The third truth about business is that becoming successful requires a lot of hard work. It means late nights, early mornings and plenty of sacrifices. It requires unbridled dedication that few can sustain for very long.
Of course, anyone can work hard when they feel the adrenaline of passion pumping through their veins. It’s easy to plow forward when the wind is at your back.
However, the real test of one’s mettle comes when times are tough. Can an entrepreneur work hard when she not only doubts herself, but when everyone else doubts her, too? Can she push beyond a constant stream of failures and disappointments?
Most people can endure a beating for a short period of time. They can deal with weeks or even months of setbacks. Everyone has a breaking point, though, and will eventually recoil. The mark of someone destined for success is a person who can stick it out for the long term. Can they last in the ring and take on blow after blow until they finally reach their goal?
One of the best examples I’ve come across is a friend of mine, who I’ll refer to as James to protect his privacy. In the course of a decade his company rose, fell and rose again in one of the most impressive bouts of persistence I’ve seen.
James’ business, which again I prefer to leave confidential, started from humble beginnings. After five years, though, it grew from just a few employees to hundreds of staff across America. It was a rapidly-moving firm with seemingly endless potential.
After reaching a peak in 2007, however, the business encountered several simultaneous disasters; first and foremost was a declining economy. A result of
the sub-prime mortgage crisis, the niche in which James operated had withered from tens of thousands of potential customers in the US to less than 8,000.
With a weakened financial position and poor revenue projections, a $10 million line of credit that had been extended to James’ company was recalled by two lenders.
The sudden withdrawal of the loan came at the worst possible time. James had already used up $8 million and with a lower volume of sales he intended to dip into the remaining $2 million to cover his short-term costs. A recall would mean that he’d not only default on his upcoming payments, but that he’d need to repay
$8 million immediately.
However, the debt burden was only part of James’
problems. To reduce expenses he would now need to lay off employees, many of whom had been loyal to him for years. They were like family and several had even relocated their spouses and children for the company. James’ staff would lose their jobs and, given the economy, would likely be unable to find something as well-paying. To add salt to their wounds, he had insufficient funds to offer them a respectable severance package.
From there began an eight-year struggle for James to keep his business afloat. He raised private capital to replace his line of credit, but to attract it during an economic upheaval required giving investors exorbitant
interest rates. While the immediate need for $8 million was gone, his company was now encumbered by massive debt costs each month. As well, he had fallen behind on payments he owed to contractors, accountants and telecom providers and was now being hassled by collection agencies.
Since 2007 I have watched James and his company fight through a dozen setbacks that all occurred as a chain reaction to the loan recall. Each obstacle looked as though they’d be the straw that broke the camel’s back. From financing rejections to lawsuits and debt collectors, his business has seen it all. Every time, however, James managed to gather the resources he needed to push forward.
In 2015, his company finally returned to profit. While the numbers were still thin and he had a fraction of his former staff, it was nonetheless an important milestone. He no longer ran the danger of closing down shop. At the time of writing, James’ business is again growing and has shed many of the problems that pinned it down for eight years.
James is living proof that indefatigable hard work and consistency are a mandatory ingredient in the recipe to success. He spent years untangling a business on the brink of insolvency and brought it back to life. Few others could bear the eight-year daily stresses of going bankrupt and losing it all.
Incessant hard work is a truth that must be accepted, but it can also be taken comfort in. It helps to know that every other successful businessperson has gone through a similar struggle. As such, each time one of my ventures takes a whipping, instead of walking away I remind myself that it’s just part of the process.
“Quitters never get rich” is a phrase that I repeat in my head constantly.
Conclusion
Business and investing are complex emotional experiences. While many say that there should be no emotion in business, it’s difficult to work towards something that you aren’t passionate about. Thus, there needs to be a healthy balance. In my opinion, learning to manage your feelings and not letting the negative ones impede your progress is a golden key to financial freedom. The easiest way to do this is to accept certain truths about the future of your business and incorporate them into your strategies. There is nothing more damaging than the paralysis caused by uncertainty or the fear of disappointment. Emotional intelligence will guide you through the peaks and valleys. Without it, you will surely quit before your venture has a fair chance of attaining success.
An essential part of investing is to both understand and manage the implications of taxation. A mistake that I made in my early days was to think that tax planning is only for wealthy individuals. As such, I rarely paid it attention and thus hampered my much-needed ROIs.
I’d often inefficiently invest in assets that would yield attractive returns, only to give back 30% of what I gained to the government.
The reality is that in most places investors of all income levels will be impacted by taxes. They’re a necessary evil that one needs to incorporate into her wealth-building strategy. While I don’t advocate illegally dodging taxes, a prudent investor will seek to defer or minimize them. Since each country has its own laws there’s no “one size fits all” method. Therefore, in this chapter I’ll identify several broad factors I think you should consider before making an investment.
Before I do, though, I should mention this: basic tax planning does not require high-priced accountants and expensive licensed professionals. “I can’t afford to learn about taxes” is not a legitimate excuse! In the age of the internet all of this information is available online. A simple Google search will help you find
your jurisdiction’s tax policies. While accountants are certainly helpful (and recommended), if you don’t have one yet you shouldn’t simply ignore your tax strategy.
Below are seven areas of taxation to understand before placing your capital into an asset.