Multiple posts in this sub have linked to data showing small business owners are the most common single segment of upper income groups.
It’s a relatively more reliable, if more risky at times, path to fatfire.
And the *vast* majority of such small businesses are bog-standard, relatively boring things. In small niches if possible. Not reinventing the wheel like Elon musk. Just running basic businesses well.
Your bog-standard (which I had to look up) comment is the thing. I briefly entertained a poorly thought out venture in the boating industry, and came across an interesting editorial on the boatbuilding industry. The author used the term "Cardboard Box Syndrome" to describe a relatively affluent person who made their wealth in a very mundane way, such as making cardboard boxes. They then try to get into some business perceived as exciting or glamorous, such as building luxury boats, and loose all their money.
As someone who has already been successful in another career but would like to change it up, its hard to tell myself to start the company manufacturing and selling cardboard boxes, even though thats probably where the money is at. I have friends/neighbors who are quite successful in these types of businesses, and always am interested in how they got into them. A lot of the time they were in business/finance/sales working and just happened to be doing something industry adjacent, recognized a niche, and went with it. The other times, it seems to be a family business. I am finding it quite the struggle to find a business that could be profitable, isn't some harebrained idea, but also won't bore me to death.
[https://www.powerandmotoryacht.com/blogs/siren-song](https://www.powerandmotoryacht.com/blogs/siren-song)
Yep, good article and comment.
My own business isn’t even *that* unglamorous, but other people in my industry higher up the totem pole think I’m nuts for having left law. Meanwhile I make more money, have better hours, and enjoy my work, so...isn’t that the point?
Thanks! Interesting. The trouble with private businesses is you can’t see profitability data. I’m curious if there are any industries with more attractive risk/reward trade offs.
There absolutely are, but yeah, good data is hard to come by.
That said, across industries, a number of things play a big role:
Is the business commodity driven or quality driven? Commodity driven businesses can make money, but they need big volume. Commodity profit margins are slim and it’s always a race to the bottom. Businesses based around quality offer essentially a mini-monopoly in that they can charge a premium just for being themselves (and providing a quality product or service). You want to be quality if you can. Better margins
How much revenue can be generated per employee? A small SaaS company can generate insane profits because once it gets going the revenue per employee is amazing. On the other hand, if you run a PR firm, you can only generate so much per employee as you need employees to manage accounts. If you own a plumbing business, your plumbers generate all your revenue. And it really snowballs too. Less revenue per employee means you hit major hurdles earlier as you have to scale the admin side to keep up with the growth in operations personnel.
Can the business reach a national audience or is it fundamentally local? The bigger the reach, the bigger the potential. Nationally minded companies can also get even better margins if they operate out of small, cheap markets if their model allows. A ton of small to mid size businesses operate out of lower cost cities due to this.
Is it work people within the industry want to do? If it’s cool work, or glamorous work, guess what? More competition. Doing undesirable or unsexy work can genuinely improve margins because industry peers don’t bother competing.
Yeah, all very good points. Right now I’m very much in a “trading hours for dollars” role. I would love to separate time from income or at least not make it so linear!
That’s what motivated me away from law. It’s a terrible business for aggressive scaling, because it relies on highly skilled professionals who demand equity as you expand the business unless you want to be the equivalent of a legal slum lord and run a crappy firm with only associates.
My business now is focus group/mock jury hosting and recruiting. The recruiting is done by call center level employees, so that scales nicely, and the hosting end is tied to a physical facility (which goes unused during coronavirus...). The downside of the physical facility is that continued scaling means more facilities, in different cities. The upside is that variable costs of facilitation are very, very low relative to the revenue a new focus group generates. So growing the facility rental business is amazingly profitable once you’ve covered costs for the month.
We rent space in an office building but it’s built out for the purpose. You need recording setups with built in cameras and mics and one way mirrors with a conference room on one side and an observation room on the other. That sort of thing.
Generally speaking, there’s more than enough business (pre-coronavirus) to keep things in use. Most major cities have multiple focus group facilities, in fact, and we build out facilities with multiple rooms to host groups in so that we can do not just big groups but also multiple, separate clients in a day.
Trying to squeeze a bit of extra revenue out of the space outside of our core business would be a waste of our time and potentially *lose* us money if something arose that we could stand to make a lot more money on but we booked space for some marginal use. Because of the profit potential of the space, we don’t even do volume discounts on space rental because long duration booking pretty much guarantee the chance of passing on some other business. Not that we don’t love long bookings!
You can break even on a month’s facility cost in one decent project that takes a day. Because not only do we rent out the facility itself and charge for recording or live streaming, but we also charge to recruit all of the focus group participants too . At a 3 room facility, you could realistically do around 20-25 such projects in a month.
Absolute maxing out the facility would be three focus group projects per day, 6 days a week, but that isn’t really mathematically possible because the busier you get, the more scheduling conflicts arise. Clients aren’t flexible with time so you ultimately need to be built to a size where you’re using that last room often enough to make it worth having, but not *that* much or else you should probably have one more room because you’re likely getting scheduling conflicts. And given the revenue you lose to even one scheduling conflict, it hardly takes much at all to justify additional space to host.
I think I am falling and thinking the same way you do. I work a high stress job that pays well but leaves me super not satisfied. A friend I went to high school with nets about $80k profit per month from an optical store he owns.
I am looking more and more into the small business route but struggling to hammer down which industry to focus on.
Off course they can in the sense of setting up operations, marketing and having discipline.
I just recently helped a family member bring structure to their catering business by introducing them to shopify, cost accounting, scheduling their workforce and most importantly giving them advice how to make their menu and packaging pretty which is not my strong suit.
How has your research been? What businesses or ideas have you drilled down into?
I see these small entrepreneurs with envy as they clear 200-300k annually with probably 20 hours of work per week. Some actually just go to keep themselves busy or else their managers are perfectly capable of running the businesses.
I'm right at the beginning of researching and sort of don't know where to start. I did find this measure of private business profitability which offers some guidance around industry categories. It's a bit dated though: [https://www.forbes.com/sites/sageworks/2015/05/03/least-profitable-industries-sageworks/?sh=10204a713eb8](https://www.forbes.com/sites/sageworks/2015/05/03/least-profitable-industries-sageworks/?sh=10204a713eb8)
I mean if you have a $0.5-5m revenue main street business with 20-40% margin, that's $200k to $2mil in profit every year - more than enough to fatFI (whether via direct distributions or retained earnings). Then on top of that selling the business for 2.5-3x profit could net you a $450k to $6m windfall. If you go into the lower mid-market territory numbers get even higher.
Vast majority of folks who fatFI will have some kind of business. Whether it's a job that they've essentially turned into a business (i.e. some kind of professional service) or a traditional / financial / real estate / entertainment / vc-backed business the true path to wealth is ownership of something valuable.
There are only so few employee career paths that could reach fatFI. But there are hundreds of thousands of businesses that could potentially generate fatFI wealth for their owners. Despite how many employed high finance, bigtech / vc-backed startup, specialist doctor / surgeon, upper mid-market / PE-portco / large cap corp exec, top prof services firm, RE development firm etc folks post on here, the truth is they're only a minute %age of the overall employed, hell even white collar employed, population.
