Build a profitable business- the baby steps part 6

We have read all of the major wealth books out there. While many of them contain sound advice there is plenty of theories we are not exactly big fans of. It´s not that we don´t believe in them altogether. It´s just that we know that there are smarter ways to go about it. If wealth and riches is your goal, you shouldn´t be listening all that much to the “get rich slowly”-crowd. They provide sound advice, but it is advice that will take too long to implement and siimply cost you too much time.

As we have stated before, conventional wisdom is a treacherous obstacle to overcome in your quest for financial independence. And we are not talking about the conventional wisdom that your parents are likely to subscribe to. We are talking about the conventional wisdom that is being sold in the form of  ”get-rich”-books. If you have ever read a book about wealth, you are more than likely to have come across the principle I am talking about. If not, it goes a little something like this: Get an education, get a nice job, save 10-20% of everything you earn by paying yourself first, max out your 401k (or other pension plan if you are not american),invest your savings in long-term mutual funds and stick with them through thick and thin. Repeat these steps for 40-50 years, and you too might or might not become a millionaire. Then again, the way western governments are printing money, we will all be millionaires in the future.

What we don´t really approve of in all this is the desperation of it all. I think we can all agree about the fact that it is better to become rich when you are young than to get rich as you approach the latter parts of your life. And that is a major factor in our doubts regarding the conventional road to wealth, as it is described in most “get rich”-books today. If you follow the advice, you are likely to get rich providing the stock market doesn´t screw you by not being bullish enough, but you have also made some major sacrifices. You have traded time for money. To be more specific, you have traded a lot of your time, during your lifetime, in order to aquire wealth after the better part of your life is already behind you. Doesn´t sound like such a great deal when we put it like that does it? It shouldn´t.

We only get one life. We must treasure it and make the most of it. Our next theory is likely to cause some of you to hate us. That´s ok. We never aspired to be popular. We feel to some extent that by being an employee, you are really giving away a big part of your freedom. In fact, there are those of us who consider being employed as a modern version of slavery. That´s the punch-line. Don´t hate us just yet. Simply read on and try to understand where we are coming from. Hundreds of years ago slaves across the european continent worked six days a week. They had little to show for it. They got Sundays off. After the harvesting season, they could often enjoy a couple of weeks of considerably less work, which was as close to a holiday as they could ever get.

They traded six days of labour enriching somebody else, for one day to spend doing what they really wanted to do with the people they loved. They spent the better part of the year enriching somebody else by their hard labour, and in the end they got a couple of lousy weeks of semi-vacation. They had housing, food and some entertainment. But they spent the better parts of their lives working hard for somebody else. If they stayed loyal to their masters and worked hard for 20-30 years (people lived shorter back then) they were often rewarded. They got to spend the senior days in a nice house with less intensive work to be done. I´m just thrilled we don´t live in that society today. Slavery must be a real drag. Back then you busted your balls for somebody else during the better part of your life. In the end you got some sort of “reward”, but the real money was made by someone else. You worked, someone else got to enjoy the bigger portion of the fruits of your labour. Doesn´t sound very appealing does it?

Enter the 21st century. Today most of us work 5 days enriching somebody else in order to enjoy two days doing what we truly enjoy doing. We work all year long, just to be able to enjoy a couple of weeks of semi-vacation (the length of vacation varies a lot between the US and Europe. In general Europeans enjoy a lot longer vacation each year.). The reason I call it semi-vacation is because there is often not much freedom surrounding it. We have to ask our boss if and when we can go. We have to synchronize the upcoming vacation with colleagues and important meetings and events in our industry. Sometimes, we bring our mobile phones or lap-tops, just to be able to keep an eye on things while we are away. Sometimes we can´t afford to go on the vacations we would like to go on. We settle for what we can afford and are happy with what we get. After all, there are those who are worse off than we are. After working a life-time we finally get to enjoy the fruits of our labour; a gold-watch (if you are lucky) and a meager retirement which in most western countries is becoming less sustainable for every decade that goes by. What was all that hard work good for anyway? Who got the money? Well, if you are working in a western society chances are that the government, the company you are working for and the banks have been on the receiving end of the equation, in that order. Sure, you got to keep some of it, but not nearly enough- at least not according to us. Surely, there must be a better way to live life to the fullest?

Of course there is.

Since your life is made up of time, trading time for money is a delicate, or should we say desperate, act. By trading time for money, you are in effect trading life for money. What´s more, your money will be in place as you are nearing the end of your career and your life. We suspect you would like to get to the money a lot sooner than that. When we claim that being an employee has some resemblance to being a slave, we are perhaps tweaking reality a little. Sometimes you need to utilize provocative statements to receive intelligent reactions. We are in no way trying to belittle the employees of the world. Most of us have been employees, before we tasted the forbidden entrepreneurial fruit. Some of us even enjoyed being employees. But there is not one of us who would go back. Wild horses couldn´t drag us back to being employees. We wouldn´t go back no matter what amount of money we got offered. Once you taste freedom, even the tiniest level of slavery becomes intolerable.

The irony of all those “get rich”-books on the market is that they are often written by people who weren´t really that rich to begin with. We find that amusing. Would you take a tennis lesson from someone who was not really that good at tennis? Would you like to learn golf from somebody who recently bought his first clubs? Would you hire a fat guy to be your personal trainer? We think not. The best way of learning is by imitating those who have done it before, The best way of learning is by doing. The ultimate irony of the wealth books on the market is that many of the authors have actually become rich, not by following their own advice about frugality and paying themselves first. They got rich because they did what we think is anybody´s best bet to achieve serious financial wealth: they started a business. By becoming authors, marketing and pitching their books, giving lectures, doing market research, networking and selling they became entrepreneurs.

They left their “frugality-pay yourself first-invest-get rich in 40-50 years” mantra and their loyal following behind in the dust, as they catapulted themselves into serious financial and entrepreneurial success. They told you what you should do to get rich, and then they did something completely different themselves. You might recall our advice about “not listening to what people say, but instead paying attention to what people do”. Well here it is, a perfect example that proves the profound wisdom of those words. The truth will always lie in what people do. What people say is merely words. Sometimes those words have meaning. And sometimes they are just words.

No matter where you are from, what schools you went to, who your parents are, or how smart you are, your best bet to become rich is- speaking from a statistical point of view- to start a business.  And incidentally, that´s just what the authors of most “get rich”-books have done. They have recognized a business opportunity, they have acted on their ideas, and their entrepreneurial drive have made them rich in the process. They haven´t given away their freedom for a false sense of security and a monthly fix (appearing in the form of a paycheck). They haven´t become financial servants of the government, the banks or a big corporation. They have chosen to challenge the conventional wisdom by pursuing their dreams.

They got rich in less than five years, by preaching to other people how they should get rich in 40-50 years.

They got rich being entrepreneurs, standing apart from the crowd, chosing the road less traveled.

And so should you.

It´s time to move on. In the next part of our guide, “Build a profitable business- the baby steps part 7″, we will discuss the difference between owning a business and owning “a job dressed up as a business”. Come along!