If you are looking for a business to create passive income, you have to play it very smart. There are so many scams out there it’s enough to make your head spin. I’ve spoken with many people who got suckered into these “opportunities” and lost everything they put in. (The worst is the coin operated laundry business. Please stay away from that one friend.) So what is the best approach? In my opinion there are three steps you need to take:
1. Be realistic.
If you want to make money you’re going to have to work for it. That’s true whether or not you buy an existing business or build it from the ground up. Other than those people who have inherited money, everyone I know who has substantial assets worked their tail off to get it. And even the people who inherited their wealth work hard – or they soon find themselves un-wealthy.
This is not to say that you can’t create passive residual income from a business. You can. It’s just that you’re going to have to work hard at building up your business to the point where it generates substantial cash. There is no such thing as a turnkey, instant money-maker. Doesn’t exist. If that’s what you are looking for, chances are high you’re going to be very disappointed – and lose money too.
2. Look around.
Read the entrepreneur and franchise magazine but just look for ideas for right now. Think about the business you want to be in and take a look at the more successful people in the industry. Are they lounging around in smoking jackets or bathrobes? Probably not. They’re out there working hard.
What do these super-successful people do? Are they marketing all the time? Are they trying to get their business process to run smoother? Interview a few. Most successful business owners are only too happy to speak with you. (You may have to interview people outside your local market – nobody likes competition. Read “Networking With People” for more information.) On the other hand, what if you don’t see any super successful people in the industry you’ve been thinking about? That’s a sure sign that this may not be the business for you to invest in.
3. Don’t expect people to be honest.
I really dislike this one, but unfortunately you have to assume that people are not telling you the truth when they are trying to sell you a business. Be skeptical of everything you read and hear. This is very difficult to do for many people. Why?
Because if you are honest you expect others to be honest too. If you are fair, you expect fairness from others. But you and I both know it doesn’t work that way. You could bend over backwards to be fair and honest with someone, and yet that person could be the first one to take advantage of you. Don’t fall for it.
I’m not asking you to be unkind, unfair or dishonest. But if you take advantage of these 3 tips, you’ll save a huge amount of time and money.
Remember, you don’t need a lot of money either. There are tons of entrepreneurial ideas that you can launch for under $5,000. But you definitely need to use your common sense and take it slowly before you buy or invest in a business. This is especially important if you are at or near retirement age.
Are you trying to buy a business? How are you conducting your search?