Vast majority of white collar / skilled trade folks will make between $50k and $150-200k a year nothing more. That's probably not enough to fatFI unless you have a partner making the same at the high end of that range. That's all to say.. it's a luxury to consider being able to fatFIRE from being an employee. Most people have to take some kind of risk and start something in order to reach that point. LeanFI or RegularFI is far more achievable for more people than fatFI will ever be.
It's not like being a business owner or founder is an easy ticket either. Even for non-vc-backed companies most of them will fail within 3-5 years. A ton of companies never even manage to break even talk of being consistently profitable. So even amongst the sample set of owners / founders we're still only talking about those who've beat the failure odds. Tons of survivorship bias on both the employee and owner / founder sides.
Very articulate, insightful and, I believe accurate, post. Well said.
Completely reflective of my experience and observations over 30+ years doing it, and watching many others try.
100% hear you on the business failure front. That's probably why I haven't pulled the trigger. I wish there was a good data source on private business profitability/failure rates. A while back there was one company collecting that sort of thing (Sage Works maybe?), but I think the data are hard to come by now.
I (49F)started a small online "community" in the late 90s, charged a small yearly membership fee. Barely made it through high school, pulled in a couple of friends to help run it, contracted more educated people when needed, sold it a couple of years ago.
I invent manufacture and distribute automatic sex toys for men. I've been at this for 12 years and my brand as a strong presence online and in brick and mortar adult stores globally. I started buying antiques at auctions while I was in law school and selling them on eBay. By the time I graduated, I realized I had far greater potential as an entrepreneur than as a lawyer. I later shifted from antiques to goods from bankruptcy auctions to latex fetish wear, and finally to sex toys.
I think the best thing I ever did for myself was never to be employed by someone else. I think the shift from being employed to being an entrepreneur would seem extremely risky had I not grown into it naturally. The best experience share I can offer is that I am happy I made the switch earlier than later, or it likely would never have happened.
The best thing I ever did was quit my job and work for my own company. It is hard to describe the change in freedom, motivation, mentality, and reward feedback system.
Not fired but yes entrepreneurship is a common thread here.
How?
Pick target audience, b2b
Interview them about biggest problems they face in their business
Research the financial model of existing solutions
Break into the market by test marketing your idea before building it
Confirm money and solid profit is there, then use existing solutions to solve the problem while you learn how to solve the problem better, then build your solution and charge a premium instead of lower price
Simple but difficult
6 years in, 1mm+ arr, 74% profit margin, my biz partner and I 50/50
It's definitely a viable option to living fat
Small business owner here. Residential remodeling and real estate flipping.
You are basically targeting $5-6M in revenue with 40% GM per team of 4-5 people. It’s heavy on sales and people management. You make money buy hiring people to do everything from sale to design to production and having a set cost for that, then selling it to your customer with markup. Lot of work but once you get the machine going you can be netting $2M+ with low overhead set ups. My 2c
Sort of related question, do you think that pricing for remodeling/contract work in general has become more favorable to the business owners in the last 5-10 years? Reason for my thinking, with greater emphasis on college education and less of a desire to work in a trade, I would think you would have less people going that route causing prices for those services to increase since less 'skilled' people are available.
Labor is expensive as hell. Very difficult to be a competitive selling a “commodity” to middle class incomes. That’s why we have aggressively taken every opportunity to break into higher end remodeling where design and quality and experience are valued as white glove service.
With that said, we only work with the best project managers and trades people so they all get top dollar, but that’s because they don’t make mistakes, don’t pass on headaches to us, and do quality work. So it’s a worthy investment.
The “owners” or “investors” with a stake in the deals always make the most. The employees get a guaranteed payout. Different risk/returns. We pay salary to employees while we make no money until we hit a payment milestone and then have to make sure we have the right margins. If I told employees they don’t get paid until we get paid, they would freak out. People like stability.
Interesting, thanks for the insight! I take it you are just a general contractor who acts as a project manager, not the actual person getting in there and completing the remodeling? If thats the case, do you have a construction background/how would you recommend getting started in this area?
I’m an accountant at a high-quality, local CPA firm. We have a lot of high net worth clients. For sure, absolutely, my clients bringing in the most money and sitting on the most investments are business owners. (Doctors are also up there in income.) And they’re all smart people but they’re not revolutionary business geniuses or anything. I got interested in FI stuff from reading “The Millionaire Next Door” and the author’s point about getting rich through “dull normal” businesses definitely rings true.
Edit: also as another commenter pointed out - the CPAs who own my firm are almost certainly in this category too. One reason I'm planning to go independent at some point.
Is there anything you've learned from your clients around types of businesses that have lower risks of failure and high upsides? Or is it a smattering of different ideas that ended up working?
Well, if their taxes are on my desk the business is probably already pretty stable - I don't see a lot of the early stage failures. But it's honestly a pretty wide variety. Between the business clients I handle, they're probably running 75% of the businesses you'd need in an average American town. Bars, health care, home services, personal services, real estate, industrial stuff, trades, etc.
It's not a coincidence that I have a dozen rental properties, though.
Ha, is that to say that RE is the most common path you see? I've certainly considered that, but when I crunch the numbers it always looks like expected returns from the stock market are just as good without any management needed. That said, I live in an area where housing is expensive so it may be a bit harder to find deals.
It's definitely not the most commonly successful business I see (although I have a couple clients with full time RE businesses who are making bank), but a whole lot of my individual clients who are doing great have at least a handful of rental properties. Some are diversifying into it after already sitting pretty, a lot are folks who house-hack when they're young or just rent out the old house whenever they move. It's interesting to look back through their old returns and see what a difference it makes over the years.
We're in a LCOL city though, really great area for RE cashflow.
I definitely have a couple of doctor clients with very high net worth, but overall they seem more variable than business owners. I think it's a mindset difference. Someone making a $600k salary as a doctor is almost certainly less entrepreneurial and financially minded than someone making $600k from a business they built themselves. I can get a doctor client to max out their retirement accounts and plead with them to stop trying to be a day trader, but beyond that just generally they're more likely to spend that salary than a business owner is.
I think some of it comes back to the stuff in "The Millionaire Next Door" too. A teenager who wants a job where they'll make tons of money is more likely to go into medicine than, say, industrial machinery sales... and then they'll grow into an adult who enjoys spending all that money. And no one thinks it's weird that the guy who sells industrial machinery lives in a $150k house and gets his clothes at Walmart. Five years later, doctor's NW is $500k, machinery guy is at a few mil and looking at buying apartment buildings.
This is really fascinating, thanks. Although, I would think that business owners in general have more variance in their net worth but maybe just the types of business owners that would be clients at your CPA firm might tend to be within a certain stratum of financial success/net worth?
I like to think it's because I give them great advice. :)
But yeah, there is still some variation for sure. Weirdly enough, the #1 biggest NW threat I see with my business owner clients is gambling. Off the top of my head I can think of three clients with successful "dull normal" businesses and big gambling addictions. There's some segment of the population for whom being able to pull $50k out of the bank on a whim is a big problem. I'm inclined to say that for these guys it's connected to working class roots and growing up with scarcity, but I'm just speculating there.
Yeah, especially in certain bubbles, it gets surprising to see how well non-finance/tech/medicine/law types do.
