The Voluntary Life

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112 What Business Should I Start? Part 2: Finding Purpose Jun 13, 2013

Show notes

An episode about finding and clarifying the purpose of your business. Why does your business exist? Topics covered include:

The limits of "Mission Statements"
The benefits of a really short elevator pitch for your business' purpose: encapsulating it all in just 3 words
It can often take a long time to move from intuitive to fully conscious business purpose. Don't worry, you can get going and discover it on the way
Three things to think about to clarify your purpose: What will inspire you? What will inspire others? What do you have the capability to deliver?

Show Notes:

Episode 107 (Part 1 of What Kind of Business Should I Start?)
The 7 Habits of Highly Effective People by Stephen Covey
The Art of the Start by Guy Kawasaki
Making It All Work by David Allen

111 Money, Risk and Motivation in Entrepreneurship Jun 05, 2013

Show notes

An episode about the financial risks and rewards of entrepreneurship and what they mean for your motivation in starting a business. Here's some harsh data about the financial risks and rewards:

More than half of startups cease trading within the first five years.
Entrepreneurs on average earn significantly less income over 10 years than they would have earned in paid employment. There are debates about the numbers but one study (Hamilton) suggests a 35% earnings differential.
Entrepreneurs on average don't earn a better return on their investment by founding startups than they would have by investing in publicly traded stocks (in fact they earn less from a risk return perspective).
Nevertheless, the majority of affluent people are self-made entrepreneurs. Entrepreneurs make-up less than 20% of the workforce in America, but account for 66% of the millionaires. Of the millionaire entrepreneurs, 80% of them are self-made: they are first generation wealth holders (Stanley).

What are we to make of such statistics? I argue that the high financial risk (and potentially high reward) make it even more important to do entrepreneurship for intrinsic motivations:

Purpose: building a business because you want to make a dent on the universe and you believe that what you are doing will make peoples' lives better.
Autonomy: being an entrepreneur because it gives you freedom to live and work as you want to (not as someone else thinks you should)
Mastery: overcoming the challenges of learning how to build a business is rewarding in itself.

The episode ends with a discussion of the difference between extrinsic and intrinsic motivations for making money itself. The intrinsic motivation to make money is for the freedom (financial freedom) that it gives you. Show Notes:

"Start Up Failure Rates: The Definitive Numbers" By Scott Shane
"What Do Small Businesses Do?" Erik Hurst and Benjamin Wild Pugsley
"Does Entrepreneurship Pay? An Empirical Analysis of the Returns of Self-Employment" by Barton H. Hamilton, 2000
"The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?" By Tobias J. Moskowitz and Annette Vissing Jørgense
The Millionaire Next Door by Thomas Stanley

110 Who To Start A Business With May 29, 2013

Show notes

This episode is about things to consider when choosing co-founders to go into business with. Topics covered include:

Do you need co-founders?
The advantages of choosing co-founders who are different to yourself (in background, skills, personality, and business networks)
The importance of shared core values and purpose for co-founders
Research by Noam Wasserman shows that teams made from former co-workers are the most stable. Teams made from former strangers are the second most stable of the three groups Wasserman analysed. Teams made from friends and family are the least stable.

Show Notes:

The Founder's Dilemmas by Noam Wasserman
The Millionaire Next Door by Thomas Stanley
The Wisdom of Crowds by James Surowiecki

108 Three Ways To Delegate May 15, 2013

Show notes

This episode is about three approaches to delegating work within your business. No business can grow unless the founder is able to delegate work to a wider team of people. It's essential that tasks are properly delegated and that the business owner doesn't abdicate responsibility. However, there are three very different ways to delegate:

The Operations Manual Approach is where detailed standards and procedures are defined for how all tasks are to be undertaken. Work is typically undertaken by relatively inexperienced employees, who learn to follow detailed specifications.
The Results Only Work Environment is where employees are given clear targets or results to meet and it is up to them how they do so. They create their own work procedures and have maximum freedom on issues like whether to work at home.
The Outsourcing Approach is where work is delegated to independent contractors or virtual assistants. Fixed costs are kept low by avoiding hiring employees as much as possible. Work is typically outsourced on a specific fee-for-project basis.

The episode explores the advantages and disadvantages of each of these approaches. Show Notes:

Anything You Want by Derek Sivers
The E-Myth Revisited by Michael Gerber
Maverick by Ricardo Semler
Rework by Jason Fried and David Heinemeier Hansson
Why Work Sucks and How to Fix It by Cali Ressler and Jody Thompson
The 4-Hour Workweek by Tim Ferriss
How I Found Freedom in an Unfree World by Harry Browne

107 What Kind of Business Should I Start? May 09, 2013

Show notes

If you want to become an entrepreneur but are not sure what kind of business you would like to start, what framework can you use to help you decide? There are two things to consider that will provide you with a strong advantage: 1. Starting a business to create a solution that you will be a customer for This is sometimes called "eating your own dog-food". To be successful, all businesses have to deliver value to customers: they have to make something that people want. If you use the product or service that your company makes, it helps you understand whether it is providing value. 2. Starting a business in an industry that you understand Industry experience provides valuable knowledge about the opportunities and constraints that your business will face. Some examples of industry knowledge are:

knowing where your potential customers shop
understanding why they buy
knowing how potential distributors or affiliates work
understanding what the major concerns of key contacts for your business are

If you don't make something that you yourself would be a customer for and you don't have a good understanding of the industry, you are flying blind. Try to develop a business where you have at least one of these two advantages. Also, try to increase your awareness of the aspect that is missing.

