3 Ways to Become Your Own Economic Empire

Last Updated Jun 23, 2011 7:50 AM EDT

Diversification is important for corporations, but diversification -- between primary jobs, side businesses, and total income -- is even more critical for individuals.
Including you.

Why? If you don't take steps to become your own empire -- and by that I mean, a revenue-producing, dynamic company unto yourself -- you remain at the mercy of your employer, your market, the economy... a number of forces largely outside your control are in charge of your destiny.

Stand pat and you may find yourself with more regrets than opportunities -- and income. Become an empire and you take a measure of that control back.

Otherwise you could become a cautionary tale. Here are conversations I've had with three friends:

  • The first was let go after fifteen years with a company. He often talked about how the writing was on the wall, but speaking was the only action he took. "I should have left years ago," he said. "But I kept hanging on, mainly because changing jobs seemed so stressful..."
  • The second realized he was no longer fulfilled and desperately wants an outlet for other skills. "I make too much money to leave," he said. "But I still want to do something different..."
  • The third realized he had given up significant tax savings by letting a hobby remain a hobby instead of turning it into a business. "You mean I could have used before-tax dollars to pay for my vehicle, my shop, my supplies and travel...?"
All opportunities lost. Fortunately, you can avoid becoming a cautionary tale. It's simple.

Not easy. Simple.

Why the difference? Becoming an empire requires effort. Ignore the "passive income" hype: The only people making passive income are the people selling passive income schemes. Whether you invest a sum of money, buy rental properties, or create information-based products, work is still involved -- both at the beginning and on an ongoing basis. In the real world, the more passive you are the less income you generate.

That's why becoming an empire and diversifying your sources of income is simple. Not easy, but worth it.

Let's start with the first way: Start a side business.

#1: Start a Side Business
Let's get a few things out of the way:

  1. Yes, you do have time.
  2. No, you don't need a great idea.
  3. No, you don't need huge amounts of capital.
  4. Yes, the paperwork is easy. In fact, you can start a small business in just one day.
The beauty of starting a side business is you get to do something you want to do instead of something you endure so you can pay the bills. If you live within your means the money you earn from a side business is truly "extra."

And with a little tax planning -- and possibly some accounting advice -- you should find that your total income goes even farther. Generally speaking, with a side business you can deduct:

  • A portion of your rent or mortgage and your utility bills if you maintain a qualifying home office or workspace
  • Auto, gas, and maintenance expenses
  • Computer and office equipment
  • Travel expenses
  • Meals
  • Any other ordinary and necessary expenses involved in running the business
In short, you get to pay for qualifying expenses, some of which you probably already incur, using pre-tax dollars. For example, if a vehicle qualifies as a business expense that means your current $600/month car payment could effectively only be $450/month.

Plus anything left after expenses goes into your pocket as well.

Winner, winner, but never a Charlie Sheen chicken dinner.

So what kind of business should you start? Here are basic considerations:

  • Don't worry about getting rich. That's not the point. Getting rich would be a happy outcome, but is not the main goal. Your main goal is to generate additional income, take advantage of tax breaks, enjoy the business... and create a safety net if you lose your primary job. Don't worry about coming up with the next big thing -- if you do, you'll never get started.
  • Do worry about enjoying what you choose. Many people feel trapped in their current professions: They don't enjoy the work, but they make too much to leave. Your side business let you do something you enjoy -- this is truly your chance to do what you love.
  • Don't worry about what people may think. Lots of people hesitate to start a side business because it might look like they can't pay their bills, or their career is failing... or simply because "a second job" is somehow beneath them. Please. Live your life the way you want; if you live by others' rules, you'll end up living their life, not yours.
Then get specific. Sources for inspiration include:
  • Tasks you currently do for fun but could get paid to perform.
  • Skills from a previous job.
  • Skills from your current job.
  • Things you've always wanted to try.
Sound too general? There's a reason: No one can tell you what side business to start. That decision is yours alone -- only you know what you like to do, what you might enjoy, what skills and resources you possess. When you start a side business, it's all about you. In a good way.

But if you're not ready, there's an easier option: Get a part-time job.

CLICK here to check out the second way to become an empire >>
Photo courtesy flickr user olr2004, CC 2.0

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    Jeff Haden learned much of what he knows about business from managing a 250-employee book manufacturing plant. Everything else he picked up from ghostwriting books for some of the smartest CEOs and leaders in business. He has written more than 30 non-fiction books, including four Business and Investing titles that reached #1 on Amazon's bestseller list. Follow him on Twitter at @Jeff_Haden.