: Radical Personal Finance
« Reply #4 on: April 26, 2022, 09:23:26 AM »
It's not necessarily about having a great business idea or getting involved in a startup.

It can be as straightforward as getting into rentals.  You don't just buy a rental with a few clicks of the mouse. There is work involved, and you are taking on business risk. But if properly managed it will turn into an additional income stream. A rental is very much like running a small business. You will learn some things too, if it is your first foray.


Cannot Wait!

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Re: Radical Personal Finance
« Reply #5 on: April 26, 2022, 09:41:07 AM »
Anything you can do for people's pets is a goldmine - if you like animals.

What do you like to do? Figure out a way to monetize your hobbies.

Archipelago

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Re: Radical Personal Finance
« Reply #6 on: April 26, 2022, 02:08:13 PM »
I believe business ownership is the fastest, most reliable, and efficient path to FIRE there is. One, because no expensive college degree is required (plus the opportunity cost), and two, because business ownership opens the door wide for tax-sheltered investment vehicles.

I'll also mention that self-employment is most compatible with the "mission of FIRE" because you are, in essence, valuing your own time.

Many people think entrepreneurship means founding the next big tech startup or coming up with an amazing new product. This couldn't be more backwards. Why compete with Silicon Valley or China? You're competing against the brilliant people and cheap labor. These businesses are a dime a dozen and most fail. Not to mention having to invest your own money in such a business.

Starting a local service business and earning $100k+ within 1-3 years is attainable if you're willing to put in some sweat and make it happen. This can be done with almost no starting capital and because of that, very little risk of bankruptcy. You're competing with folks down the road still using 90s technology who are so busy making money that they don't return customer phone calls.

Here are some ideas for service businesses. https://sweatystartup.com/businesses-i-love/
Note: I love the overall message the Nick Huber preaches and have followed him since the early days, but lately there seems to be a lot of subscription courses being peddled from his site, so I no longer endorse him. You asked for a list of ideas, Sweaty Startup is a great place to start. I recommend this list and his general thought process on entrepreneurship, but not paid content. Hope this is clear.
« Last Edit: April 26, 2022, 02:17:06 PM by Archipelago »

Rusted Rose

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Re: Radical Personal Finance
« Reply #7 on: April 27, 2022, 12:05:24 PM »
The current way to start a business is lighter, faster, and cheaper than people often envision because they didn't grow up with that system. I wish I had a dollar for every time someone in my family said "Hey, I know, we should manufacture X widget and make a fortune!"

Ummm ... no thank you.

There are TONS of podcasts that discuss how these things work today. (The one mentioned is too religious for me etc. etc., but anyway.) You'll see patterns and overlap and pick up how to think about things, and there's plenty of practical info.

I might suggest you start with something like The Side Hustle Show that will throw a ton of different ideas at you, and then expand from there.

Captain Cactus

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Re: Radical Personal Finance
« Reply #8 on: April 27, 2022, 12:28:33 PM »
The side hustle show and sweaty startup are both good ones.  I stopped listening when I started working from home and didn't have any drive time anymore.  The poor guy on sweaty start up, when the pandemic hit he was in a desperate situation...I unsubscribed before finding out what happened to his moving business.

What I'm interested in learning more about are professions in which I could do some education, get a certification, and then be able to open up my small shop and provide some kind of professional service.  Not that I'm interested in this, but I once knew a girl who opened up her own genetic counseling shop (she did a master's program, so more investment than I have in mind, but sort of along those lines).

My wife is an attorney and I've been encouraging her to hang her own shingle, but she simply doesn't have the confidence in herself.  She graduated and basically worked for the state of CT in varying capacities because she couldn't get hired in a private firm (long story...she's incredibly bright but we can agree she's introverted and not great at interviewing, so...).  I have also worked with veterinarians for 10+ years, and have always envied their ability to open their own shop and have a solid business (despite almost zero business acumen). 

It's possible that the kind of thing I have in mind doesn't exist without a professional degree/license?

Archipelago

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Re: Radical Personal Finance
« Reply #9 on: April 27, 2022, 09:14:45 PM »
The side hustle show and sweaty startup are both good ones.  I stopped listening when I started working from home and didn't have any drive time anymore.  The poor guy on sweaty start up, when the pandemic hit he was in a desperate situation...I unsubscribed before finding out what happened to his moving business.

What I'm interested in learning more about are professions in which I could do some education, get a certification, and then be able to open up my small shop and provide some kind of professional service.  Not that I'm interested in this, but I once knew a girl who opened up her own genetic counseling shop (she did a master's program, so more investment than I have in mind, but sort of along those lines).

My wife is an attorney and I've been encouraging her to hang her own shingle, but she simply doesn't have the confidence in herself.  She graduated and basically worked for the state of CT in varying capacities because she couldn't get hired in a private firm (long story...she's incredibly bright but we can agree she's introverted and not great at interviewing, so...).  I have also worked with veterinarians for 10+ years, and have always envied their ability to open their own shop and have a solid business (despite almost zero business acumen). 

It's possible that the kind of thing I have in mind doesn't exist without a professional degree/license?

