Will running a business make me rich?

This newsletter is for people who run a business or want to run a business. I’ll be addressing all of the main questions you will come up against when you launch a business and during the running of your business.

Alongside a deep dive into these important questions. I’ll be journaling the growth and ups and downs of my own agency, Bottled Imagination. These updates will always contain the highlighted version (the LinkedIn friendly version) and then the version of what really happened that week.

This won’t be fortune cookie advice from someone who has already ‘made it’.

These will be practical, real time thoughts and learnings from someone who is doing it right now

Weekly journal 22/03/2024

I slacked on the newsletter for the first time last week. I apologise to the millions of readers of born or made but I was in a different country and we’ve been very busy! I’ve also been busy sourcing some guest posts for the newsletter, as it turns out I’m not as interesting as what I thought I was at the start.

Here’s what’s been happening over the past 2 weeks.

The LinkedIn Version

• I spent 4 days in Germany for a talk at SMX Munich on Content that stands out in a world of saturation and AI. My dry, self deprecating humour translated seamlessly to the German audience and my naturally extroverted personality means I tackle the whole thing with ease.

• I pulled together a proposal for a potential new client in the airport before my flight home to cement myself as a true hustle bro.?
• Some of “the ones that got away” got back in touch with us. Former clients and even brands from pitches that we didn't win in the early days of setting up BI slide into our DMs. Perhaps the recession is over??
• The results come FLYING IN for our clients. Two KPIs get hit 3 months early by the team.

The Real Version

• I spent 4 days in Germany for a talk at SMX Munich on Content that stands out in a world of saturation and AI. My dry, self deprecating humour translated seamlessly to the German audience and my naturally extroverted personality makes I tackle the whole thing with ease.

I’ve wanted to work abroad for a week this year and I also wanted to do a talk abroad. This ticked both of those boxes. To be honest, travelling alone to speak at a conference when you only know a handful of people there was more intimidating than I was expecting. On the first day I felt a bit isolated and maybe even a bit lonely - which I wasn’t expecting. I love my own company usually (Probably because I’m a riot)?

But I really enjoyed the day of my talk and meeting lots of new and interesting people. I’ve realised I’m just not an opener, I rarely ever go up to someone to start a conversation. I need a sociable person with me to help me.?

My talk was a bit like playing an away game in football. The usual crowd pleasing, self deprecating openers didn’t have people falling off their chairs with relatable laughter but…I actually think it was one of my better talks delivery wise. Delivery is something I’ve been working on and the event itself was really well run by the SMX team.?

• I pulled together a proposal for a potential new client in the airport before my flight home to cement myself as a true hustle bro. The only issue here is that I didn’t get anybody to take a picture of me doing it.

The only issue here is that I didn’t get anybody to take a picture of me doing it.

Flying used to paralyse me with anxiety and this is genuinely the first time I’ve travelled pretty much anxiety free. Which meant I could work from the airport.?

It’s looking like we might have won this piece of business, without pitching. I feel like Blair Enns.?

• Some of “the ones that got away” got back in touch with us. Former clients and even brands from pitches that we didn't win in the early days of setting up BI slide into our DMs. Perhaps the recession is over??

When I landed in Munich I checked my phone and the first message I had was from a client who might have to potentially cut some budget due to the way their site is monetised changing heavily. This would normally ruin my week and my whole experience of doing a talk in Germany. But the initial, some might say rage, passed within a few minutes. I felt confident of what we are offering, what we had done for that client and where we were going as a business. I felt like things would be fine. And they were. A few days later one of our older clients got in touch and 3 or 4 more leads came in from people who had seen our stuff and wanted to work with us. I call this agency whiplash.

Will running a business make me rich?

I’m going to start this with immediately sounding like a LinkedIn w*nker and say ‘Define your wealth’?

Is it money? Is it mega money? Is it time? Both?

It’s an important question because the business you run will likely mirror this.

Mine was money. Mega money, Not money to buy a new car. Not money to say I’ve got loads. Money for a different reason.?

When I say ‘define your wealth’. When I was 25/26 I literally did the calculations for it. I looked at my current situation and then imagined my life at 35 (The age I’m at now). My life in ten years, on paper, could be awful. All the things I feared it could be.

Here’s the calculation I did on monthly costs for me in 10 years time.

Monthly costs

A nursing home for my dad who was on a very steep decline with his multiple sclerosis - ￡4.5k per month

Rent or mortgage - ￡400 p/m

Bills - ￡300 p/m

Travel costs - ￡200 p/m

Food and socialising - ￡500 p/m (That’s tight)

Let’s say I want kids when I’m 35. Add ￡300 p/m on top of that and make it ￡800 p/m

Childcare costs - ￡300 p/m

Monthly costs for future Cope - ￡6,500 p/m

One off costs

Holidays - ￡1.5k per year

Deposit for a house - ￡15k

Wedding - ￡10k

On my monthly costs alone I would need a salary of ￡160,000

At the age of 25 I’d never seen a salary on any job ad that was that amount.

I had to find a cheat code. I had to set up a business. I thought that was my only option given my personal circumstances.

That’s why I’m here doing this. I did the calculation at 25 and realised my life was going to be full of financial and personal anxiety that I would probably pass onto my own children.

It’s probably why I’m sat here at 35 with no children, not married and with only getting a mortgage in a scheme where I didn't have to pay a deposit.?

