Median household income in America is between 45,000-55,000 per annum. What this means is 50% of American households with both husband and wife working make less than 55,000 a year. Then you have top 10% Americans making 110K or more, top 5% making 180K or more and top 1% of Americans making 410K or more.
Next let's look at what it takes to live in the US on an average. If you include rent/mortgage, home related expenses, internet, cell phones, utilities, car payments, car insurance, health insurance, shopping, food/groceries, eating out, kids expenses, education loans, taxes, entertainment, car gas, travel and all other miscellaneous expenses you are looking at 4500-6000$ per month to live an average life. This comes out to $55,000 to 72,000/year after taxes, which is about $70,000 to 100,000 before taxes assuming a combined federal and state deductions of about 30%. When the average person is making way less than what it takes to live an average life, our country is in deep trouble. Now, you can blame the government or some other entity for your financial troubles. If you are one of those people this blog is not for you. Goal is figure out how to win given the circumstances and not give up because odds are against most people.
Now you know why Americans have the largest consumer debt in the world because our credit cards and loans are maxed out and we end up buying more than what we can afford just to survive. Did you know that employees usually end up paying more taxes than business owners despite the fact that business owners tend to make more money and control their own time? This is why July 4th is independence day in the USA, because you pay about 50% taxes (if you include all income tax, sales tax, property tax, registration tax etc.) and so first six months of your income goes just in taxes. I am just kidding of course, but you get the idea.
If you are thinking running a business is a big risk but being an employee is not. You are wrong. Without a business there are no jobs. If you are the business owner and you are in financial trouble, who do you protect? Do you save enough money to keep you and your business going or will you keep paying your employees even when you are not making a profit? In essence you will have more control of your time and money if you are in your own business versus working for someone else/being an employee.
I am assuming you have already thought through everything I just talked about and came to the conclusion that owning your own business is the right thing to do since after all America is the land of free enterprise and opportunities. Starting your own business is the right decision but where you do you start? Businesses are the engines that run any country. Well you have the right idea, but you don’t know where to start and you are also worried about the money it takes to start a business. Let’s not forget the risk that comes with losing everything you worked for all your life that you'll need to invest to start your own business. Just so you are informed, 80% of all businesses fail within first 2 years, with another 10% failing in first 5 years and another 8% failing within first 10 years. What this means is that 98% of all businesses fail in the first 10 years of starting. There is also the opportunity cost, which is the money you'll lose by not working your job while you work your business.
I know what you are thinking "Well, it sounds like there is no winning whether I work in a job or run my own business".
What do the 2% of successful business owners do that the 98% are doing? What skill sets do you have to develop for you to be that person who can succeed? Is there a professional development program that can help you learn the skills to run a successful business? What mindset do you need to have to build a large business? Who has the wisdom and the time to help you on your journey so you can overcome your blind spots? Yes, it takes money to make money but who said it has to be yours? What type of businesses can you start that'll work with your personality, time and money challenges? This is where mentorship and coaching is extremely critical.
Remember the conversation about taxes we just had. Citizens with W2/employment have about 30-50 deductions when they file taxes, but did you know business owners have about 3000 deductions. Most employees are paying 20-45% just in income taxes and then you compare that to Amazon, a $250 billion dollar business that paid zero taxes for so many years. What is wrong with this picture? Well, if you owned your own business, you get to reduce all your expenses from your income and then whatever money is left over that determines your tax bracket/how much money you pay in taxes. Compare that what employees do every year. Employees pay taxes, Medicare, social security, etc. on their income and whatever money is left over they get to spend it and whatever you spend your money on is taxed again. All the other taxes employees pay is deducted with after tax money. Essentially if you don’t own your own business you are paying too much in taxes.
Running a business needs a mindset that most people don’t have unless their parents had a successful business that they grew up around and learnt from. Mind you, if you had exposure one type of business but then you are getting into another type of business you can leverage most of your learnings but there still maybe a lot of blind spots. Running a business requires a passion, vision, never give-up attitude, solution-minded focus, customer obsession, a clear game plan and the ability to work with people and lead people effectively. Passion is not something you are born with or something you get right when you start your business. It is something you develop over time when you know you are doing the right thing even when nothing is going your way. A vision is something that is a must have so you can share that with your employees and everyone that comes in contact with you. Every time you share your vision, your belief in your vision gets stronger.
Be weary of naysayers, as they could steal your dream if you are not strong enough. It's a dog eat dog world out there. When people can't do something or have no faith in something they tend impose that feeling on you. Business owners need to have faith in their own vision and should have the guts to follow their dreams no matter what. When someone is employed and they run in to major issues, first thing they do is find a way to get out of the situation and they don’t want to own it. Employees feel if they associate themselves with a problem they will be taken down along with the problem. When you are in your own business you need a solution mindset, you approach problems with an intent to solve them and make thing better. Business owners are constantly looking for problems that can potentially stop them from creating success and are one step ahead of the problem. They have answers to most situations because they have thought about them and are proactively approaching every problem.
Without a customer, there is no business. You got to sell something to someone for the business to work. It can be a service or product but a business owner sells something. When there is a business with no product or service usually their customers are their product. Think about Facebook, they don’t sell anything but how they do they make money. They sell their customers data to make money. Regardless of what you sell, knowing your customer is the key to the business's success. Being obsessed with what the customer wants will force the business owner to create the right product and continue to delight the customer. This will also help you cater to your customer's needs so you retain your customers.
One thing I know about planning is that it always requires a re-plan. There is hardly a few instances that I can remember where everything went according to my initial plans. This is why retrospective and having a coach/mentor really helps. You have someone to bounce your ideas and you are constantly course correcting as you move towards your destination. Think of your initial plan as entering your destination address on your GPS. As you start driving traffic conditions and weather conditions may change and so your GPS is going to redirect you based on that. That is how it goes in a business as well. Make sure your car is moving otherwise a plan is useless because you have no feedback and you'll be on the same place as you were before. Be sure to check your plan as build your business and make changes based on real world situations so you can get to your dreams and goals.
Leadership skills, communication skills and people skills are essential to building a long term growing business. The sooner you get yourself into a personal development program the better it is for you. Although some of these skills can only be developed by actually running your business with a coach helping you overcome your blind spots along the way.
If you are someone that is looking for coaching and mentorship to run a successful business or help you get into the right business, you have come to the right place. Seth and Sue have had tremendous success building businesses to a high level. They have built a multi-million dollar worldwide business. They have also had successful careers and managed to build their business while they worked their jobs. Reach out to us and we can help you on your entrepreneurship journey.