Canadians can still get rich as employees—ask any Canadian bank president. However, high-paying jobs are hard to find. Most corporate structures are pyramid-shaped, with a few high-paying positions at the top and many lower-paying jobs down below. Your best chance of getting rich is by investing money in your own business. But this is risky, because many new businesses wind up failing. As many as 80% go bankrupt or simply shut down in their first five years, according to surveys. Many owners of failed enterprises lose their life savings by investing money in their businesses, if not their homes and marriages.
3 reasons why new businesses fail
- Owners underestimate the amount and variety of work. In a small business, everything is your job, until you hire somebody to do it.
- Owners run out of capital to pay their bills before the company’s profits begin to flow.
- Some “bright idea” businesses fail because there’s no demand for their product or service.
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4 ways you can make your business a success
- Keep your job and run the business on the side until it starts making money.
- Make sure you have adequate capital. Apply for loans, lines of credit, merchant charge-card accounts and so on before you need them.
- Choose a “me-too” business over a pioneering one. Improve on existing products or services, or buy a franchise.
- Make it your life’s work. Learn all you can about the industry, and keep learning. Plan on working long hours for many years without immediate rewards. Above all, stick with it. Many entrepreneurs go broke two, three or more times before they launch the business that makes their fortunes.
The odds are also against you when investing money in shares of start-ups
Note that the odds against success in your own business apply just as much to investing money in shares in start-up businesses that trade on the stock exchange. If anything, the odds against investing money in publicly traded start-ups are worse; that’s because some publicly traded start-ups are created by stock promoters who merely go through the motions of building a business, while their real business is selling stocks to the public. That’s why it pays to downplay junior stocks in your portfolio. Instead, invest most of your money in well-established companies with a history of sales and earnings, if not dividends. If you’d like me to personally apply my time-tested approach for investing money to your portfolio, you should consider becoming a client of my Successful Investor Wealth Management service. Click here to learn more.
