Two Roads to Dynastic Wealth, Part II
by RichardThe salvation of our economy is not the money being shoveled out the door by our feckless government.
And it’s not the politically well connected banks and declining legacy businesses scooping up all this ill-begotten money.
No. Our dynamism is a function of the vast constellation of small, entrepreneurial, family owned businesses.
This is the well that produces most of our job creation…and the vast majority of our cutting edge creativity.
I finally finished Thomas Friedman’s masterful survey of the changing global dynamic: “The World Is Flat
And I’m more convinced than ever, that there was never a better time in our history to launch a family owned business.
Technology has shifted the balance of power to the extent that a start up business can compete on a level playing field with lumbering sunset corporations mired in bureaucracy and slothful habits.
Anyone with a well thought out business plan can create a global supply chain originating twelve time zones removed from their home office, and most significantly, can do this without ramping up overhead through adding employees and warehouse or office space.
Once you accept that virtual partnerships and teams can be assembled from like-minded colleagues functioning as vendors and freelance independent contractors…all linked electronically…you are only limited by the scope of your imagination and daring.
You could end up as a Power Seller on eBay, pressing FedEx or UPS into service as your distribution arm. You might have a niche application that could be marketed via iTunes, and even if you don’t have the skills to do the software design…someone…somewhere in the connected world has the necessary talent.
I know of a family that started selling mail order vitamins and supplements…using their basement and garage as their office and warehouse, and pressing their school age children into service to staff up at no additional cost.
Their hard work was rewarded when a global multinational giant ultimately bought their company….after several decades when the family business provided secure employment for all the family members.
Children growing up in these family themed companies absorb the work ethic and dynamic almost by osmosis…ensuring a smooth transition when control passes eventually.
Be an the alert for confiscatory taxes, as wealth is defined down by our revenue hungry government. Learn how to reinvest profits to grow the business, creating unrealized (and untaxed) gains going forward.
Live modestly and within your means…you can always harvest your gains when the time is right.
Now is not the right time…not with government intervention being glorified, while private wealth is under assault.
But this present drift towards mindless collectivism and dreary leveling will not wear well in a country bursting with entrepreneurial fervor and a robust recent history of individual freedom.
Read Friedman’s book as an antidote to the rampant idiocy and isolationism that now infests the chattering classes.
April 23rd, 2009 at 10:33 am
This has always been a dream of mine, and many of our business-owning friends and relatives keep telling us the same thing. But what if you have a dependent with a pre-existing medical condition, making them uninsurable? As soon as I quit my corporate job, what am I supposed to do? My family would be uninsurable. My dependent is already being denied LTC coverage at my work, since dependents need a medical review before qualifying. If there was a basic family insurance that we could get no matter what, I would do it in a heart beat. But until then - hello cubicle.
April 24th, 2009 at 1:39 am
It’s fair to say that Richard’s article addresses half the picture. Partisan rhetoric in Washington is similar in that regard.
As John’s comment above suggests, some of the policies instituted by the Democratic government are conducive to entrepreneurship. Universal health care would provide John with a safety net to branch out and try to start his own business; it will also allow smaller employers to attract workers since it’ll be easier to offer them health benefits that are comparable with large employers. Recent changes in Cobra provide a similar safety net, and (oddly) extending unemployment insurance is, in effect startup capital to those laid off workers that choose to pursue an independent business. The initiatives and incentives around Green Energy also offer significant potential in innovation.
The preceding Republican years also saw many policies that encouraged entrepreneurship, from reduced regulation (lowering compliance/licensing costs), and taxation (increasing the incentive to take risks). A major area of growth during the preceding Republican years was army contracting and security-related companies, largely the outcome of 9/11-triggered paranoia.
On the flipside, both Democrats and Republicans have taken steps that are not conducive to entrepreneurship. The Republican ban on stem-cell research, or the Democrats’ intent to increase taxation, thus taking available capital out of the hands of venture capitalists.
In the end, I strongly disagree with the idea that now is not the time to start a business. Regardless of which side is in power, the US remains one of the best countries to start a business because the Law is respected and taxes are very, very low (even after the planned Democratic increases). Recessions cause plenty of upheaval in both the economy and society, and upheaval leads to uncovering opportunities. This is a great time to be a buyer for equipment/inventories that over-extended businesses have to sell at rock-bottom prices. If you want to be a real estate investor, now is the time to buy distressed properties.
So, my advice is to forget partisan chatter on both sides, find a good idea, and when the circumstances are right for you, go for it.