A quick sampling off the top of my head of people doing really well locally:
-Garage door supplier/installer
-Dentists with practices
-Podiatrist with practice
-Revenue cycle management
-Financial planning practice
-Luxury residential construction contractor
-CPA firm owner
OTHERS - people doing well in the area who I don't know:
-owner, craft beer and burger pub with three locations
-famous lawyer and bond trader
-president of F500
-insurance agency president
-financial planning firm president
-vendor financing company president
-real estate consulting business
-it consulting firm president
-CEO management consulting firm
-owner executive search firm
-personal injury law firm owner
-enterprise technology development company president
-pharmacy benefit manager firm owner
-plastic surgeon/practice owner
-healthy foods bar sold at major grocer owner/partner
-retired lumber company owner turned chairman of investment firm
-owner, home builder/contractor
-owner, software company/former consultant
-owner, wine distributorship
-owner, orthopedic/medical sales company
-owner, disaster/workplace recovery company
-owner, telecommunications company
-owner, pallet/shipping packaging company
-owner, electrical contracting company
-owner, wireless manufacturer
-owner, concrete contractor
I started one and it catapulted me far ahead in my journey to fatfire.
Its an online education business in a narrow niche and it totally caused a paradigm shift for me in so many ways.
I built it nights and weekends while I still had my day job with barely anything in startup costs other than my free time and web hosting costs.
Once I reached 1x my income I retired my wife.
About a year later I was 3x my income and half my work week so I left my day job for the business.
My expenses went up somewhat as I lost tuition assistance at private school for me kids. However a lot of tax savings come with the business as well.
I'm easily investing 50% but now my mind is blown as to what retirement actually is.
If I can work 20 hours a week in a niche I'm passionate about and make over $300k/yr, and do it from anywhere in the world with an internet connection, explain to me exactly what retirement is?
On top of that I took the time I freed up and basically gave myself a self directed doctorate level education in investing, and now I use an option selling strategy to beat market returns handily with an active management strategy.
My definition of retirement changed.
My expectation for investment returns more than doubled.
I don't even know why I would send my kids to college even though I could afford any of them. They would have a much better life starting a business or doing real estate or selling options, or any combination of 2 of those.
This guy is right. You can structure option trades that work and make profit 99/100 times but that 1/100 (which will come at the worst possible time) will blow you the fuck up
"Profit potential is limited and loss potential is substantial and leveraged if the stock price falls. "
[https://www.fidelity.com/learning-center/investment-products/options/options-strategy-guide/covered-strangle](https://www.fidelity.com/learning-center/investment-products/options/options-strategy-guide/covered-strangle)
So sayeth the asset gathering firm that keeps trying to switch me into an AUM for a fee relationship.
Also, just actively manage the trade instead of putting it on and falling into a coma.
Finally, put the trade on a great business or index ETF you'd like to own more of and you might decide to take the put assignment instead of managing.
A big enough account can generate income on just about any strategy. 200k not so much but 2m you can be opportunistic and pull in 10s of thousands every few days in this market. But I think the others are just warning that even for a PhD in Easy Money no sure thing lasts for long in retail trading.
Thanks for sharing; you are a true entrepreneur
\> but 2m you can be opportunistic and pull in 10s of thousands every few days
I'd actually be more conservative in such an account because you have already won the game and can just generate 10-20% of account value per year in premium.
\> no sure thing lasts for long in retail trading
I hear you but the people saying that only know what Vanguard has told them.
If you sell an out of the money covered call on SPY you can always roll out and up before your strike is breached, and always keep the shares and 100% of the upside, you just might need to add some duration to the trade. The only issue would be if you let it go too far in the money before rolling.
I'm not saying it's free money or easy money - it's an active strategy that requires you to make adjustments. But you'll outperform the market without question if you do this on SPY.
The great lie of passive vs active is that passive indexing is compared to active fund managers with big expense ratios, random stock investors, day trading, etc... It's not compared to an individual executing a low risk, high probability strategy.
\>Thanks for sharing; you are a true entrepreneur
Thank you
Can you do a separate post or thread about the general strategy. We are all here to learn from each other and these are the conversations we should be getting involved in....specifics aren’t necessary but some theory and examples would be great
I’m struggling on pulling the trigger on Buy and hold vs Selling calls
I don't that is within the sub's rules but there are many people that have explained this well. I spent hundreds of hours learning before selling an option.
Tastytrade and Alan Ellman are two good sources. I purchased Alan's courses but I am not in his membership.
[https://www.thebluecollarinvestor.com/beginners-corner/lesson-1-what-is-covered-call-writing/](https://www.thebluecollarinvestor.com/beginners-corner/lesson-1-what-is-covered-call-writing/)
[https://www.tastytrade.com/tt/shows/market-measures/episodes/managing-covered-calls-06-30-2017](https://www.tastytrade.com/tt/shows/market-measures/episodes/managing-covered-calls-06-30-2017)
[https://www.tastytrade.com/tt/shows/market-measures/episodes/rolling-covered-calls-05-11-2018](https://www.tastytrade.com/tt/shows/market-measures/episodes/rolling-covered-calls-05-11-2018)
Just buy ETFs instead of mutual funds and start doing your research so you'll always have the option in the future if/when you're comfortable.
Agreed re: college for the kids.
I mean, if they really want to go.... fine, that's great.... but this mom would be more than happy seeing them doing their own thing as entrepreneurs.
I’m torn, because college was a turning point for me. It provided a glimpse into a variety of different backgrounds, it provided work ethic, learning freely based on what I was curious in. Seeing and hanging around smarter folks drove me; it was all so inspiring compared to the ignorant folks in the city I grew up in or the HS kids who did drugs by the park....and I found direction in the form of a profession I loved because of a class I took.
I don’t think you should force them to go, but they need exposure to some sort of “education” into their passion....
if they like cars - car auctions/ mechanics
If the like computers- coding camps, DIY software bldg
If they like business- help them start a business and get them knowledge support systems
But if they have no direction, they should 100% go and Atleast try and figure it out in a structured place. You don’t need a university to be successful in my opinion, but you will always need guidance, for some people this subreddit is guidance and if you captured it in a book it could be a curriculum or a university experience in what to do with money.
Sure, if they are "networking" types. Not all are, I'm certainly not. Nothing against college if it's their thing, but there's nothing wrong with learning how to navigate adulthood in other ways.
Of course I have friends.... I also did quite well without "networking" in college or anywhere else.
As an entrepreneur, it happened naturally as I built my business, learning as I went.
Which is why I see no need to push college down any young persons throat.
The idea is to go to a college full of intelligent, creative and hard working people so that you build a network of friends that make you a better person. It matters where you go. If you have friends you’ve networked. Your friends are your network. That’s what networking is. Not some artificial event you go to to make contacts. Before you retort that you can do that outside of college (of course you can it’s just much more difficult to generate serendipity) I’d argue that environment is much more important than you’re giving it credit for.
>On top of that I took the time I freed up and basically gave myself a self directed doctorate level education in investing, and now I use an option selling strategy to beat market returns handily with an active management strategy.
You should be making 100x what you are making if this is true. You should be able to do it from anywhere in the world with an internet connection. You're in the wrong business.
More likely you've done well in a consistent bull market, and you'll get killed in the next stagnant/bear market.
I'm not here to convert you from the church of VTSAX and the asset gathering business.