In fact something astonishing happens in your mid 20s to your mid 30s. All you get asked, by everyone, is if you are thinking of buying a house or getting married. You get asked this by people who did not buy their own home or pay for their own wedding. It’s an insane financially pressuring period of your life if like me, there is no pot of money that’s been handed down.?

I’ll explain why the way I looked at it was both a good idea and a bad idea later.

The small print

Setting up a business is not a get rich quick scheme. If you have established yourself in a working environment for someone else, it’s likely that you will be on a pay cut when you first set up a business. Doesn’t matter what type of business, the short term will hurt you financially. It’s taken me nearly 2 years to get back to near what salary I was on.

You’ll need to accept these things

• The business will get rich before you do
• The last person to get a pay rise is the owner
• You are going to be more time poor
• It’s going to take time to get to a place where you can prioritise yourself

The type of business you choose to create

A lifestyle business

I know a lot of people who run a lifestyle business. It’s a business setup to fund and maintain your chosen lifestyle. It’s sometimes looked down on by fast scaling businesses or businesses that are being grown to be acquired. A lifestyle business can be a great way of both making money and building an infrastructure that works when you are off. You will be an employee of your own company and it’s not always the case but you are likely to be in the day to day quite a lot unless you build it a certain way.

I’ve worked for these types of companies and they can be good to work for. Not always focused on growth and targets means they can focus on culture and the day to day.

You can build a lifestyle business and be wealthy via your salary and or your dividends of the profit.?

A growth business

You either bootstrap or get investment to aggressively grow a business with the intention of constant growth or with the intention of being acquired at some point.

To do this you will need month on month, quarter on quarter growth. It’s target driven so you will either be setting growth targets or have targets set for you by investors that you aim to hit. These targets can be revenue or profit based or quite often both.?

You will still be an employee of your own company and in these kinds of scenarios it’s not totally unusual to be hiring people who are potentially on a higher salary than yourself. Your rewards may come later via an acquisition of your company.

I remember an advisor talking to me about my first business and saying that I should grow it to sell it. I actually never really knew you could grow a business to sell a business. It’s not really something they teach you in schools is it? If you look back on the calculations that 25 year old me did then you’ll realise that this was the route that I saw as the one that can get me where I need to get to. The one where I can sit with my family and tell them ‘Everything is going to be okay’

The maths are actually fairly simple when it comes to selling a service based business. You are valued on a multiple of your EBITDA (Let’s just say profit for now)

Here’s an example for a service based business

Revenue - ￡5m

EBITDA - 20%

Profit - ￡1m

Business valued at 5x Multiple of your profit means valuation - ￡5m

The multiple that they use for your valuation can be based on lots of different things within a scoring criteria, like is your revenue predictable in terms of retainers over profits? Are you overly reliant on one client or customer? Do you have a leadership team which means the business can function without you?

It’s unlikely you get that ￡5m up front should someone come and buy your company. You might get let’s say 50% up front and 50% either involved in an earn out, where you have to hit certain targets or in shares of the acquiring company.

So if you owned 20% of your business at a ￡5m valuation. You might receive ￡500k up front and ￡500k in an earn out. You can see how that ‘becoming a millionaire’ dream can be quite hard to hit once you start reducing equity through investment or through partners?

You have to run a growth based business differently to a lifestyle business. You can’t say you are a growth business and function like a lifestyle business. The immediate pay off is low, the risk is fairly high but the eventual pay off could be significantly higher than a lifestyle business.?

Will money make you happy?

You know what I really dislike? Multi millionaires on podcasts saying that money doesn’t make you happy. They are out of survival mode and will have been for a number of years. For someone in survival mode, like how they would have been at some point, money can improve your life significantly.

I see it like this. Money gives you time and options. Time to invest in yourself, time to invest in your ideas, the options to do that in the way that is right for you. You don’t have time or options in survival mode. You just know you need to do this thing and you might not even know what it really is. If you want money to spend on something material or for your own ego then yes you will probably be unhappy when you get there.

I know it won’t make me happy. It’s the snapshot that I was once aiming for where I’m suddenly happy and all my problems are solved. I know it won’t be like that if I ever do get there. But, money would have significantly improved mine and my family's life and maybe it would have reduced the struggle, just for a little bit.

I don’t have wealth, I’m in a better situation than what I was. I’m far more comfortable and less stressed by at least having some savings now, I can say that for a fact. I’ve met multi millionaires since I’ve setup Bottled Imagination. I study them. Some say that not looking at the right hand side of a menu is something that goes unnoticed but is a luxury of it all. Some were completely free and you could see it in them. Some weren’t happy still, they wanted more.

The only thing that I can pass on is below.?

I had this master plan right. This calculation when I was younger. I’d be the saviour. The one who said to their parent’s “I’ve done it, I've got this covered”. Everything is fixed. I worked like a dog. 12-14 hour days, sometimes for myself, sometimes for other people. I could help my loved ones a bit but I was nowhere near my goal. I carried on. I was approaching 35. Doomsday in my head. The time I had prepped for the nursing home costs. I had treaded water on the rest of my personal life.?

My dad passed away 2 weeks before I turned 35. I wasn’t in the hospital thinking about the money. In fact I was apologising to him, to everyone in the room. I was wondering what the fuck I had done with my life. None of that stuff I thought mattered actually mattered at that moment.?

So when I say think about whether money would make you happy. I mean really think about it.