A few ideas come to mind.

Bookkeeping
Home inspections
OSHA class instructor
3D design & printing
Short term rental property management
Event equipment rental
Tour guide agency
Tutoring
Home or commercial appraisal
Loan officer

Depends on your skills and interests. These are more "professional/indoor" things.

I do think the sweaty route is the best to take, because no one does these things anymore and you can charge a premium for that ($50-$100/hr).

cool7hand

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Re: Radical Personal Finance
« Reply #10 on: April 28, 2022, 11:41:10 AM »
Somewhere I read Seth Godin’s three questions to help know whether to pursue a business or opportunity. This is purely from memory, so any mistakes with the paraphrase are mine: (1) What sort of resources are you willing to commit, including time, money, and emotion? (2) Who are your customers (because if you hate your customers, you’ll hate your business)? (3) Are you looking for something that makes every day better or something that is a grind with a prize at the end of the endeavor?

mtnrider

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Re: Radical Personal Finance
« Reply #11 on: April 28, 2022, 12:07:33 PM »
I gave up listening to Joshua's podcast years ago.  It was occasionally entertaining and sometimes interesting, but his message often rubbed me the wrong way.  That said, for this specific case:

https://www.investopedia.com/financial-edge/1010/top-6-reasons-new-businesses-fail.aspx
Quote
Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s.

And we didn't even talk about how much you're making from the business yet.  Or how many hours you'd be working.  So yeah, you can get to FI by starting a new business.  But the odds are against you, and you might have done better working elsewhere.  Now, if you say you want the entrepreneurial lifestyle - where you create a job where you can vacation when you want it, that's a different thing.

What could be said is that you should acquire rare and valuable skills that the market values.  Once you have those, you can decide the best path.

Sorry to be a downer. :(

Captain Cactus

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Re: Radical Personal Finance
« Reply #12 on: April 28, 2022, 01:19:48 PM »
I gave up listening to Joshua's podcast years ago.  It was occasionally entertaining and sometimes interesting, but his message often rubbed me the wrong way.  That said, for this specific case:

https://www.investopedia.com/financial-edge/1010/top-6-reasons-new-businesses-fail.aspx
Quote
Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s.

And we didn't even talk about how much you're making from the business yet.  Or how many hours you'd be working.  So yeah, you can get to FI by starting a new business.  But the odds are against you, and you might have done better working elsewhere.  Now, if you say you want the entrepreneurial lifestyle - where you create a job where you can vacation when you want it, that's a different thing.

What could be said is that you should acquire rare and valuable skills that the market values.  Once you have those, you can decide the best path.

Sorry to be a downer. :(

Not a downer, thank you for your reply!  Now that you mention it, having a job where I can take vacation time whenever I want it is essentially what I'm dreaming about. 

clarkfan1979

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Re: Radical Personal Finance
« Reply #13 on: April 29, 2022, 09:44:55 PM »
I stopped listening to Joshua about 2-3 years ago. I liked his first few years. He was more humble back then and less judgmental.

Did you ever hear of his story when his first business failed because he couldn't make payroll. He admits that he tried to grow too fast. He was hiring people before he had a steady steam of income to pay them. I'm sure he is doing fine now with his second business.

Many business owners work 80+ hour weeks when they first start. If you are passionate about something, fine. However, there is tons of sacrifice involved in the beginning with no guarantee of anything.

I think people have different definitions of a "failed business" My interpretation is a "failed business" is when someone closes a business. However, it doesn't mean that the business wasn't profitable. It's very possible that the business was profitable, but the profits didn't meet the owners expectations. They wanted 300K/year of income, but it was only producing 100K/year of income. Business closed.

deborah

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Re: Radical Personal Finance
« Reply #14 on: April 29, 2022, 10:19:47 PM »
I once worked with a person who bought small one person franchises, built them up a bit and then sold them. For instance, at the time he had bought a pillow cleaning franchise for my city. He collected pillows from hotels, opened them up, refreshed and sanitised the filling, closed them up again and returned them to the hotel. Environmentally friendly (reduced the number of pillows going to landfill) and cheaper for the hotels. The previous franchisee hadn’t realised he could do this for all the hotels. My coworker built up the business by getting a lot of hotels as customers, and then sold the business for a lot more money. He was a contractor and he’d buy up these franchises so he had work whenever his contract expired. He didn’t keep any of them for more than a year. He liked franchises because the head office provided instruction and equipment for the various businesses, and were enthusiastic about him expanding their coverage - it increased their visibility too.

mozar

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Re: Radical Personal Finance
« Reply #15 on: May 06, 2022, 06:04:53 PM »
I think it would be difficult to start a business without prior experience or specialized knowledge but one can learn along the way. Some small businesses I’ve heard of:
Selling printables on Etsy
Excel guru (teaches excel classes)
Writing coach
Coach and angel funding connector for new entrepreneurs
Gum ball machine refiller
Sourdough expert
Rapper who writes raps for birthdays (100k+ a year)
SEO expert
Cloud architect (puts company data on servers)

 

Wow, a phone plan for fifteen bucks!