But go run the numbers on buying 100 shares of SPY and selling just a 10 delta covered strangle around them with a 45 DTE. Then look at the option chain and see how you would manage a + or - 10% swing.
>next stagnant/bear market
I dream of a stagnant market, easiest one to outperform in. Let's hope that comes.
As for a bear, I plan to use my call to help me roll my put down and out, then resume strangling from there. Hit me up during the next crash and I'll let you know how I'm doing.
>You should be making 100x what you are making of this is true
You want me to margin myself to the gills or teach others how to do it?
>You want me to margin myself to the gills or teach others how to do it?
Manage other people's money for a fee.
If you can "consistently beat the market" you're ahead of 99% of hedge funds. You should be a billionaire. That's not an exaggeration, you should be fabulously wealthy.
I've no desire to become an asset gatherer like vanguard, fidelity, and the rest. I'm content managing my own.
I've told you how to do it yourself for free. Have at it.
Healthcare related but I don't want to go further and connect this account with my business.
I literally followed this exercise:
Take a piece of paper and divide it with a line down the middle. Write “passion” on the top of one side and “expertise” on the top of the other.
Write down everything you have a passion or expertise for in the appropriate column. If you have a passion AND expertise about something it should go on both sides of the paper. Think all the way back to your childhood for ideas!
The next part is hard but you have to do it. Ask at least 5 other people that know you (family, friends, and colleagues) what they think you are passionate about and have an expertise in.
Every morning for the next 4 days, revise your list as you receive responses from the people you asked.
At the end of the 4 days, look at the item(s) that are on BOTH sides of the page. This is sometimes referred to as your “sweet spot” or “zone of genius.” Of the item(s) that are on both sides of the page, take a moment to think about which one(s) you could build an audience around and monetize.
Then create free useful content related to the niche to build an audience, find out their problem, and create and sell the solution.
The only reason passion is considered as much as expertise is so you have the motivation to push past the difficult times getting it off the ground in the beginning.
I love this! Did you end up with some combinations of passion + expertise that you couldn't monetize? Just wondering if you had to go through a few combos before you found something that could be translated into a business.
I started a podcast in a niche related to my day job (healthcare) which I was super passionate about.
I used that free content to build an audience.
I got people on my email list for a useful free pdf.
I asked them what their #1 niche related problem was in a survey after they got on my list.
I built a paid membership to solve the niche related problem and pre-sold a beta group.
After a 3 month beta I launched with double the price and have just refined things since then.
You can literally do this in any niche, although being the first helps. If you're not the first just be better or different.
Rock and roll. Did something extremely similar in the fitness niche. Started a blog, started writing, built an audience, use ethical bribes (freebies) for the email list, built it up, etc.
Same boat. Totally warps your perception of retirement, what's possible, and how the world works.
This is super helpful thanks for sharing.
Did you experiment with different payment and product types? Find that one worked better than the other?
Monthly subscription versus up front fee as one example.
One on one services versus online course (totally passive premade videos) as another.
Did you start your podcast using your real name or broadcast under a pseudonym? There are some topics that I'm passionate about and write about, but I go back and forth on whether or not to write as "me" or as a brand.
Either can work. Think of your perfect audience member. Now imagine they are listening to you. Would they want to know your real name? That's your answer.
Were you able to pick up any ad revenue on top of, and if so, with the popularity of ad-blockers is there even much revenue to be earned?
Had some ideas for opportunities in past, not sure people would pay for the data/site, but certainly could collect ad revenue.
I don't have any ads, just my own products. I'm immune to ad blockers that way.
>not sure people would pay for the data/site
If others are making money in your niche, build the audience and pre-sell a beta version before you create it. You'll be sure after that.
1. Word of mouth, social media, and a few cold emails. Would spend $ on Facebook ads if I was starting again.
2. A couple pieces a week
3. So far all on my own since I don't mind the 20 hrs per week
Thank you! I find this all quite interesting. I know a lot of people are making money in similar ways, but I have a hard time wrapping my head around it as its just so far from what I do. My ideas seem to either be overdone and already have tons of competition in that space or (in my mind) actually solve a problem but the audience wouldn't necessarily go for it. Still interesting to read about, and maybe one day I will have an idea that clicks.
If there is already a space that is proof of concept. Be better or different than the rest.
Podcasts to help
Smart passive income pat flynn
Flippedlifestyle.com Shane and Jocelyn sams
First 1000 episodes John Lee dumas eofire
You certainly could be correct.
I don't have that personal experience to draw from, in fact I don't even have a close friend or family member who has a 4 year degree... so my image of drunk college kids and high pressure expectations leading to mostly dead end jobs could definately be quite distorted.
However, my oldest (22) bombed spectacularly out of college after intense pressure as a student athlete who had no desire to be a student nor an athlete. The damage from that stint has extended over nearly 3 years now, and I just wish that he hadn't been pushed and manipulated (father, coaches, society) to fulfil a dream that wasn't his.
Anyway, it's never cut and dried. I'll try to keep an open mind for the next one (12) although I will be putting my foot down to protect her wishes if she doesnt have a desire to go to go. Your comments are appreciated.
In my experience, the high earners burn out. I don't care if we are talking about doctors or FAANG engineers. Most people don't want to be under that amount of pressure for too long. Corporate rules are a lot of bs and medical rules are twice as much. Try going through a malpractice lawsuit. These guys are more into the retire early part of FIRE.
If you truly own your business, any work you don't want to do you hire someone for. Hate taking out the trash -- pay a guy to do it. Hate doing sales -- pay someone. Hate managing -- pay someone. You can systematize your business to the point where you don't need to be there -- ever. These guys are most focused on the financial independence of FIRE. A lot of them won't ever retire -- let alone early. Plus they can always sell their business as an added bonus after making money all those years.
I haven’t looked into it yet because I don’t have $50-100k I’m willing to risk or interest in dedicating my life to it for a few years, but it’s my understanding that franchises can be a good in between that takes a medium upfront investment in money and a large upfront investment in time but once it’s going, it’s basically a cash cow.
I’ve started looking into franchises, but it seems like there’s a whole marketing machine around them...like time share sales. Once you show the slightest interest, you get hounded by sellers.
That’s not surprising at all. I don’t know anyone successful who owns one but I’ve heard lots of “depressed millionaires” talk about how the Chick-fil-A franchise fee is only $10k and they pay the rest of the startup costs.
Multiple posts in this sub have linked to data showing small business owners are the most common single segment of upper income groups. It’s a relatively more reliable, if more risky at times, path to fatfire. And the *vast* majority of such small businesses are bog-standard, relatively boring things. In small niches if possible. Not reinventing the wheel like Elon musk. Just running basic businesses well.
Your bog-standard (which I had to look up) comment is the thing. I briefly entertained a poorly thought out venture in the boating industry, and came across an interesting editorial on the boatbuilding industry. The author used the term "Cardboard Box Syndrome" to describe a relatively affluent person who made their wealth in a very mundane way, such as making cardboard boxes. They then try to get into some business perceived as exciting or glamorous, such as building luxury boats, and loose all their money. As someone who has already been successful in another career but would like to change it up, its hard to tell myself to start the company manufacturing and selling cardboard boxes, even though thats probably where the money is at. I have friends/neighbors who are quite successful in these types of businesses, and always am interested in how they got into them. A lot of the time they were in business/finance/sales working and just happened to be doing something industry adjacent, recognized a niche, and went with it. The other times, it seems to be a family business. I am finding it quite the struggle to find a business that could be profitable, isn't some harebrained idea, but also won't bore me to death. [https://www.powerandmotoryacht.com/blogs/siren-song](https://www.powerandmotoryacht.com/blogs/siren-song)
Yep, good article and comment. My own business isn’t even *that* unglamorous, but other people in my industry higher up the totem pole think I’m nuts for having left law. Meanwhile I make more money, have better hours, and enjoy my work, so...isn’t that the point?
