Can starting a business get you rich? It can if you manage to make it successful. Some of the wealthiest people in the world are the ones who started their own businesses.
The thing that can make business owners rich, is that their income is not tied to their time. They get paid based on the results of their own businesses.
However, starting a business is a somewhat riskier way to get by, compared to having a job that pays regularly. It can take months or even years before new businesses start to generate any income.
How to get rich by starting a business
There are several ways you can profit from starting a business.
The first way is to grow it and pay yourself a good salary. However, it can take quite some time to make your business profitable enough to pay yourself well.
This of course depends on the business you start. Some business models require very little initial capital. In cases like this, you can pay yourself a nice salary even from the early days.
The second way is to grow your business enough and pay yourself with dividends. This again requires your business to be profitable enough to pay dividends.
The third way is to start a business and sell it. After you have established customers and a business model, even if your business is not yet profitable, you could be able to sell it to someone who has more resources to grow it.
After the difficult starting phase, the business could be worth, even a lot of money, if it has a bright future. That is another way to make money from starting a business.
Does getting rich require multiple sources of income?
It is a general misconception that getting rich requires multiple sources of income. It is really difficult to start 10 different income sources from scratch without previous knowledge.
Having multiple sources of income is good for security after you have some initial capital, to begin with. Find a way to make money from one source of income, then diversify it to make it more stable.
Focus on one primary source of income at first. After you have that, you can diversify to other aspects and get that sweet “multiple sources of income”.
Get rich with one source of income, for example, a business. After you have a steady cash flow from that, you can stay rich by diversifying to different assets, such as stocks and real estate.
Best businesses to start to get rich
The best kind of business for you might be completely different from what someone else should be doing. However, a few traits of a business can make good money in the long term.
The business should be in a growing or steady industry, not in a declining one. The world is changing fast and new businesses pop up in the growing industries.
There is no point in starting a business in a dying industry and expecting it to make money for years to come.
Another trait of a successful business is that it’s easy to scale. This could mean a digital product or work being done online. It is much easier to scale a business that sells a digital product, than a physical service for example.
With businesses that work online, you can outsource the tasks that are on in your field of expertise. This can easily be done through Fiverr or Upwork for example.
Of course, this doesn’t mean you can not start a successful cafe or a car repair shop. They just can not be scaled as easily and they require more capital to start. If that is what you want, I am sure you could make a business like that work as well.
You can even start a “regular” business, such as a cafe or repair shop, but with a twist. I highly suggest you read Lean Startup by Eric Ries and Blue Ocean Strategy by Renée Mauborgne. Those books have great information on how to succeed in different fields of business, by adding a new twist.
Should you start or buy a business?
There are some pros and cons when comparing starting a business or buying one. I will go through some of them now.
Pros of starting a business:
- You get to make every decision from the day you start
- You know the full history of your business
- You can manage the image of your business
- You know the industry from the day one of your business
Cons of starting a business:
- The start of the business can be tough and uncertain
- It requires a lot of work to establish a name for yourself
- Loans and initial capital
Pros of buying a business:
- Existing customer base
- Existing brand and reputation
- The difficult starting phase is already behind
- Already established systems
- You can see the cash flow of the business
- Business is proven to work
- Employees are already trained and know their job
- Financing could be done with an earn-out or low interest
- The previous owner will teach you the ropes
Cons of buying a business:
- Potentially bad reputation
- The owner might be the “brand” of the business
- No deep knowledge of the field of the business
- Profitable businesses can be expensive
- Buying a business can be risky since you jump on board a moving ship
More about why you should buy a business instead of starting one in this post.
So, can starting a business make you rich? Yes, it can. Is it easy? No, it’s not. Is it possible? Yes, it is.
You don’t need 10 sources of income, like the people on YouTube say you need, in order to get rich. Multiple sources of income are to keep you rich after you get rich. This is to diversify your risk.
Focus on one thing to initially make you rich, then diversify to different asset classes. For example, I have posts about investing, you can read them here.
Other business-related posts can be found here.
Hopefully this was helpful to you, have a nice day!