The Right Vehicle: Unconventional Vehicles (Part 2)
Updated: Sep 11, 2020
We are all running in a constant race: a race for significance, fulfillment, and happiness. When we were in elementary and high school, we were racing to get high grades and acquire medals and titles so we can have a better chance of getting into prestigious college universities.
Pursuing a college degree and choosing our profession mark the start for the biggest race of our life. From this point onwards, every decision is so crucial that it can change the pace and direction of the race.
In our previous post, we talked about the importance of choosing the right vehicle. Your chosen vehicle will not only set the pace by which you can achieve your goals, but it can also restrict or augment your potential as an individual.
We think that the safest path to financial freedom is to save money and work on a conventional vehicle. But in reality, we’re actually trapped in an endless cycle of working, earning, and spending.
To make it worse, what you’re earning and what you’ve saved depreciates in value long-term. This will compel us to work harder, and so the endless cycle continues. This cycle is a life-long problem and the only way to break the chain is to provide a life-long solution.
What is the lifelong solution if you want to achieve financial freedom? Choose a vehicle that can provide you long-term income without directly exchanging your time and effort. In short, build something that can give you a passive income that grows exponentially and will support you until retirement.
There are few vehicles that can yield passive income, and one of them is building a business. We’re not talking about mom-and-pop stores and small businesses here. I’m referring to huge businesses with more than 500 employees: a business that you can leave for a year and still operate.
If you have 500 employees who work for you 8 hours every day, in a single day you can produce 4,000 hours of productivity. This is called “leverage”; that is, you benefit from the cumulative effort of 500 employees with different skill sets working towards your bottom line, even without your direct supervision.
By leveraging your time and resources, it becomes possible for you to earn passive income, as well as find more time that you can devote to other things, such as your family, going on a vacation, and making time for your hobbies and advocacy. This is where “time freedom” comes in: when you reach a point in which all your combined profit, interests, and dividends are working by itself and paying for your dream lifestyle.
Without a doubt, building a business is the path to genuine wealth. Yet it is one of the most difficult endeavors one can undertake. In my experience, every single day felt like a test. It was an ongoing test of how badly I wanted my vision to become a reality. Every day, I encounter different challenges that literally test my physical, mental, and financial stamina. Countless failures and disappointments will push you to your limits. This is the price to pay for building your empire from scratch. But for me, this will be worth it in the end.
Aside from the tremendous ground work that needs to be done, most people struggle to take the first step, which is to raise their capital. Today, it costs at least $1.5 million (in the Philippines) to start your own business. Of course, there is no guarantee that your venture will succeed. Chances are it will struggle in the first few years. In most cases, entrepreneurs even lose more than they earn. As a result, many small businesses fold up within the first five years. Worse, your venture could even lead to your bankruptcy. That’s $1.5 million down the drain!
Others call franchising a “business in a box” because the groundwork and the business system are already established and running. All you have to do is maintain and follow the system.
This is perfect for people who don’t want to start their own business from scratch. With a system in place, you won’t have to spend much time working on the nitty-gritty of your business. While getting a franchise will save you time, you will still have to raise a huge amount for your capital and initial operational expenses. In addition, you’ll be paying for the support system, the brand, and royalty fees.
A well-known franchise brand is worth around $150,000 to $900,000. And that’s only the initial franchise fee which only allows you the rights to use their brand. Every month or quarter you’ll pay for royalty fees (which is based on gross sales). It’s a recurring fee for becoming part of the franchise system. Think of it as a monthly premium membership fee. The royalty fee is used for continuous development of the brand, support, business strategies, and marketing plans.
It’s a fact that investing in a franchise business has a higher chance of success than building your business from scratch. But even the business system and the support do not guarantee your franchise business’ success. Even when your franchise is not earning sufficiently, you will still have to pay royalty fees. But let’s just assume your franchise succeeded; still, it would take you a few years before you even reach the ROI and earn profit.
Given the massive risk involved, most people are reluctant to take these unconventional vehicles.
The silver lining comes with this one unconventional vehicle, the potential of which the majority of us overlook. Most people view it as a small-time business with very small earnings. Little do they know that it’s one of the best business models ever invented.
This vehicle has the capacity to earn exponential passive income long-term yet it requires only a small capital with a very few inventory. No employees are required and no overhead expense needed. At the start, you don’t need a full-time commitment; hence, you can work at your own pace. And the best part is a majority of the work can be done at home.
You don’t need to have an MBA degree or technical expertise to succeed in this type of business. All you need is a consistent effort to learn the necessary skills and mindset of an entrepreneur and the commitment to make your dreams into reality.
Learn more about this vehicle on The Right Vehicle Part 3.