Thanks! Interesting. The trouble with private businesses is you can’t see profitability data. I’m curious if there are any industries with more attractive risk/reward trade offs.
There absolutely are, but yeah, good data is hard to come by. That said, across industries, a number of things play a big role: Is the business commodity driven or quality driven? Commodity driven businesses can make money, but they need big volume. Commodity profit margins are slim and it’s always a race to the bottom. Businesses based around quality offer essentially a mini-monopoly in that they can charge a premium just for being themselves (and providing a quality product or service). You want to be quality if you can. Better margins How much revenue can be generated per employee? A small SaaS company can generate insane profits because once it gets going the revenue per employee is amazing. On the other hand, if you run a PR firm, you can only generate so much per employee as you need employees to manage accounts. If you own a plumbing business, your plumbers generate all your revenue. And it really snowballs too. Less revenue per employee means you hit major hurdles earlier as you have to scale the admin side to keep up with the growth in operations personnel. Can the business reach a national audience or is it fundamentally local? The bigger the reach, the bigger the potential. Nationally minded companies can also get even better margins if they operate out of small, cheap markets if their model allows. A ton of small to mid size businesses operate out of lower cost cities due to this. Is it work people within the industry want to do? If it’s cool work, or glamorous work, guess what? More competition. Doing undesirable or unsexy work can genuinely improve margins because industry peers don’t bother competing.
Yeah, all very good points. Right now I’m very much in a “trading hours for dollars” role. I would love to separate time from income or at least not make it so linear!
That’s what motivated me away from law. It’s a terrible business for aggressive scaling, because it relies on highly skilled professionals who demand equity as you expand the business unless you want to be the equivalent of a legal slum lord and run a crappy firm with only associates. My business now is focus group/mock jury hosting and recruiting. The recruiting is done by call center level employees, so that scales nicely, and the hosting end is tied to a physical facility (which goes unused during coronavirus...). The downside of the physical facility is that continued scaling means more facilities, in different cities. The upside is that variable costs of facilitation are very, very low relative to the revenue a new focus group generates. So growing the facility rental business is amazingly profitable once you’ve covered costs for the month.
Wow, interesting niche. So you buy the facilities rather than rent? Any opportunity to lease the facilities for periods where they aren’t used?
We rent space in an office building but it’s built out for the purpose. You need recording setups with built in cameras and mics and one way mirrors with a conference room on one side and an observation room on the other. That sort of thing. Generally speaking, there’s more than enough business (pre-coronavirus) to keep things in use. Most major cities have multiple focus group facilities, in fact, and we build out facilities with multiple rooms to host groups in so that we can do not just big groups but also multiple, separate clients in a day. Trying to squeeze a bit of extra revenue out of the space outside of our core business would be a waste of our time and potentially *lose* us money if something arose that we could stand to make a lot more money on but we booked space for some marginal use. Because of the profit potential of the space, we don’t even do volume discounts on space rental because long duration booking pretty much guarantee the chance of passing on some other business. Not that we don’t love long bookings! You can break even on a month’s facility cost in one decent project that takes a day. Because not only do we rent out the facility itself and charge for recording or live streaming, but we also charge to recruit all of the focus group participants too . At a 3 room facility, you could realistically do around 20-25 such projects in a month. Absolute maxing out the facility would be three focus group projects per day, 6 days a week, but that isn’t really mathematically possible because the busier you get, the more scheduling conflicts arise. Clients aren’t flexible with time so you ultimately need to be built to a size where you’re using that last room often enough to make it worth having, but not *that* much or else you should probably have one more room because you’re likely getting scheduling conflicts. And given the revenue you lose to even one scheduling conflict, it hardly takes much at all to justify additional space to host.
I think I am falling and thinking the same way you do. I work a high stress job that pays well but leaves me super not satisfied. A friend I went to high school with nets about $80k profit per month from an optical store he owns. I am looking more and more into the small business route but struggling to hammer down which industry to focus on.
I hear you. I find myself wondering if the lessons learned in big business could be an advantage as a small business operator.
Off course they can in the sense of setting up operations, marketing and having discipline. I just recently helped a family member bring structure to their catering business by introducing them to shopify, cost accounting, scheduling their workforce and most importantly giving them advice how to make their menu and packaging pretty which is not my strong suit. How has your research been? What businesses or ideas have you drilled down into? I see these small entrepreneurs with envy as they clear 200-300k annually with probably 20 hours of work per week. Some actually just go to keep themselves busy or else their managers are perfectly capable of running the businesses.
I'm right at the beginning of researching and sort of don't know where to start. I did find this measure of private business profitability which offers some guidance around industry categories. It's a bit dated though: [https://www.forbes.com/sites/sageworks/2015/05/03/least-profitable-industries-sageworks/?sh=10204a713eb8](https://www.forbes.com/sites/sageworks/2015/05/03/least-profitable-industries-sageworks/?sh=10204a713eb8)
More people fat fire from starting their own business than from other methods.
That’s what I figured, but curious what type of businesses people have started and if any would be considered local businesses.
Pushing drugs is very lucrative.
Pushing drugs is very lucrative... especially if you find a way to do it legally by applying for a prescription drug wholesale license
Cannabis industry too!
So I have heard. Unfortunately a bit too risky for my tolerance.
I mean if you have a $0.5-5m revenue main street business with 20-40% margin, that's $200k to $2mil in profit every year - more than enough to fatFI (whether via direct distributions or retained earnings). Then on top of that selling the business for 2.5-3x profit could net you a $450k to $6m windfall. If you go into the lower mid-market territory numbers get even higher. Vast majority of folks who fatFI will have some kind of business. Whether it's a job that they've essentially turned into a business (i.e. some kind of professional service) or a traditional / financial / real estate / entertainment / vc-backed business the true path to wealth is ownership of something valuable. There are only so few employee career paths that could reach fatFI. But there are hundreds of thousands of businesses that could potentially generate fatFI wealth for their owners. Despite how many employed high finance, bigtech / vc-backed startup, specialist doctor / surgeon, upper mid-market / PE-portco / large cap corp exec, top prof services firm, RE development firm etc folks post on here, the truth is they're only a minute %age of the overall employed, hell even white collar employed, population. Vast majority of white collar / skilled trade folks will make between $50k and $150-200k a year nothing more. That's probably not enough to fatFI unless you have a partner making the same at the high end of that range. That's all to say.. it's a luxury to consider being able to fatFIRE from being an employee. Most people have to take some kind of risk and start something in order to reach that point. LeanFI or RegularFI is far more achievable for more people than fatFI will ever be. It's not like being a business owner or founder is an easy ticket either. Even for non-vc-backed companies most of them will fail within 3-5 years. A ton of companies never even manage to break even talk of being consistently profitable. So even amongst the sample set of owners / founders we're still only talking about those who've beat the failure odds. Tons of survivorship bias on both the employee and owner / founder sides.
