The average multi-millionaire has seven different sources of income. But that’s not what you hear about, is it? That’s not what gets the press.
Instead, you hear about The Game. You know The Game … get funded, make no profit. Even better, make no revenue, cash out big, retire on an island.
This is mostly fantasy, and is becoming more so each day, as investors now turn to companies with fast growing revenue, sustainable profit, and solid management.
But do you need an investor at all? For businesses that take smart advantage of the unique power of the Internet, probably not.
In this 10-minute episode I make the case that:
- Millionaires treasure multiple income streams
- ”The Game” is coming to an end
- Real businesses are profitable
- Raising money can promote waste
- Constraints are good, depending on your mindset
- ”Problems” can result in greater opportunity and wealth
Listen to 7-Figure Small with Brian Clark below ...
The Show Notes
- The Habitual Startup Approach to Wealth Building
- A Beautiful Constraint: How To Transform Your Limitations Into Advantages
- How to Create Abundance Despite Constraints
- Ask a question here
- Free registration for webinars and more
The Benefits of Bootstrapping
Brian Clark: Welcome to another episode of Unemployable. I’m your host, Brian Clark … and thank you for joining me once again!
Millionaires Treasure Multiple Income Streams
So, last episode we talked about a strategy that diversifies your asset base and provides you with multiple sources of equity and income. And after recording that show, I came across an interesting fact – the average multi-millionaire has seven different sources of income.
But that’s not what you hear about, is it? That’s not what gets the press.
Instead, you hear about The Game. You know the Game … get funded, make no profit, even better, make no revenue, cash out big, retire on a island.
When I meet people and I ask about their business, and they respond by telling me what series round of money raising they’re on. I want to turn around and simply walk away. Unfortunately, my parents raised me to be more courteous than that.
Real entrepreneurs start real businesses. Real businesses make a profit for the owner or owners. The “build to flip” approach is the Game, and plenty of people are seeing this particular phase of the game coming to an end.
”The Game” Is Coming To An End
VCs are having a hard time finding exits from some of their sillier investments, and private equity firms are unloading holdings and looking for companies with fast growing revenue, sustainable profit, and solid management.
Now, I’ve got no problem with taking private equity funding once you are that type of profitable company, assuming you actually need the money. Or maybe you just want to take some money off the table and sell a portion of your company.
But explore the benefits of bootstrapping first and foremost. I have a feeling most of you are on board with this, but let’s diver a little deeper.
Real Businesses are Profitable
I built what became Copyblogger Media with only $1,000 for a site design, web hosting fees, and a bunch of my time on the way to early profitability. A lot happened from that point on the way to $10 million in revenue for 2014, but one of those things was not venture capital or private equity funding.
Some people try to get funding right away to basically just give themselves a better job than the one they had before. Maybe they need the structure, I don’t know because I don’t really identify with that mindset …
… but regardless, once you have an investor involved, your freedom is diminished. And to me, this has always been about freedom.
Raising Money Can Promote Waste
In other words, taking money too soon, or taking too much, or sometimes taking money at all, is a waste. Here’s what I mean by that:
- Waste of equity — you’re giving up a percentage of your company before you know how much is appropriate or necessary
- Waste of control — once you have investors, you lose a degree of freedom that might also not be ultimately necessary
Waste of opportunity — cash is designed to be spent, which often inhibits seeking more creative solutions, like strategic partnerships
Constraints Are Good, Depending on Your Mindset
Speaking of creative solutions, there’s a great book you might want to read called A Beautiful Constraint: How To Transform Your Limitations Into Advantages, and Why It’s Everyone’s Business.
As you may guess, the authors argue that constraints are not only surmountable, they can result in more innovative and abundant solutions than having the necessary resources in the first place.
The book outlines three steps that we all go though in the face of constraints:
- Victim: The initial reaction to lower your ambition when faced with a constraint.
- Neutralizer: The refusal to lower your ambition, and instead finding a different way to achieve the ambition instead.
- Transformer: Using a constraint as an opportunity, possibly even increasing your ambition along the way.
Keep in mind, these are not three types of people, they’re three stages that people can go through. The only difference between those gifted with the “art of hustle” and everyone else is a mindset that more easily sees problems as opportunities.
Which of course means you can develop that mindset. You probably already have it.
Let me give an example from my own entrepreneurial journey. In 2001 I had the idea to create a virtual real estate brokerage out of a few content-rich websites. The model was powered by people searching online for homes, and we supplied buyer agents to represent them in the showings and negotiations — no brick-and-mortar presence needed.
Despite being a licensed attorney at the time, Texas still required all new licensees to be an agent for two years before becoming eligible to upgrade to broker. That typically means working for an existing brokerage, and that wasn’t going to work for me. Given that I was over-qualified, it was easy to feel unfairly victimized.
I neutralized the issue by partnering with a commercial broker who was the friend of a friend. I paid him a small passive percentage to be my sponsoring broker, and he let me do my thing. He was okay with this since my legal training and experience far surpassed what was required of even brokers.
From there, I transformed my initial model thanks to the insights I gleaned from that relationship. I ended up bringing in another commercial broker, and we moved beyond homes into representing buyers of apartment complexes.
This relationship led to the launch of a second niche real estate company, at which point I had three companies providing three income streams. My business quickly grew and became more sophisticated, all because I wasn’t allowed to do things the so-called “easy way” from the beginning.
”Problems” Can Result in Greater Opportunity and Wealth
So, back to those millionaires and their multiple sources of income. Later on, the sources of income can become capital-intensive, such as investments in real estate and more passive angel investing. But you’ve got to get the capital in the first place, right?
Bootstrapping a small, profitable business is a way to accumulate that capital. Boostrapping several businesses through strategic collaboration is a way to accumulate even more capital, and diversify your income streams at a more rapid pace.
More on that in future episodes. For now, let’s wrap this one up.
Next week you’re hear a new feature as part of the show – your questions answered. I’ve already gotten in some great ones from listeners, and I’m looking forward to diving in with some answers.
If you’d like to submit a questions to the show, you’ll need to go to unemployable.com/ask to record it. Now, this is something that’s only available to registered Unemployable members, so you’ll need to be logged in if you’re not already.
If you’re not a registered member, you can sign up for free at Unemployable.com. In addition to the Q&A function, you’ll get access to a series of high value, no pitch webinars that expand on some of the concepts you’ve already been introduced to.
That’s it for now …. We’ll talk more soon, and in the meantime, keep going.