I guess it is easy for us to calculate. Let's say we manage to save $4k a month for the next 30 years, that would net us $1.44 mil.
But that's 30 years later.
Then we read about news like Zopim being acquired for $37mil SGD, leaving their founders as multi-millionaires while below 30 years old.
What's the difference?
I have come to realise that starting our own businesses is among the best way to propel our wealth. But... the caveat is that lots of hard work is needed, much more than being just self-employed. Worst is, the hard work may not even pay off in the end. Of course, such probabilities could be improved with more knowledge and learning. And that is what I have been doing/studying the past 2 months.
The greatest realisation came after I chanced upon this quote which I like to share:
"Organize around business functions, not people. Build systems within each business function. Let systems run the business and people run the systems. People come and go but the systems remain constant" -- Michael Gerber
I have come to realise that the current tuition centre I have been trying to grow and run, has been built mostly about people. Granted, my initial capital was low, and this is something that might be "necessary". But of late, I realised, some of the anchor tutors were getting tired, I myself am getting tired as well, teaching so many students. Worst, we are all pretty irreplaceable at the moment, being super effective as well as popular with students. There is no way I could take a break without the business breaking down. Even for the coming reservist, I have to arrange make up classes with students whose classes clashed with the reservist.
The best way to reach out to help more students, I have come to understand, is to have a systematic way of approaching the tuition business as a whole. By systematic ways, it means, like what Michael Gerber said, having systems for the different business functions.
In other words, build around functions, and have systems run these functions.
I used to keep thinking, I want to hire people, to ask people to join in to help, etc, in this tuition business. At that time, I seriously have no idea what I wanted people to do if they come in. I was unsure what is needed to be done to grow the business further. And it is likely I am facing what most small business owners were facing in their business. In other words, I was working real hard IN the business, and while I know I need to work ON the business, I have no idea how.
The key word is how.
I struggled with the "how" for 2 years. Of course I'm still trying to learn more now, but I have come to understand about functions and systems. I feel pretty lucky to have learned programming during my NUS days, because such understanding is really similar to functions in programming. I will probably leave the content on how to identify and build around functions and systems at a later date when I have experimented more.
But back to the topic of this blog post, the question is to retire, it is not just about how we are able to start a small business, but how we are able to build business supported by functions, systems, and people. A small business, or being self employed, is still limited in three ways
1) It depends very heavily on the founder, who is not able to rest without the business collapsing. 2) It is not sellable, because again, it depends too heavily on the founder. 3) It is unable to grow, because the founder has only 24 hours a day. There's a cap, a limit, to the size of the business.
But hey, is that what we want for retirement? I doubt so.
The benefits of business systems: 1) Saving time Putting systems in place enable others to operate part of your business.
2) Saving money Better systems means more efficient staff, perhaps fewer staff, and the small business owner get to spend more time doing the things that earn money and less time doing things that don't?
3) Supporting your business growth There's no point getting more customers or more business from existing customers if your business can't handle the extra work - a good system is needed to ensure continued great service.
4) Sellable With systems in place that are proven to work, it is possible to franchise or sell the business to another and know that it will still work.
The key to retirement for a small business owner is to be able to get others to run the business efficiently while being away, or sell the business away. Isn't it?