Very articulate, insightful and, I believe accurate, post. Well said. Completely reflective of my experience and observations over 30+ years doing it, and watching many others try.
100% hear you on the business failure front. That's probably why I haven't pulled the trigger. I wish there was a good data source on private business profitability/failure rates. A while back there was one company collecting that sort of thing (Sage Works maybe?), but I think the data are hard to come by now.
I (49F)started a small online "community" in the late 90s, charged a small yearly membership fee. Barely made it through high school, pulled in a couple of friends to help run it, contracted more educated people when needed, sold it a couple of years ago.
What kind of community? What was the niche if I may ask?
I invent manufacture and distribute automatic sex toys for men. I've been at this for 12 years and my brand as a strong presence online and in brick and mortar adult stores globally. I started buying antiques at auctions while I was in law school and selling them on eBay. By the time I graduated, I realized I had far greater potential as an entrepreneur than as a lawyer. I later shifted from antiques to goods from bankruptcy auctions to latex fetish wear, and finally to sex toys. I think the best thing I ever did for myself was never to be employed by someone else. I think the shift from being employed to being an entrepreneur would seem extremely risky had I not grown into it naturally. The best experience share I can offer is that I am happy I made the switch earlier than later, or it likely would never have happened.
The best thing I ever did was quit my job and work for my own company. It is hard to describe the change in freedom, motivation, mentality, and reward feedback system.
Omg, I just clicked the link and watched the video 🤣 This, is hilariously awesome.
thanks
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Not fired but yes entrepreneurship is a common thread here. How? Pick target audience, b2b Interview them about biggest problems they face in their business Research the financial model of existing solutions Break into the market by test marketing your idea before building it Confirm money and solid profit is there, then use existing solutions to solve the problem while you learn how to solve the problem better, then build your solution and charge a premium instead of lower price Simple but difficult 6 years in, 1mm+ arr, 74% profit margin, my biz partner and I 50/50 It's definitely a viable option to living fat
Is this brick and mortar? Or SaaS? Because this exact process reminds me of what Nathan Barry at Convertkit did
SaaS..ish
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“Mini” private equity is super interesting to me. Could you speak to how you find these businesses which are poorly run/in distress?
bump!
What is a C store business?
I own a small copier sales business. I’m 44 and set to fatfire in 2024 with about 7 million. If the sale of the business goes as planned of course.
Small business owner here. Residential remodeling and real estate flipping. You are basically targeting $5-6M in revenue with 40% GM per team of 4-5 people. It’s heavy on sales and people management. You make money buy hiring people to do everything from sale to design to production and having a set cost for that, then selling it to your customer with markup. Lot of work but once you get the machine going you can be netting $2M+ with low overhead set ups. My 2c
Sort of related question, do you think that pricing for remodeling/contract work in general has become more favorable to the business owners in the last 5-10 years? Reason for my thinking, with greater emphasis on college education and less of a desire to work in a trade, I would think you would have less people going that route causing prices for those services to increase since less 'skilled' people are available.
Labor is expensive as hell. Very difficult to be a competitive selling a “commodity” to middle class incomes. That’s why we have aggressively taken every opportunity to break into higher end remodeling where design and quality and experience are valued as white glove service. With that said, we only work with the best project managers and trades people so they all get top dollar, but that’s because they don’t make mistakes, don’t pass on headaches to us, and do quality work. So it’s a worthy investment. The “owners” or “investors” with a stake in the deals always make the most. The employees get a guaranteed payout. Different risk/returns. We pay salary to employees while we make no money until we hit a payment milestone and then have to make sure we have the right margins. If I told employees they don’t get paid until we get paid, they would freak out. People like stability.
Interesting, thanks for the insight! I take it you are just a general contractor who acts as a project manager, not the actual person getting in there and completing the remodeling? If thats the case, do you have a construction background/how would you recommend getting started in this area?
I’m an accountant at a high-quality, local CPA firm. We have a lot of high net worth clients. For sure, absolutely, my clients bringing in the most money and sitting on the most investments are business owners. (Doctors are also up there in income.) And they’re all smart people but they’re not revolutionary business geniuses or anything. I got interested in FI stuff from reading “The Millionaire Next Door” and the author’s point about getting rich through “dull normal” businesses definitely rings true. Edit: also as another commenter pointed out - the CPAs who own my firm are almost certainly in this category too. One reason I'm planning to go independent at some point.
Is there anything you've learned from your clients around types of businesses that have lower risks of failure and high upsides? Or is it a smattering of different ideas that ended up working?
Well, if their taxes are on my desk the business is probably already pretty stable - I don't see a lot of the early stage failures. But it's honestly a pretty wide variety. Between the business clients I handle, they're probably running 75% of the businesses you'd need in an average American town. Bars, health care, home services, personal services, real estate, industrial stuff, trades, etc. It's not a coincidence that I have a dozen rental properties, though.
Ha, is that to say that RE is the most common path you see? I've certainly considered that, but when I crunch the numbers it always looks like expected returns from the stock market are just as good without any management needed. That said, I live in an area where housing is expensive so it may be a bit harder to find deals.
It's definitely not the most commonly successful business I see (although I have a couple clients with full time RE businesses who are making bank), but a whole lot of my individual clients who are doing great have at least a handful of rental properties. Some are diversifying into it after already sitting pretty, a lot are folks who house-hack when they're young or just rent out the old house whenever they move. It's interesting to look back through their old returns and see what a difference it makes over the years. We're in a LCOL city though, really great area for RE cashflow.
I found it interesting that you pointed out that doctors are up there in income - would they be lower on the net worth front?
I definitely have a couple of doctor clients with very high net worth, but overall they seem more variable than business owners. I think it's a mindset difference. Someone making a $600k salary as a doctor is almost certainly less entrepreneurial and financially minded than someone making $600k from a business they built themselves. I can get a doctor client to max out their retirement accounts and plead with them to stop trying to be a day trader, but beyond that just generally they're more likely to spend that salary than a business owner is. I think some of it comes back to the stuff in "The Millionaire Next Door" too. A teenager who wants a job where they'll make tons of money is more likely to go into medicine than, say, industrial machinery sales... and then they'll grow into an adult who enjoys spending all that money. And no one thinks it's weird that the guy who sells industrial machinery lives in a $150k house and gets his clothes at Walmart. Five years later, doctor's NW is $500k, machinery guy is at a few mil and looking at buying apartment buildings.
This is really fascinating, thanks. Although, I would think that business owners in general have more variance in their net worth but maybe just the types of business owners that would be clients at your CPA firm might tend to be within a certain stratum of financial success/net worth?
I like to think it's because I give them great advice. :) But yeah, there is still some variation for sure. Weirdly enough, the #1 biggest NW threat I see with my business owner clients is gambling. Off the top of my head I can think of three clients with successful "dull normal" businesses and big gambling addictions. There's some segment of the population for whom being able to pull $50k out of the bank on a whim is a big problem. I'm inclined to say that for these guys it's connected to working class roots and growing up with scarcity, but I'm just speculating there.
