Saturday, October 15, 2011

How to Start a Succesful Business Right Now

I get emails regularly from readers asking me for suggestions on how to succeed in the current environment, some are even moving to China, a couple to Mongolia. James Altucher answers this question for one of his readers, below. Altucher's answer makes sense wherever in the world you are. His answer is not the only answer to success in business, but it is a very good answer. His emphasis on a service business is a very good emphasis. A service business generally requires a lot less capital to start and it is much easier to adjust as you learn how best to meet the demands of your customers and potential customers. Here's James:

@jeredbare asks: How can I start a business and sellout it within two years while making lots of cash?

ANSWER: I can just say what the easiest method that I used was. I had zero business experience. But I started a service business (making websites for others) and I didn’’t leave my job until I had several clients (HBO, most notably), and then you build it until you sell it. Then repeat the process.

If I were going to do things a little differently I’d change two things:

A) I would start off as “service” but then productize the service. For instance, in my first successful business I would’ve changed the “service” to a “product” that made and built websites. Product businesses sell for higher value. I had written all the software that we used again and again to make the backbone of websites but I didn’t realize that the smart thing was to productize it.r>
B) Most important: I would’ve just kept the cash instead of trying to reinvest it in stocks to make more. My biggest regret is making that money and then losing it all that first time and then having to start from scratch again and again.
Of course, in the current environment, cash means more like what Harry Browne recommended in his design of the permanent portfolio. Keeping all your money in physical cash or a bank account is very dangerous if price inflation heats up, as I expect it will. Browne wrote the answer to safe conservative investing in Fail-Safe Investing: Lifelong Financial Security in 30 Minutes

As far as more answers about life and business, James has a lot of other interesting "Dear Alty" thoughts, observations and comments here.

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