Before you start chasing after your dream of millions…
Not every entrepreneurial endeavor needs to start with millions in funding
Wehear about it all the time — a small startup with a great idea raises millions of dollars through angel investors. However, not every entrepreneurial endeavor needs to start with an obscene amount of funding. Sometimes, money itself becomes distractionary and it gets wasted on prime location office spaces, fancy desks, and overpriced decorations.
Sometimes, these million-dollar funded ideas struggle to get out of the red and their founders find themselves struggling to make ends meet. It’s not uncommon. According to Harvard Business School, 75% of venture capital (VC) backed business fail.
This is because starting a company is easy.
Making a profit, however, is a bit harder. That’s why it’s better to focus your energy on figuring out how to make that first $100k rather than that first million.
So why aim for $100k instead of a million? I’ve got another question for you — how are you going to make that million if you don’t know how to get to that first $100k?
$100k is merely a milestone towards whatever end goal you want for yourself. It may be a million. It may be a billion. The issue with these numbers is that they’re so big that they can be overwhelming. Then you get sucked into the fallacy that if you want to make millions, you have to spend millions.
A lot of people get awed by investment funding but how much of the company remains yours? How much of it is simply borrowed money but under a different name?
If you spend millions and only make $50 in actual real profit, the reality is — you’re not any closer to real wealth. Those millions are merely foddering for the inefficiencies and inability to capture a market. The kid that’s flipping collector troll dolls at 500% profit on eBay on the side after school is doing much better than you.
The equation isn’t about how much you have to spend. Rather, it’s about how effective you can monetize your current resources, knowledge, and skills for a profitable return. Having the appearance of wealth is only a surface value and doesn’t have any substance in contrast to making an actual profit.
It’s easier to incrementally scale-up
It’s currently the easiest time to make $100k than any other era in history. $100k is also a lot of money — enough for anyone to add avocado and whole grain toast to the grocery list without it being a deal.
There are different ways of making money. The usual method is to trade your time for money. The growing alternative trend is to put in a time investment upfront and reap the rewards of being able to earn financial returns when you sleep. This second kind of income is traditionally looked at as bank interest rates and stock market returns. The emerging trend now is through digital products and selling things online — something that doesn’t technically require your attention 24/7 but just enough to provide the human connection and contact when necessary.
There is a misconception that passive income is easy. A livable passive income is harder to obtain than what those YouTube drop-shipping spam ads will try to tell you. It takes experimentation and it takes time.
But most importantly, it takes figuring out how to offer real value for the person on the other side — something that you, yourself, would be willing to pay for. When you start serving a real need, that’s when making passive income becomes easier.
The question isn’t how to make a million bucks but why?
The million-dollar dream is one of the biggest traps beginner entrepreneurs often fall into. In part, it’s because they become so focused on making money rather than figuring out how to run a business.
Entrepreneurship isn’t the same as playing the lottery. It’s not an act of putting in as little as possible for a big return. Customers are real people on the other end, not some tickets with numbers printed from a machine.
Customers are complex. They have needs, desires and, moods to match how their day is going. They get hungry, angry, frustrated or are just plain bored. Your task is to figure out how to solve these issues. People pay for this stuff. Solve enough of the same problem and you’re on your way towards automating an income.
99.9% of the time, customers won’t part with their money simply because you think they should. You have to give them a reason why they should do so. Solving a problem that directly affects them is usually enough to encourage them to part with their money — whether it be directly or indirectly through the platforms they’re subscribed to, the third-party advertisers, the sponsorship deals, and digital products.
Figuring out how to make your first and real $100k is the precursor to making that first million.
When we enter into entrepreneurship, we get sidelined by the big numbers rather than how to stack the little numbers. You don’t need a massive amount of cash to live a comfortable life.
If you want that Gucci and Prada kind of life, you’re going to need more than $100k. If you’re content with avocado on toast and living a simpler lifestyle, $100k is more than enough. Remember to account in rent or mortgage, your current debts and required repayments in addition to your day to day living costs. The final number you end up with will determine your numeric goal.
At the end of the day, $100k is just another arbitrary number. The real amount you need depends on where you want to end up. The purpose of making money is so that you can live the life you want.