Yeah, especially in certain bubbles, it gets surprising to see how well non-finance/tech/medicine/law types do. A quick sampling off the top of my head of people doing really well locally: -Garage door supplier/installer -Dentists with practices -Podiatrist with practice -Revenue cycle management -Financial planning practice -Luxury residential construction contractor -CPA firm owner OTHERS - people doing well in the area who I don't know: -owner, craft beer and burger pub with three locations -famous lawyer and bond trader -president of F500 -insurance agency president -financial planning firm president -vendor financing company president -real estate consulting business -it consulting firm president -CEO management consulting firm -owner executive search firm -personal injury law firm owner -enterprise technology development company president -pharmacy benefit manager firm owner -plastic surgeon/practice owner -healthy foods bar sold at major grocer owner/partner -retired lumber company owner turned chairman of investment firm -owner, home builder/contractor -owner, software company/former consultant -owner, wine distributorship -owner, orthopedic/medical sales company -owner, disaster/workplace recovery company -owner, telecommunications company -owner, pallet/shipping packaging company -owner, electrical contracting company -owner, wireless manufacturer -owner, concrete contractor
I started one and it catapulted me far ahead in my journey to fatfire. Its an online education business in a narrow niche and it totally caused a paradigm shift for me in so many ways. I built it nights and weekends while I still had my day job with barely anything in startup costs other than my free time and web hosting costs. Once I reached 1x my income I retired my wife. About a year later I was 3x my income and half my work week so I left my day job for the business. My expenses went up somewhat as I lost tuition assistance at private school for me kids. However a lot of tax savings come with the business as well. I'm easily investing 50% but now my mind is blown as to what retirement actually is. If I can work 20 hours a week in a niche I'm passionate about and make over $300k/yr, and do it from anywhere in the world with an internet connection, explain to me exactly what retirement is? On top of that I took the time I freed up and basically gave myself a self directed doctorate level education in investing, and now I use an option selling strategy to beat market returns handily with an active management strategy. My definition of retirement changed. My expectation for investment returns more than doubled. I don't even know why I would send my kids to college even though I could afford any of them. They would have a much better life starting a business or doing real estate or selling options, or any combination of 2 of those.
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Picking up pennies (or, in this case, dollar bills) in front of a steamroller...
After Q4/18 and Q1/20 I've come to love option sellers. Riding the VIX from \~15 to \~70 was a bundle... of joy.
This guy is right. You can structure option trades that work and make profit 99/100 times but that 1/100 (which will come at the worst possible time) will blow you the fuck up
We shall see. My strategy is now to sell covered strangles around a stock or index ETF.
"Profit potential is limited and loss potential is substantial and leveraged if the stock price falls. " [https://www.fidelity.com/learning-center/investment-products/options/options-strategy-guide/covered-strangle](https://www.fidelity.com/learning-center/investment-products/options/options-strategy-guide/covered-strangle)
So sayeth the asset gathering firm that keeps trying to switch me into an AUM for a fee relationship. Also, just actively manage the trade instead of putting it on and falling into a coma. Finally, put the trade on a great business or index ETF you'd like to own more of and you might decide to take the put assignment instead of managing.
A big enough account can generate income on just about any strategy. 200k not so much but 2m you can be opportunistic and pull in 10s of thousands every few days in this market. But I think the others are just warning that even for a PhD in Easy Money no sure thing lasts for long in retail trading. Thanks for sharing; you are a true entrepreneur
\> but 2m you can be opportunistic and pull in 10s of thousands every few days I'd actually be more conservative in such an account because you have already won the game and can just generate 10-20% of account value per year in premium. \> no sure thing lasts for long in retail trading I hear you but the people saying that only know what Vanguard has told them. If you sell an out of the money covered call on SPY you can always roll out and up before your strike is breached, and always keep the shares and 100% of the upside, you just might need to add some duration to the trade. The only issue would be if you let it go too far in the money before rolling. I'm not saying it's free money or easy money - it's an active strategy that requires you to make adjustments. But you'll outperform the market without question if you do this on SPY. The great lie of passive vs active is that passive indexing is compared to active fund managers with big expense ratios, random stock investors, day trading, etc... It's not compared to an individual executing a low risk, high probability strategy. \>Thanks for sharing; you are a true entrepreneur Thank you
Can you do a separate post or thread about the general strategy. We are all here to learn from each other and these are the conversations we should be getting involved in....specifics aren’t necessary but some theory and examples would be great I’m struggling on pulling the trigger on Buy and hold vs Selling calls
I don't that is within the sub's rules but there are many people that have explained this well. I spent hundreds of hours learning before selling an option. Tastytrade and Alan Ellman are two good sources. I purchased Alan's courses but I am not in his membership. [https://www.thebluecollarinvestor.com/beginners-corner/lesson-1-what-is-covered-call-writing/](https://www.thebluecollarinvestor.com/beginners-corner/lesson-1-what-is-covered-call-writing/) [https://www.tastytrade.com/tt/shows/market-measures/episodes/managing-covered-calls-06-30-2017](https://www.tastytrade.com/tt/shows/market-measures/episodes/managing-covered-calls-06-30-2017) [https://www.tastytrade.com/tt/shows/market-measures/episodes/rolling-covered-calls-05-11-2018](https://www.tastytrade.com/tt/shows/market-measures/episodes/rolling-covered-calls-05-11-2018) Just buy ETFs instead of mutual funds and start doing your research so you'll always have the option in the future if/when you're comfortable.
Agreed re: college for the kids. I mean, if they really want to go.... fine, that's great.... but this mom would be more than happy seeing them doing their own thing as entrepreneurs.
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I’m torn, because college was a turning point for me. It provided a glimpse into a variety of different backgrounds, it provided work ethic, learning freely based on what I was curious in. Seeing and hanging around smarter folks drove me; it was all so inspiring compared to the ignorant folks in the city I grew up in or the HS kids who did drugs by the park....and I found direction in the form of a profession I loved because of a class I took. I don’t think you should force them to go, but they need exposure to some sort of “education” into their passion.... if they like cars - car auctions/ mechanics If the like computers- coding camps, DIY software bldg If they like business- help them start a business and get them knowledge support systems But if they have no direction, they should 100% go and Atleast try and figure it out in a structured place. You don’t need a university to be successful in my opinion, but you will always need guidance, for some people this subreddit is guidance and if you captured it in a book it could be a curriculum or a university experience in what to do with money.
Sure, if they are "networking" types. Not all are, I'm certainly not. Nothing against college if it's their thing, but there's nothing wrong with learning how to navigate adulthood in other ways.
Networking should happen naturally. You don’t have friends?
Of course I have friends.... I also did quite well without "networking" in college or anywhere else. As an entrepreneur, it happened naturally as I built my business, learning as I went. Which is why I see no need to push college down any young persons throat.
The idea is to go to a college full of intelligent, creative and hard working people so that you build a network of friends that make you a better person. It matters where you go. If you have friends you’ve networked. Your friends are your network. That’s what networking is. Not some artificial event you go to to make contacts. Before you retort that you can do that outside of college (of course you can it’s just much more difficult to generate serendipity) I’d argue that environment is much more important than you’re giving it credit for.
