What is the Best Small Business to start?
When asked recently, what was the best small business to start Dan Kennedy had an interesting notion about building a business:
“One of the lessons I learned slowly and painfully has to do with income versus wealth.”
So what’s the difference? According to Dan, sales and profits are important, and that’s what most business entrepreneurs focus on. However sales and profits are not wealth, they are income.
Wealth, he says, comes from creating valuable assets, that produce income. You can either work all your life creating income, or you can work on building wealth. Such as a business assets so that the income eventually takes care of itself. That he said, is the best type if business to start.
For example, opening your own little cafe creates income, but creating a system, such as McDonald’s that can be ‘duplicated’ and ‘scaled’, now that creates wealth.
Many sport and entertainment superstars, successful business owners, entrepreneurs and even lottery winners, may have a big income but they easily fall into the trap of wealth ‘simulation’ instead of wealth ‘creation‘.
When they are focused on creating income they tend to spend much of it on the trappings of wealth, living a wealthy lifestyle, simulating wealth by dissipating cash.
I personally know, because I spent the first 40 odd years of my life focused on wealth ‘simulation’ with beautiful houses, exotic cars, wives, expensive friends and other things, that gave the appearance of wealth.
But when the income stopped – they all disappeared. If I had instead focused upon creating wealth rather than earning income, things could have been very different.
Focusing on wealth creation means, using the income to build or acquire assets that then generates income with which to acquire more assets. You continue to do this, until generating an income doesn’t require yourself to do the actual work.
Your personal income should not be used for living a luxurious lifestyle, but instead, used to create or acquire assets from which you can eventually live a wealthy life.
Wealthy People Understand
Most truly successful wealth creators understand this principle implicitly.
Warren Buffet still lives in the modest home he bought in the 1958 and the late Sam Walton drove an old pickup truck, these are both examples of wealth creators living well below their means. John D Rockefeller and J Paul Getty are examples of wealth creators whose use of this principle has ensured that their legacy lives on, generations later.