Examples of leveraging a businesses

Using the internet to acquire clients and make sales Marketing and advertising your product/service Having employees (consider salespeople and marketers) do work that you couldn't do yourself Creating a product that other people will sell Raising capital from investors to finance your company's growth Licensing your brand or ideas to someone else

How to become rich: use leverage and build a business that can be scaled

The bottom line is that one person can only make so much money. We only have a finite amount of time, capital, resources and ideas. However, by leveraging the skills and capabilities of others the potential for growth is virtually limitless. Thus, the key is to create a business that does not require your continuous care in order to make money.

That is the short answer to how to become rich. However, building a scalable business is not necessarily easy. It require time, effort and a whole lot of creativity.

The difference between Shane and Jessica: leverage

Obviously, Shane is getting a lot wealthier than Jessica is. As well, Shane can step away from his business knowing that it will continue to make money without him. Jessica can't. The major difference between the two, though, was not their line of work or degree of education. Instead, it was Shane's ability to leverage other resources.

In fact, in many ways Jessica is still very similar to being an employee. Her earnings are limited by how much she can work, she can never get away from the business and she still has a boss: her clients. The only real difference between owning her own company and working for one is that she takes on all the risk and doesn't receive a pension.

On the other hand, Shane doesn't need to show up to work to get paid. Instead, he has a team of people that keep it functioning. He can take time off and focus on other things if he chooses to. As well, there is virtually know limit to how much money Shane can earn. So long as his team, business and customer base continue to grow, he will keep getting richer.

Can I become rich by working for myself?

Okay, now we're getting somewhere! By this point, you can probably agree that inheriting money, winning the lotto and getting a high-paying job are realistically not how to become rich. So what about freelancing or working for yourself?

The short answer is yes, you can become filthy, stinkin' rich by being self-employed.

But…(there's always a but)

Don't just close your browser and say, Now I know how to become rich: I'll just start a business! Instead, you need to start a very specific kind of business: one that can be leveraged. Let's delve into what that means by looking at two examples.

Example #1: Jessica

Jessica owns a website design company. She's the sole employee and has several clients who pay her to help with their online presence. While she gets paid very well for what she does, Jessica can't seem to earn more than $10,000 per month. She would love to make more money, but she simply does not have the time to take on more projects. Jessica takes pride in her work and wants each client's website to be absolutely perfect. She worries that working with additional clients would lessen the quality of her services.

While earning $10,000 per month is certainly enough for Jessica's lifestyle, she has one major problem: she hasn't taken any time off from work in months. She hesitates to take a vacation because her clients might require her services while she's gone. If she doesn't give them what they want and when they want it, they might take there business elsewhere. Jessica feels stuck and can't seem to find a way to grow her business without tending to it everyday.

Example #2: Shane

Shane also owns a website design company. However, he knows very little about designing websites. Instead, he employes three other designers who do the work. Shane also has a marketing manager who drives business to the firm though internet advertising. Because of its marketing and volume of staff, Shane's company can take on over a dozen projects each month. As such, it earns over $20,000 every two weeks. Much of the revenue pays for salaries and overhead costs, but the rest is used to hire more designers. Shane knows that more designers will equal more sales, so his goal is to add a couple of more members to the team every so often.

After a couple of years Shane's company has established itself as a real brand. Customers love the quality of its work and business keeps rolling in. Shane continues to reinvest most of the earnings into hiring and training more website designers, and he soon has a staff of 30 people. The firm is earning $600,000 per month and he is getting paid handsomely.

Since the business is growing so quickly, Shane knows that he can't be everywhere at one time. So, he hires three managers to take on many of his responsibilities. This way, he can focus on what he does best and can leave the rest to his team. Shane's goal is to eventually have the managers completely run the company while he collects dividend payments from it.

Why is ‘get a high-paying job' not an option for how to become rich?

That's a fair question. From an early age we're told to study hard in school so that we can one day get a good job. However, there are several reasons for why being an employee doesn't translate into wealth.

First, a job can easily be taken away from you. You could get sick and no longer be able to work. You could get fired. The company might go under. The economy might be slow. Your skills might not be useful in today's age. There are a million ways to lose your job.

Second, you only get paid when you work. One of the tenets of wealth is that you don't need to work in order to get paid. Instead, your assets pay you. The rich earn money day and night, rain or shine. They own companies with employees, and they have real estate and other investments that produce income for them constantly. They don't get paid by somebody else.

Conversely, if employees don't show up for work, they get fired. They're subject to the hours that their bosses set and their salaries are dictated by someone else. Regardless of how much they earn, employees' incomes are limited either by a salary cap or by the amount of hours in a day.

The biggest difference between the rich and employees is that the rich own assets, whereas employees are assets.

Third, employees pay the most in taxes. In general, governments provide tax incentives to entrepreneurs and investors. This is largely because they want to encourage them to create companies and ultimately jobs. As such, the rich are often able to reduce or at least defer a large portion of their tax encumbrance. On the other hand, highly-paid employees often lose about half of their earnings to income tax. They have few deductions or credits that they can use to offset their costs. Losing half of what you make is a major barrier to becoming wealthy.

How to Become Rich: the Art of Using Leverage

September 20, 2017

Everybody wants to know how to become rich. Well, except for those who already are. Aside from them, though, how to become rich is the million-dollar question for most people (click here to find out how I did it in my mid-20s). If you came to this page looking for the answer, you came to the right place. This article will give you the cold and unabated truth about how wealth is created.

In short, there are only three ways to become rich:

First, you can inherit money from your family. Second, you could get lucky and, for example, win the lottery. And third, you can build a scalable business.

Now, if you're like most people the first two options are not really options at all. They're more like slaps to the face. You probably don't have ultra-rich parents and you're not about to waste your money gambling. So, you're left with the last option: build a business that you can scale.