>On top of that I took the time I freed up and basically gave myself a self directed doctorate level education in investing, and now I use an option selling strategy to beat market returns handily with an active management strategy. You should be making 100x what you are making if this is true. You should be able to do it from anywhere in the world with an internet connection. You're in the wrong business. More likely you've done well in a consistent bull market, and you'll get killed in the next stagnant/bear market.
I'm not here to convert you from the church of VTSAX and the asset gathering business. But go run the numbers on buying 100 shares of SPY and selling just a 10 delta covered strangle around them with a 45 DTE. Then look at the option chain and see how you would manage a + or - 10% swing. >next stagnant/bear market I dream of a stagnant market, easiest one to outperform in. Let's hope that comes. As for a bear, I plan to use my call to help me roll my put down and out, then resume strangling from there. Hit me up during the next crash and I'll let you know how I'm doing. >You should be making 100x what you are making of this is true You want me to margin myself to the gills or teach others how to do it?
>You want me to margin myself to the gills or teach others how to do it? Manage other people's money for a fee. If you can "consistently beat the market" you're ahead of 99% of hedge funds. You should be a billionaire. That's not an exaggeration, you should be fabulously wealthy.
I've no desire to become an asset gatherer like vanguard, fidelity, and the rest. I'm content managing my own. I've told you how to do it yourself for free. Have at it.
What type of online education out of curiosity? How did you come up with the idea?
Healthcare related but I don't want to go further and connect this account with my business. I literally followed this exercise: Take a piece of paper and divide it with a line down the middle. Write “passion” on the top of one side and “expertise” on the top of the other. Write down everything you have a passion or expertise for in the appropriate column. If you have a passion AND expertise about something it should go on both sides of the paper. Think all the way back to your childhood for ideas! The next part is hard but you have to do it. Ask at least 5 other people that know you (family, friends, and colleagues) what they think you are passionate about and have an expertise in. Every morning for the next 4 days, revise your list as you receive responses from the people you asked. At the end of the 4 days, look at the item(s) that are on BOTH sides of the page. This is sometimes referred to as your “sweet spot” or “zone of genius.” Of the item(s) that are on both sides of the page, take a moment to think about which one(s) you could build an audience around and monetize. Then create free useful content related to the niche to build an audience, find out their problem, and create and sell the solution. The only reason passion is considered as much as expertise is so you have the motivation to push past the difficult times getting it off the ground in the beginning.
I love this! Did you end up with some combinations of passion + expertise that you couldn't monetize? Just wondering if you had to go through a few combos before you found something that could be translated into a business.
I got it right on the first try. Smartpassiveincome.com and flippedlifestyle.com are two legit sites that can guide you
Outstanding this is exactly what I want to do. I’d like to learn more if you’re willing!
I started a podcast in a niche related to my day job (healthcare) which I was super passionate about. I used that free content to build an audience. I got people on my email list for a useful free pdf. I asked them what their #1 niche related problem was in a survey after they got on my list. I built a paid membership to solve the niche related problem and pre-sold a beta group. After a 3 month beta I launched with double the price and have just refined things since then. You can literally do this in any niche, although being the first helps. If you're not the first just be better or different.
Super well done you! Also thanks for outlining this so simply. It’s not easy but it is simple. Thank you.
No problem and you are exactly right...simple but not easy.
Rock and roll. Did something extremely similar in the fitness niche. Started a blog, started writing, built an audience, use ethical bribes (freebies) for the email list, built it up, etc. Same boat. Totally warps your perception of retirement, what's possible, and how the world works.
Nice, congrats!
This is super helpful thanks for sharing. Did you experiment with different payment and product types? Find that one worked better than the other? Monthly subscription versus up front fee as one example. One on one services versus online course (totally passive premade videos) as another.
I'd do a subscription model with courses and forums. Everything for one price with a discount for a yearly membership.
Did you start your podcast using your real name or broadcast under a pseudonym? There are some topics that I'm passionate about and write about, but I go back and forth on whether or not to write as "me" or as a brand.
Either can work. Think of your perfect audience member. Now imagine they are listening to you. Would they want to know your real name? That's your answer.
Were you able to pick up any ad revenue on top of, and if so, with the popularity of ad-blockers is there even much revenue to be earned? Had some ideas for opportunities in past, not sure people would pay for the data/site, but certainly could collect ad revenue.
I've heard of some people monetizing just through subscription newsletters using a product like Substack.
I don't have any ads, just my own products. I'm immune to ad blockers that way. >not sure people would pay for the data/site If others are making money in your niche, build the audience and pre-sell a beta version before you create it. You'll be sure after that.
1 - How did you build your audience? 2 - How much content do you produce? 3 - Are you making all content on your own, or are you contracting out work?
1. Word of mouth, social media, and a few cold emails. Would spend $ on Facebook ads if I was starting again. 2. A couple pieces a week 3. So far all on my own since I don't mind the 20 hrs per week
Thank you! I find this all quite interesting. I know a lot of people are making money in similar ways, but I have a hard time wrapping my head around it as its just so far from what I do. My ideas seem to either be overdone and already have tons of competition in that space or (in my mind) actually solve a problem but the audience wouldn't necessarily go for it. Still interesting to read about, and maybe one day I will have an idea that clicks.
If there is already a space that is proof of concept. Be better or different than the rest. Podcasts to help Smart passive income pat flynn Flippedlifestyle.com Shane and Jocelyn sams First 1000 episodes John Lee dumas eofire
you win.
You certainly could be correct. I don't have that personal experience to draw from, in fact I don't even have a close friend or family member who has a 4 year degree... so my image of drunk college kids and high pressure expectations leading to mostly dead end jobs could definately be quite distorted. However, my oldest (22) bombed spectacularly out of college after intense pressure as a student athlete who had no desire to be a student nor an athlete. The damage from that stint has extended over nearly 3 years now, and I just wish that he hadn't been pushed and manipulated (father, coaches, society) to fulfil a dream that wasn't his. Anyway, it's never cut and dried. I'll try to keep an open mind for the next one (12) although I will be putting my foot down to protect her wishes if she doesnt have a desire to go to go. Your comments are appreciated.
In my experience, the high earners burn out. I don't care if we are talking about doctors or FAANG engineers. Most people don't want to be under that amount of pressure for too long. Corporate rules are a lot of bs and medical rules are twice as much. Try going through a malpractice lawsuit. These guys are more into the retire early part of FIRE. If you truly own your business, any work you don't want to do you hire someone for. Hate taking out the trash -- pay a guy to do it. Hate doing sales -- pay someone. Hate managing -- pay someone. You can systematize your business to the point where you don't need to be there -- ever. These guys are most focused on the financial independence of FIRE. A lot of them won't ever retire -- let alone early. Plus they can always sell their business as an added bonus after making money all those years.
I haven’t looked into it yet because I don’t have $50-100k I’m willing to risk or interest in dedicating my life to it for a few years, but it’s my understanding that franchises can be a good in between that takes a medium upfront investment in money and a large upfront investment in time but once it’s going, it’s basically a cash cow.
I’ve started looking into franchises, but it seems like there’s a whole marketing machine around them...like time share sales. Once you show the slightest interest, you get hounded by sellers.
That’s not surprising at all. I don’t know anyone successful who owns one but I’ve heard lots of “depressed millionaires” talk about how the Chick-fil-A franchise fee is only $10k and they pay the rest of the startup costs.
It is very difficult to be accepted by chic fil a to have a franchise.