How much do you bet when you come across a money-making opportunity? Let’s assume you have $100 k in savings that you can use as capital for one or more money making ideas. Are you gonna put in all? There are 3 types of risk takers. Those who :
a. Use less than $ 100 k.
b. Use all the $ 100 k and hope for the best
c. Borrow 3 to 4 times of the $ 100 k
As for me, I am a coward when it comes to executing money making ideas. This is not my money. The saving funds belong to my wife and my son too. Therefore, I never allow myself to swallow more than I can chew. Well, you might have a different opinion but I am just speaking from my own experience when dealing with my former employers’ budget. Even then, I was cautious even though those aren’t my own cold hard cash. If you thrive on an adrenaline rush, then you might go ahead to borrow as much as you can for your new venture.
Peace of mind
I am sure you heard of how individuals got entangled with insolvency and credit crunch. Ever experience the emotional upheaval of a person going under the torment of a heavy financial burden? It may not necessarily be about running your own small business. Greed can make you lose judgment and get involved in money-making schemes such as futures speculation or money scam. A good friend of mine tried to share his “good luck” with me on a foreign currency scam about a year ago in which he had also invested quite a lot. In God’s blessing, the scam imploded days before I put in the money.
The fact remains that if you just put in a small percentage of your savings, you will save lots of sleepless nights. Even if you fall into a scam, make sure you don’t put yourself in a spot that makes it impossible to make a comeback. Prepare provisions for failure.
Better Chance Of Success
Making money is a marathon. Many made the mistake thinking that starting a business is a 100-meter sprint. They want to scale fast.
For example, it is a norm to use leverage or margin trading in futures speculation. For instance, you can put in the capital of $ 1000 to trade as much as 100 times the market value of your investment. When fortune smiles at you, your capital grow a thousand fold with each pip that goes with your bet. However, if the wave moves against your bet, just remember, each opposing point will cost you to lose at a hundred times of your invested fund. Talking about an adrenaline rush! Some call this mental orgasm.
In a similar stance, if you find an opportunity to start an online business, focus on that one online “shop” with all your attention. Resist the temptation to grow too fast via borrowed funds. There is a time for setting up, a time for marketing, a time for understanding the market, a time of training and nurturing and a time for growth. Start the next branch only when the first model succeeds by generating enough cash to take care of itself. Even then, you should tread with care before going for the next commitment.
You Have To Learn Everything From Scratch If You Start Small
Take your time to learn about a business. When I started on my first blog, I was pretty careful. My partner owned the domain name and he entrusted me to build the website. I had no choice but to learn everything from scratch, from the use of a good domain name, to SEO and to adding consistent contents. Although the road of building a blog was long and boring, the journey was flushed with stimulating experiences. I started thinking about the next blog post even before I completed the current one. I bought books and subscribed to online courses to equipped myself with the latest technology about blogging and SEO techniques so that I won’t run out of ideas. Everything boils together as ingredients into bowls of soup of learning experience.
If you are in a brick and mortar startup, you have to wear different hats when you learn the ropes of your business. For example, you need to know your customers personally instead of relying on your sales guy to do the cold calls. Because you are dealing with your own business, you will ensure that your customers get top notch services. No employees will ever work as hard as you.
One Tends To Become Careless When Flushed With Money
After selling the blog, I thought I could repeat the success not with one, but with a few blogs. I became greedy. I bought a few domain names on a few competitive niches like hair removal, bed bugs, exotic pets, and lasik. I didn’t care whether the domain names were dot com or dot whatever. I wanted to make money fast. I even hired a freelance writer to work on all the blogs at the same time because I was flushed with funds from the sale of howtoblog.org.
Executing the 5 blogs at the same time cost me about one grand a month to pay the writer. By the way, greed caused me to lose my focus and ethics. The writer was a prolific copywriter and might know a thing or two about hair removal but topics like lasik and bed bugs were definitely not in her league. But did I care? Nope, not in a million years. After spending nearly 20 grand in 2 years, I finally pulled the plug off the venture. None of the blogs ranked well in SERPS ranking and they were infested by malware because of that damn iPage Hosting! The curse of having too much money.
Experience And Skills Are Transferable
When you start small, it doesn’t mean that you are picking up insignificant skills under a smaller entity. When I moved from a smaller business of $ 4 million to $ 50 Million, I found out that all my experience in running a smaller food production carried me all the way to a much bigger supply chain. No doubt, new lessons come when you step up on to a bigger league but your previous experiences will combine to support you.
Do you want to know what I mean? What does a four-person company have in common with a 400 strong factory? Both have human resource issues, logistic problems, receivables recovery, cash flow management, products differentiation…..but in a different scale. Therefore, do not rush the growth. There is a reason for people to look for organically grown chicken as compared to hormone-induced poultry. One provides nutrients while another one causes cancer.
Never fall for the old adage that you need to grow fast to stay relevant. Cash is king whether you are running a business or not. Every emergencies and opportunity that arise depending on how liquid your cash flow is at the moment.