Articles

Seven Keys to Building A Successful Residual Income Business

Posted on Apr 26, 2011

Introduction

For someone who has never owned a small business, let alone a residual income business, the idea of building one might seem too complicated, time-consuming, difficult, or risky. What many people are discovering is that not building a small business can be very risky in the long run. Most people want to believe that a day will come when they won’t be dependent on fulltime employment. Call it retirement, scaling back, financial freedom or living the good life, most people want to believe that someday they will have more freedom to explore life’s wonders and have a less stressful lifestyle – hopefully while they are still young enough to enjoy and appreciate it.

But how many fully appreciate what is needed to achieve this? People might point to examples of parents and grandparents who are enjoying a comfortable retirement after a lifetime of work. These examples do exist but the environment has changed dramatically over the past thirty years. Not only do people change employers more frequently but much more importantly, the generation reaching retirement today was the first to see the change from “defined benefit” pension plans to “defined contribution” individual retirement plans. Under a defined benefit plan, the plan provider (employer or investment company) took on the investment risk by saying “based on what you’ve contributed, we will guarantee you this monthly payment for as long as you live.” Under a defined contribution plan, the plan holder (you) takes on the investment risk and your monthly payments will vary and could even run out. Individual retirement plans, such as RRSP’s in Canada and IRA’s and 401(k)’s in the US, are defined contribution plans. While defined benefit plans do still exist, they are rare.

So how are we doing? Two articles in the Wall Street Journal paint a sobering picture on both sides of the border. A January 4, 2011 article states: “Will Canadians be able to maintain their living standards when they retire? Probably not, according to a recent study.” A February 19, 2011 article states: “The retirement savings plans that many [US] baby boomers thought would see them through old age are falling short in many cases. The average person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain the owner’s standard of living in retirement.”

How can we go about creating residual income for a secure retirement without reliance on government support programs? In the absence of a defined benefit pension plan the average person has three options available. You can choose either or any combination of these options based on your experience and your temperament. These options are 1) Financial Markets, 2) Real Estate, and 3) Owning a Business.

Financial Markets can serve you well if you’ve been putting enough aside to work with, if you know where to get reliable information and will be disciplined in researching that information, if you have the stomach for the volatility of the markets, and if you’re okay with delaying or halting your retirement in the event of a market downturn. Experts suggest deciding on the yearly income you want from your investments and multiplying that figure by 15 to determine the amount of “nest egg” you will need. Take a moment to do that now and see how close you are to your goal. Note that this nest egg amount does not include the equity in your home. Living in a debt-free home can be very satisfying and it can reduce the yearly income that you need to live on but the home equity does not create yearly income.

Real Estate can serve you well if you have the capital to invest in good properties, if you can analyze and select good properties in good locations, if you are willing to work through tenant issues or pay a hard-working property manager, and if you have the financial reserves to handle emergency replacement of items such as furnaces, hot water tanks, appliances, roofs, etc. While “no-money-down” deals do exist and have been touted as the Holy Grail of real estate investing, the reality is that these properties tend to be more distressed which is why they offer more favourable terms to entice a buyer.

Owning a Business can serve you well if you can minimize your initial investment and monthly overhead, if you can stand out against your competition, if you can generate residual sales through a consumable product, if you can create leverage, and if you can capitalize on large and growing demand. As well, building a successful business will require skills in finding, motivating, and developing loyal team members and trusted advisors.

Each of these options is important and it is sensible to be experienced in more than just one. As an example, a person might choose to start one business, then use that experience to expand to another business, then use the profits from that to invest in a real estate property, then refinance and buy a second property while still managing the second business, all the while studying financial markets and practicing with “paper trades” (pretend trades), then practice with real trades from the business profits, then sell the properties and the businesses and invest the proceeds in the financial markets for a comfortable retirement. The scenario in that one sentence might take 20 years to unfold. But it is viable and can work for those willing to get started and put in the effort. Regardless of the specific type of business you start, the seven keys that follow will greatly improve the likelihood of your business success.

Key #1: Be Crystal Clear About WHY You Are Building The Business

What is your 5 or 10-year vision for this business?
How is your business making the world a better place?
How much to you want to depend on government support in retirement?
This clarity will be the spark that gets you moving when obstacles appear.

Key #2: Get Creative!

Think outside the box – the “tried and true” might just be worn out
Don’t get locked into an idea of how things “ought” to work
Seek out and take the advice of those who are successful business builders
Don’t wait for permission
Shun the “helpful” advice of those who are NOT successful business builders

Key #3: Treat Your Business Like A Business, Not Like A Hobby

Understand the difference between Activity and Accomplishment (avoid just being busy)
If home-based, set up a business environment in a part of your home (no ironing board in the office)
Have an organized workspace with needed office supplies (file folders, file cabinet, etc)
Have regular business “hours” and dress for success (map out your hours at start of wk)
Set measurable goals and remain focused on working toward them.

Key #4: Get Comfortable With Being Uncomfortable

Be forever meeting new people.
Seek uncomfortable opportunities to reach new audiences.
Seek out new training and new ideas that challenge you – your business will grow only to the extent that you grow.
If you’ll do for two years what most people won’t, you can do for the rest of your life what most people can’t.

