I bet you have heard of the motivating stories of some billionaires and millionaires who claim to have built their business and retirement savings from scratch. On top of my head are Colonel Sanders, Howard Schultz, Ralph Lauren, and the fan favorite, Oprah Winfrey.
These entrepreneurs have great tales of how they transformed their lives from rags to riches. And in every case, their stories have significantly inspired many like you.
The only mystery is how you can achieve the same transformation for yourself. Here is a guide on how you can achieve a similar feat.
Get a Job
Starting from starch is not easy. But that does not mean you should remain at that point waiting for a miracle. Remember, you have a long journey to go, so you better start it early.
Your dream to be an entrepreneur does not mean you cannot seek employment. Not unless you have an alternative source of financing for your prospective business.
Daymond John, the founder of FUBU, is an example of a millionaire whose journey from scratch started with first getting a simple job. Daymond has claimed that waiting tables at Red Lobster Restaurant helped shape his successful entrepreneurial career.
Having a job is an excellent place to start saving for your startup capital. A job allows you to make an income that enables you to save. Statistics on small businesses in America reveal that 66.3% of entrepreneurs started their businesses using personal savings. Another 27.6% utilized incomes from another job.
Like in the case of Daymond, having a job offered him income security and flexible hours. Daymond used the extra hours off the restaurant to work on his side hustle, which he later grew into the current business empire.
Set Up An Emergency Fund
Remember how your mom and financial advisors told you to set up an emergency fund when planning your personal/family finances? It turns out that the advice applies to your business too.
One of the reasons you may need to get a job before starting your business is to ensure you have created an emergency fund. An emergency fund is money you put aside and use when your business experiences unexpected expenses. It is the fund you turn to when your business runs into a crisis.
An emergency fund reduces your business failure rate in the early startup stages. It offers the flexibility you need to take risks in your new business. There may be a time you will need it to maintain your business as a going concern.
Take Advantage of Match 401(k) Plans
Even after finding a job, never forget your long-term goal of starting your business. Take advantage of all benefits offered by the employer.
Every dollar counts, especially when planning to start a business from scratch. The opportunity to start saving for your retirement early enough is one that you shouldn’t ignore.
One such opportunity is employers offering a 401(k) match plan. It is a plan where your employer decides to contribute to your 401(k) by matching each dollar you save or through a partial contribution.
Remember, this is not an employment requirement by law. But some employers take it as an employee motivation initiative.
Having more 401(k) savings before starting your business is not a bad idea. Remember, you may not be able to be saving into the account at the startup stages of your business because you may not be making any profit.
Set Up a Long-term Care Plan
As I mentioned in my previous podcasts, getting old and retiring is inevitable. Even the latest technological innovations haven’t made it possible to reverse these constants.
Therefore, you cannot afford to ignore these future realities when planning for the present. For example, how will you be able to take care of yourself later in life?
Long-term care insurance is one of the ways to prepare for this future. The plan covers an array of services not covered by your regular insurance policy, like adult care.
It would be best if you started making long-term care plans early enough. Currently, most long-term care policy providers do not accept applicants aged 75 years and above.
The primary reason for long-term care planning is to protect your retirement savings. The average cost of a private room in a nursing home is $106,000, and $93,075 per annum for a semi-private room.
You don’t want all this cash deducted from your retirement savings account. You will exhaust all your retirement savings earlier than planned.
Invest in a Venture that Will Fetch You Residual Income
Robert Kiyosaki has always been consistent in his message on how to make money. He always preaches the importance of letting money work for you. That is the whole concept of residual income. It is the passive income you receive after completing an income-producing investment. The income continues to flow even after you have stopped contributing effort to the investment.
It is the secret tactic most millionaires and billionaires have employed over the years. A great example is Warren Buffet’s investment in the stock market. He doesn’t need to work in the companies he has invested in to earn dividends.
However, you have to be particularly careful when choosing your sources of residual income. It may require you to invest part of your business savings. And you don’t want to risk it in a venture that doesn’t bring you returns.
Get More Tips to Build Your Business and Retirement Savings from Scratch
Your dream to become the next millionaire and billionaire from scratch is still alive. There are still more tips on making this dream a reality. Learn all the tips by tuning in to The Building Wealth Podcast as presented by Dr. Wheeler Pulliam!