3 Ways to Become Your Own Economic Empire

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

#2: Get a Part-Time Job
Still with me? I'm a little surprised. Most people, especially people who feel at least moderately successful in their current career, despise the thought of taking a part-time job.

Why? Similar to starting a side business -- but even more so -- getting a part-time job can make people feel they appear financially desperate, or they are failing in their career, or just, well, embarrassed.

Get over it. A friend of mine owns a $50 million company and works every other weekend as a golf instructor at a country club; he loves to teach the game. A lawyer friend works as a valet on Friday nights; he loves running around parking cars with "the kids" to see if he can still keep up. A surgeon friend works as a bartender a couple times a month; he enjoys interacting with people who may be under the influence but at least aren't sedated.

Like I said: If you think a part-time job is beneath you, get over it.

Advantages of a part-time job:

  • You get to pick what you do while generating additional income.
  • You can sharpen old skills and gain new skills.
  • You can check out a profession or industry before risking a full-time plunge.
  • You gain inside knowledge that can help you start your own business.
  • You have a safety net if you lose your full-time job.
Disadvantage:
  • You actually have to work.
So what kind of part-time job should you consider? There are two basic paths:
  1. Choose a job based on skills you already possess. No matter what your current profession, you have skills another business needs. Think about what you enjoy doing the most in your current profession and leverage those skills. You might have to do a little hunting, and possibly even knock on a few doors, but I guarantee there are businesses eager to access skilled help -- especially when they don't have to offer benefits and full-time perks.
  2. Choose a job based on a skill you wish to gain. (This is the path I would choose, but that's just me.) Hope to open a restaurant someday? Be a server, a cook, a prep worker... better yet, spend time in as many different positions as possible. While some people can be great leaders without having walked a few miles in their employees' shoes, most leaders benefit greatly from working their way through the ranks. Pick part-time jobs that will broaden your skill set in the field you wish to enter; why pay for seminars or instruction when you can be paid to learn?
Then get specific. Just keep the following in mind:
  • The best part-time jobs are typically not advertised. To land the right spot you'll probably need to network, knock on some doors -- and face rejection. That's okay; becoming an empire requires some amount of sales skills (which is why everyone should work in sales, at least for a while.) Decide what you want to do and hit the pavement. Somewhere out there is a business that will be delighted you came calling.
  • You'll need to establish parameters from the beginning. Never jeopardize your primary job. Decide ahead of time when and how much you can work at a part-time job, and stick to that decision.
  • You may need to notify your primary employer. Some employment agreements forbid second jobs, or second jobs in a related field. Know what is and is not allowed and act accordingly. Again, never jeopardize your primary job.
Sound too general? Again, there's a reason: You possess unique skills and experiences, and a unique perspective on what work you enjoy. Again, it's all about you. In a good way.

Speaking of "all about you," let's look at one more issue: Your primary profession.

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

#3: Are Most of Your Eggs in the Wrong Basket?
I worked in the book manufacturing industry for twenty years, seventeen of them at the same facility. Some of my ex-coworkers are still there, but the outlook is grim. For the first time in thirty years the plant has laid off skilled workers. Many will be called back due to cyclical volume swings, but some may not. Book production (not publishing, production) is a dying industry.

Want more proof? I love books more than anyone I know -- not just reading them, but the actual books themselves -- and even I have a Nook. (And yes, I do feel like a traitor.)

My friends' livelihoods are in real jeopardy; many just hope to make it to retirement before they get forcibly retired. When you have all your eggs in one basket, no matter how lucrative that basket, you still face tremendous risk -- even when your industry is thriving.

And there's one other consideration:

Does the amount you currently earn offset a lack of satisfaction in what you do?

If not, you need to change careers. Life is too short.

Why did we look at your primary job after looking at side businesses or part-time jobs? Simple: The extra income you generate those efforts provides greater freedom to make a change in your primary job. When you build an additional income buffer you can afford to take a pay cut or take a chance on a new career.

A side business or part-time job generates income but also provides greater freedom: Freedom to choose from a broader range of choices, to take greater risks, or to just take a chance on yourself.

If your eggs are in a basket that faces economic or industry uncertainty, move them. Find another basket. Find two baskets.

If your eggs are in a basket that provides little in the way of job satisfaction, move them. You owe it to yourself to enjoy what you do.

Becoming your own economic empire is simple. Not easy, but simple.

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Photo courtesy flickr user SecretSushi, CC 2.0