106 Self-Employed Vs Business Owner May 03, 2013

Show notes

This episode is about the pros and cons of being self-employed vs being a business owner. Both options have advantages and disadvantages, but mixing the two does not work well. In the self-employed/freelancer model, you sell your time, cover your own expenses and keep all profit. This works best when you have a valuable skill and lots of industry contacts, as you are able to undercut bigger companies on price but keep your overheads low. If it works, you get the advantage of a lot of flexibility to work or take time off. The disadvantage is that you are dependent on work for income, so there is much less financial freedom in the long term. You don't build up value in business itself (nobody wants to buy a job) and it can be hard to keep your overheads low for longer (as you may need to start investing in marketing, new equipment etc). So it's a vulnerable model over the long term. The business owner model is the idea to create a value generating machine. The focus here is on developing standards and procedures to make yourself (the founder) unnecessary to the running of the business as quickly as possible. The advantage of this model is that you create an income stream and a source of value (the business itself) that you can sell in the future, or live from as passive income. This has the potential for much greater financial freedom as well as the freedom to step away from the work in the longer term. The disadvantage is that you have more risk in the initial period, as businesses take more investment. You also get much less free time in the initial period, as the startup phase of a business is more stressful than freelance work. Either model can give you a lot of benefits, but be careful not to get stuck between these two models- you can end up with all the stress and none of the benefits. If that happens, it isn't creating a business, it's creating a job (and the worst kind of job, because you can't stop doing it). I hope this podcast will help you be conscious of which model you are adopting and to move more clearly to one or the other if you are currently stuck in-between. Show Notes: The E-Myth Revisited by Michael Gerber The 4-Hour Workweek by Tim Ferriss Anything You Want by Derek Sivers

104 How To Diversify Your Investments Apr 19, 2013

Show notes

This episode is about how to diversify your investments for lower risk and higher return. The issues covered include:

The problems with a simple "buy and hold" approach, whereby you invest all your money in your one favorite asset (be that stocks, gold or anything else).
The problems with the "market timing" approach to investing and why it doesn't work.
The benefits of diversifying your portfolio
How to properly diversify your portfolio by using different asset classes, rather than just different securities.
How to use rebalancing bands to harvest volatility, increase your return and reduce risk.

You can get more information about the concept of the permanent portfolio discussed in this episode in Harry Browne's book "Fail-Safe Investing" and in many of the previous Voluntary Life podcast episodes on investing. As always regarding investment, do your own research. I am not an advisor and this isn't advice of any kind, it's just my own opinions based on my experience.

103 Everything You Need To Make Long Term Travel Easy Apr 10, 2013

Show notes

It has never been easier to live and work abroad. If you are self-employed and work online there is nothing to stop you. Why nor sublet your apartment for a few months and live abroad in a fascinating (and potentially cheap) destination? Here is a list of all the things that make long term travel super easy:

Have your home post rerouted to friend (or commercial service) who scans it into a Dropbox account for you. If a friend does it, buy them a multi-page scanner for this.
Get a professional agent to manage the sublet of your apartment back home
AirBnB for renting longer term accommodation (especially for whole apartments)
TripAdvisor for short term hotel stays
Cloud services for file storage (e.g. dropbox, google drive)
Clound services for backup (e.g. Crashplan or Backblaze)
A small scanner app on your smartphone for scanning any paper you need to keep (receipts etc) when abroad
Get your online banking set up for all the transaction types you will need to do
Get your Credit/Debit cards set for use abroad
A password manager (e.g. LastPass, 1Password) for your online passwords
An E reader (e.g. a kindle, iPad) to enable you to read as many books as you want while you are away
A lightweight laptop for your work
A Smartphone with a nice camera for taking pictures and getting online
An external encrypted drive for local storage/backup
International plugs for all your devices

101 How To Dream Big Mar 30, 2013

Show notes

An episode about how to use goals and visions to move forward in creating the life you want. Show Notes: Previous Episode on GTD Getting Things Done by David Allen

100 Entrepreneurship Part 16: Limited Liability Is Not A Magic Shield Mar 20, 2013

Show notes

This episode is about the concept of limited liability and it's role in entrepreneurship.

The purpose of the limited liability principle is not to protect the entrepreneur as director or manager of a business, it is for the protection of investors.
There is a big difference between this principle and how the actual law of limited liability works in practice. The law is messy and confusing, with strange concepts such as "corporate personhood" granted by the State.
I argue that the principle of limited liability for investors could be implemented through contracts and that the whole messy legal implementation that we currently have is unnecessary to achieve investor protection.
I argue that it makes sense for entrepreneurs to use contractual limits of liability wherever possible and to use insurance whenever you need to reduce risk in that way.
The reality for small business entrepreneurs is that you will not be able to hide behind a shield of limited liability, for example you will be expected to personally underwrite loans.

These are just my opinions. As always, you need to rely on your own due diligence and get your own legal advice.

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