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3 Ways You Can Gain Control in These Uncertain Times

Today there is a lot of uncertainty with regards to the economy and many people finally are realizing that times are different. The age of industry, where a secure job with retirement and a pension were common, has now become the new information age. People have realized that the gov’t and/or their job can no longer provide these kinds of benefits. And with the instability and large dips and peaks in stocks over the past few years, many have already lost 12 years of their hard-earned wealth. Home values are still dropping, foreclosures continue to increase, the employment rate isn’t moving below 9% even with all the injected money and promises and taxes across the board are increasing…

No longer can people accept the status quo. No longer are people going to just give their liquid assets to brokers of stocks or real estate firms, or rely on the government’s social security program – “broker” will be the result for most people!

People in droves are realizing that they must take control of their future, and more specifically their finances. More and more people are searching for a viable means of creating more cash flow. The issue is people are short on time already and long on commitments. They need to find another income source, but cannot find a job that will shell out the $200 plus per hour they may need to achieve their goals given the time constraints they have. Even if they could find such a job, another job would only magnify the problem described above, further increasing your tax liability, meaning you would actually have to make more income in order to keep pace with what taxes the government’s going to take from you.

The good news is, you have choices. Besides getting hired for that magical secure job, besides THAT, what else is possible?

One option is investing. If you’re holding onto a large chunk of money – and with today’s low rates and yields it needs to be quite a bit – this is one way. Chances are if you have this kind of money, you’re probably pretty well off already and not relying on an employer or the government anyway. But just for kicks, let us say you needed $10,000/month to cover your living expenses, to pay down some debt maybe and to put aside for savings or tithing, and so on. $10,000/mo is the same as being paid a 12% return on a million dollar investment. That’s just not going to happen for the average investor any time soon in today’s economy – particularly when you take into consideration the government’s portion (taxes). Truthfully, you would need more like ten million dollars invested in order to net $10,000/mo in today’s economy. Therefore not very realistic for the majority…

The next option is how most of the world’s richest acquired their wealth: by starting their own business. So let’s look at a few different choices when it comes to business building:

Business Building – Option 1:

Start a conventional business. You can start a business to design, build and market your product. This too will require a large capital investment up front and financing for start-up businesses is not so easy to get right now, regardless of how good a product you might have. A service-based business may be cheaper to start up but the service sector is shedding jobs and you may have quite a struggle. On top of that, nice of ten businesses fails their 1st year in business. One mindset to have is to just realize this and look to start up 10 businesses. The education would be invaluable and your accumulated wealth by the 10th business – if you even needed to start all 10 – would be among the richest one percent of the U.S..

Business Building – Option 2:

Buy a Business Franchise (like TCBY Yogurt or KFC). A Franchise is a proven business with pre-developed success structure or system of doing business. In purchasing a franchise, you are buying a cookie-cutter business where you simply follow directions and you are likely to create as much as a multiple six-figure income. The downside again is the initial outlay: some of the most successful franchises will cost $500,000 to $1,000,000 or more just to gain access and the rights to have a franchise with that company. You still have all the other costs of a location, employees, supplies, equipment, et cetera. Banks are more apt to lend money to this type of business structure because of the successful track record these established business models have rather than a new start-up business, but even today that may be hard to obtain. So someone with limited business experience could earn income with a franchise business if they follow the system – and they would have a much, much higher chance of succeeding than with starting up a traditional business – but it’s still too cost prohibitive for the majority.

Business Building – Option 3:

Home Based Business Work. With a much lower entry cost compared to either business vehicle mentioned above, but still the strength of an an established business model as with the franchise business model, the Home Based Business Work model is often times the best solution for the majority of people wanting to take control and get ahead today. The convenience of being able to work from home and leverage the power of the internet to plug into an existing company’s successful business brings together all the advantages of the above business models with few of the disadvantages. One disadvantage, due to the low cost of entry, is a home business owner has access to the strategies and tools to be successful but must take responsibility to work the business consistently to produce consistent results.

Tips to Minimize Risk When Starting a Small Business

There is almost always a certain amount of risk involved with starting a small business. According to the Small Business Association (SBA), more then half of new small businesses will close down within five years. Underlying these sobering statistics is the unspoken financial turmoil, ruined credit, strained relationships, and personal stress that can accompany a business failure. Taking steps to minimize the risk inherent in starting up a new company is thus good business practice that, when done correctly, can save a tremendous amount of headache and heartache down the road.

To that end, here are five essential tips to follow that will help minimize the risk of starting a small business.

1. First define your unique risks. Before you start your business, or as soon as possible, take out a piece of paper (you can do this electronically, but taking time to write it out will make it more real to you) and make a list of all the possible risks of starting a business in order of priority as you see them now. Why is this important? Because it will give you perspective, and it will help to focus on those risk areas that you are already aware of.

2. Create strategies to minimize the above risks. Now that you have identified some of the risks involved with starting your venture, develop a plan to help minimize them. Here are a few examples:

To protect your personal assets:Avoid signing personal guarantees on any of your business’ debt- especially if you are running a sole proprietorship or partnership. Also, make sure to consider taking out property and liability insurance policies.
To help ensure that you have enough income to live on: If you are starting a new business chances are you will not be generating enough revenue to adequately pay yourself at the beginning. You also will have to cover startup expenses. To help minimize this risk, you can maintain another income stream on the side (or alternatively, keep your day job and run your new business on the side, until the business is more profitable). You could also wait to start the business until you have saved up enough money to help cover living expenses at the beginning, or you could take out a small loan for this purpose.
To protect your work-life balance: If you are married, make sure that you check in with your spouse and other family members about starting a new business. Running a business typically takes more time and energy than working for an employer, and it can involve odd hours as well. This can put a strain on relationships. If you are afraid of getting too wrapped up in your business, then create some natural separations, such as not running it from your home, and if you do then trying to separate your work area as much as possible from your living quarters. You can also enlist the help of family and friends to keep you from overdoing it in your work schedule.

3. Make sure the business is a good fit for you. What experience, training, skills, or knowledge do you possess that can be used to run this business? Make an effort to enter into an industry and chose a business model that fits you and your unique strengths and qualities. Additionally, if you are lacking in industry or business management know-how, you could enter into a business partnership with others who have it. Moreover, make sure your business idea fits your personality. You can not run a restaurant if you do not like food, and you will have a hard time selling your services if you shy away from social situations. Finally, do you have the available time and commitment needed to start your own business?

4. Make sure you know how to run a business. Have you received any formal business management, business financing, or marketing training? If not, is it vital that you learn the basics of owning and operating your own company. There are numerous free business how-to articles, webinars, and tutorials available online, via the SBA or SCORE, for example that can help fill in this information gap. Moreover, it is vital that you get a mentor. Either ask someone you know to help you, hire someone, or consider tapping the resources of groups such as SCORE and and Micro Mentor which provide free business consulting and mentoring services.

5. Make sure you have done your research. Countless small businesses disappear into oblivion because their owners fail to invest adequate time and money in market research, product development, and business planning. They are thus out of touch with their target market and are unable to establish a niche nor respond to changes in consumer attitudes. Those who are unsuccessful as small business owners also fail to adequately assess their competition.