Key #5: Develop The Habits Of Urgency And Persistence

Define them
Time slips by more quickly than you can imagine.
Treat one day per week like it’s the last day before a two-week holiday.
Know that there will be obstacles, which are there to test your resolve.
Maintain your energy level to perform at your best and avoid downtime.

Key #6: Be Simultaneously Passionate About What You Offer And Detached From The Outcomes Of Your Efforts

If you don’t yet believe passionately in what you offer, step back and re-evaluate.
You must believe that you are making a positive difference in people’s lives.
Welcome feedback, but know that you will never please everyone.
Focus on being of service to others, not on how much you are earning.
Whether they buy is immaterial but be the best you can at what you do.
This is essential to overcoming the rejection that ALL business owners face.

Key #7: Develop Your Business To The Point That It No Longer Needs You

If your business only generates revenue when you are actively working, it is not a business – it is a JOB!
To be financially free and have lasting security, you must develop your business so that it makes money while you sleep.
At first this might seem unethical or lazy to some but it actually requires a stronger work ethic to build a business to this level.
Build your business with the intention that in five years you are going to sell it.
This is important NOW, not just when ready to retire.

–Paul R. Anderson, MBA

Paul Anderson is President of Anderson Career Training Institute (www.acti.org) – an Edmonton-based training organization helping people develop new directions. In addition to his organizational duties, he conducts workshops on topics related to entrepreneurship, motivation and personal development. Through the Institute’s Self-Employment Training Program, Paul and his team have helped more than 1,000 Albertans over a fourteen-year period to achieve their dream of starting their first business.

Creating a ‘Calgary Stampede’ Of New Clients

Posted on Jul 19, 2010

Starting July 8th, Calgary (where I live) turns into a complete country party town for 10 days.

The Calgary Stampede is an event that’s been running since 1886 – and lays claim to The Greatest Outdoor Show On Earth.

We get probably half a million visitors in to Calgary during the 10 day event (which is amazing since Calgary is 1 million people- we add 50% of our population in 10 days).

Get this, the total take home winnings from the Stampede Rodeo is a whopping $1.6 Million – which is now the largest prize winnings of any rodeo in the world, from my understanding.

You’d certainly have to pay me well to sit on a bucking bull! $1.6M would about do it ;o)

What would make people travel from all over the world to see the Stampede?

*** HINT: The lessons of the Stampede can easily be adapted to your business.

1) An annual event like no other – there are rodeos all over the world – but Calgary has a 1 million dollar rodeo purse so this is NOT like all the others. People look forward to the Stampede for months to come. The best Rodeo stars from across the world gladly come to Calgary to fight for the main prize.

Make your special events special – and something worthwhile coming to.
2) The customers “get into it” like no where else in the world. Imagine this… Thursday night before the party begins on Friday you leave your office all dressed in suit and tie (I remember it well – uhhgg). Friday morning – everyone from the corporate CEO’s right to the mail clerks dress up in their western attire (hats, boots, belt buckles, and jeans). And they stay that way for the whole 10 days.

WARNING: If you are in Calgary from out of town and mistakenly wear a tie – it WILL be cut off by the nearest person with a pair of scissors.

The customers dress the part and *gladly* become part of the culture.

3) The Party racks up there with the best in the world – many people save their money, and their livers, for the party that happens.

The saying for the week is: “Drink triples, see double and act single” – and lots of people heed that advice.

The bar staff is dressed skimpy enough to make Hugh Heffner smile with glee.

And people really do travel from across the world – JUST for the party.

Make an event so exclusive that they are willing to *do whatever it takes* to be there.

4) Tons of events, goodies, and freebies. Every day during the stampede you can walk down the street and catch yourself some free breakfast – pancakes, sausage and eggs (and if you catch the good private parties they are serving vodka and orange juice by 7 am – told you it was a party).

Line ups around the block for the Stampede Breakfasts (almost always complimentary).

Corporate Calgary’s way of giving back and saying thank you.

5) It is unique to have an entire city dress, act and drink the part. Tons of fun (drinking or non) for the whole family. Great midway with tons of rides and things to do. The people watching is nothing short of amazing in itself.

When everyone is part – it’s a very amazing experience for everyone involved.

*** Lessons From The Stampede For Your Business ***

- Make your special events special – and something worthwhile coming to.

- The customers dress the part and *gladly* become part of the culture.

- Making an event so exclusive that they are willing to *do whatever it takes* to be here.

- Giving back and saying thank you to all those that got you there.

- When everyone is part (from CEO’s to entry level clerks) – it is a very amazing experience for everyone involved.

- Have fun and lighten things up a little and people will notice.

Have a great week and happy Stamped’n!

Troy

Troy White is a top marketing coach, consultant & direct response copywriter based in Calgary, Canada. He has a powerful approach to growing small businesses and entrepreneurial run ventures on a budget. His free Cash Flow Surges blog shares tons of great strategies at http://blog.smallbusinesscopywriter.com

Discover numerous techniques for turning your personal and business stories into solid marketing campaigns. From online email marketing, to product brochures and descriptions. Complete instruction for new entrepreneurs and seasoned veterans. Powerful tools for every business. Guaranteed. http://www.StorySellingTips.com