In terms of wealth building, there are two kinds of businesses.

One is a real business, and the other is what I

call "employing yourself." Knowing the difference between the two can make a big difference in your net
worth.
DO YOU !"# ! $O% O& ! %U'I(#'') *# !('+#& ,!( -#!( -I..IO(' O/ DO..!&' *O
YOU
"I can0t remember the last year I made less than 122 grand," he told me. "%ut you know what) %esides
money set aside for the kids0 education, I ha3en0t sa3ed a lot," my friend #4 shared with me. "You03e li3ed
a good life," I reminded him. "%ut I made a mistake," he said. "I focused my energies on making a high
income. I ne3er thought about e5uity."
#4 is right. +hen he stops doing what he0s doing now 6building and selling homes7, his "business" will
probably stop with him. !lthough he earns a lot of money e3ery year selling lu8ury homes, he won0t ha3e
any way of making money from his business when he stops working.
In other words, his business has no e5uity.
Knowing the difference between income and e5uity is critical to your wealth9building goals. It0s important
to ha3e a good income 99 and many businesses can gi3e you that. %ut unless the business itself becomes
more 3aluable o3er time 99 unless it becomes something that can go on without you 6or that you can sell7 99
you will miss out on the most effecti3e way to retire wealthy.
It0s interesting how many high9income professionals miss this critical point:
;doctors
;lawyers
;architects
;actors
; athletes
$ust to name a few. Yes, these <obs can pay great if you make it to the top of the industry, but unless you
find a way to con3ert them into real businesses, they will ne3er offer you the big pot of gold at the end of
the rainbow that can be yours by planning smart.
.et0s look at this issue with a simple e8ample 99 a <ob that I like 3ery much: copywriting.
You can easily make a si89figure income as a freelance copywriter. %ut if copywriting is all you do, what
you are really doing is simply hiring yourself out to other businesses. 4 and D- were both earning more
than =>22,222 a year as copywriters after studying with me for se3eral years. %ut if that0s all they e3er did,
neither of them would be wealthy today.
4 got married and had kids. e bought a nice house in the country, a couple of new cars, and started
sending his kids to pri3ate school. e was li3ing 3ery well, but ta8es and e8penses were eating up most of
his income. e wasn0t sa3ing enough to retire on 99 and he knew it.
*he same was true for D-. e worked long hours and made tons of money, but all kinds of personal
re5uirements 99 including a costly di3orce 99 left him with a lot less in sa3ings than he had counted on. If he
had nothing but his <ob as a freelance copywriter to count on, he could li3e a good life. %ut when the time
came to retire, he would ha3e to cut back his lifestyle 99 probably more than he0d want to.
%' and K are running an ad3ertising agency. &ight now, they represent about two do?en clients. *his is
enough to gi3e them both of them a decent li3ing. If they keep doing what they are doing, the business will
probably stay about the same si?e as it is now and they0ll be able to continue paying themsel3es decent
salaries.
%ut if they decide to treat their business as a business and force it to grow at a greater rate than would be
"normal" 99 if, for e8ample, they grow their base of talent and clients by tenfold 99 they will then ha3e a
business that will not only gi3e them bigger yearly incomes but will also be worth many millions of dollars
if and when they are ready to sell it. Or, if they don0t want to sell it, they can stop working, or work less,
and still take out some 3ery good money e3ery year in profit sharing.
.et0s say you are a copywriter now and you reali?e that you don0t ha3e a business, <ust an income. +hat can
you do) One thing you can do is hire other, younger copywriters to work for you. You can pay them
salaries, teach them the ropes, and spend more and more of your time finding new clients.
You can build your client base from <ust a handful of companies to a do?en @ and then from a do?en to A2
@ and then from A2 to B22 or more.
If you do that o3er a >29year period, for e8ample, and increase your client base by, say, B2C a year, you
could easily ha3e A22 clients spending =A2,222 with you e3ery year. !t a 3ery reasonable B2C profit
margin, and if we assume that such a business would be worth about B> times earnings 6modest for that
industry7, you would ha3e created a business with re3enues of =>A million, profits of =>.A million, and a
saleable 3alue of =D2 million.
*hose are achie3able numbers. *hat is the power of de3eloping a business with e5uity. *hat 99 e5uity 99 is
the difference between a high9paying <ob and a good business. Income is good, but e5uity is where it0s at.
If you are an employee, you know you ha3e a <ob and not a business. %y the same token, if you are self9
employed and your business income is your billings, you ha3e a <ob, not a business. If you ha3e all the
accoutrements of a business but can0t see how it can grow and de3elop by itself, without you, you too
probably ha3e a <ob and not a business.
If it0s not already crystal9clear, I0m saying that ha3ing a business is 99 at least from the perspecti3e of wealth
building 99 infinitely better than ha3ing a <ob.
*hink about your own situation. -ake plans if necessary.
HOW TO TURN YOUR JOB INTO A BUSINESS:
'tep B. 4ut aside as much cash as you can to bankroll 'tep >.
'tep >. ire someone to replace you.
'tep D. *each that person e3erything you know. *hen, let him loose to learn more. -ake sure his total
compensation 6including intangibles7 is enough to keep him.
'tep E. ire someone to duplicate or replace your replacement.
'tep A. +hile you are doing all this hiring, training, and nurturing, keep e3eryone busy by spending the
ma<ority of your time selling.
'tep F. &epeat 'teps B to A until the business is worth enough for you to retire on the price you0d get by
selling it.
'tep 1. Keep or discard your business at will.