While my wife was working on her university paper last night, I decided to take a long, hot shower to clear the stress of recent days. I needed time to think, to imagine myself in a few weeks’ time, in a few months… in a few years. While I am still looking to manage a bigger book (read a higher pay check ), I have also started the RRSP rush (yeah, people think it’s during February but I have already started my sprint for RRSP and TFSA contributions as of the 2^nd week of January).

Today, I’ll be working from 8am to 8pm (add blogging and gym before and after work hours ). I can’t really complain because first; I have a job, second; the job pays well. I would be a fool to whine about hours worked while many people are looking for a job or, worse, thousands of Haitians are wondering in the streets looking for food, shelter and lost family members…

However, it doesn’t mean that I can’t think about myself and what I want to do. Therefore, I took a some time to think about my future and look at my different options.

I was raised in a family of entrepreneurs. My grandfather owned a company, 3 of my aunts run or had ran companies for years and my dad has been his own boss for the past 15 years. Me? I am one of those little rats stuck in the rat race deluxe. I certainly have a good sideline with my online company, but hey, I am still working for someone else for most of my waking hours!

Like a baby bird moving its wings in its nest, I am still wondering if I really know how to fly or if I was born to be a dodo. While I was lost in my thoughts, I got a flash about one of my friends who started on his own at the beginning of January. He decided to run websites and he actually made a lot of money this year. So my question today is:

What do you need to become an entrepreneur?

While I have a few answers, I have more questions to ask than anything else…

To become an entrepreneur, you need a whole bunch of stuff that you usually read about in books; courage, tenacity, perseverance, the ability to work countless hours…  But of all these qualities of the good entrepreneur, I think you need most a deep desire to work for yourself. A true feeling of freedom and independence. An entrepreneur, doesn’t mind if he won’t make money today, as long as he is working on his projects, as long as he sees it growing, he knows that he will make it in the end.

I think I have this feeling carved into my bones, I have always wanted to manage, decide, to do what I want, when I want (not in a lazy way though!). However, the problem, as is the case for many people in many situations in their life, is fear.

The worst part of being stuck in the rat race is that it is quite comfortable; everyone  around you is in the same cage, you are fed, have shelter and are so deeply entrenched in the race that you keep running all day without wondering what your life would be if it wasn’t like that. The perception of someone who succeeds is the one who has a spouse, children, a house with a garage and the white picket fence! He relies on a good job with benefits and a decent pension plan. Once you have reached this level, you think that you are “made it”. But in fact, you are just entering the rat race… deluxe!

So sometimes, I open my mind and think about being a full time entrepreneur, about waking up in the morning and working for myself. Knowing that each effort put forth would be profitable… But then, I get hit by the train of reality that reminds me that I have a mortgage and a family that counts on me to bring home the bacon….

Your Take:

So my question to you is: When do you think you should start a business and quit your job? Is there a perfect time? How do you know you are ready?

image source: R ‘eyes’

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Since the recession hit, banks have become notoriously stingy when it comes to lending to small businesses, at a time when the economy needs enterprise more than ever to get back on its feet. At the same time, many professionals who have been made redundant now want to start their own businesses, having been presented with a harsh job market and a sudden opportunity to make it on their own. If you’re about to make the leap into the world of small businesses, make sure you read our top tips before you start looking for capital.

1. Finding the right funding

Most people entertain a similar train of thought when looking for capital to start their business. Rather than borrowing from a bank, they turn first to friends, then family, then founders (i.e. themselves and their business partners), and then banks and investors. There are other ways, however, if none of these are suitable.

First, there are ‘business angels‘. These are informal investors, often retired executives or entrepreneurs with a great deal of capital and a lingering taste for more money-making. Rather than demanding collateral, business angels normally invest in return for a share of your business profits. The average investment amount in these cases was around $450,000 in 2007, and business angels are looking for companies that will grow, rather than simply sustain their MD.

With no business angel in sight, you might turn to business schools or other further education establishments for cash. These institutions often have incubator schemes, which lend modest sums to startups and provide valuable advice too. The money they provide often comes from venture capitalists, serving as a friendlier middle man between you and the big lenders. If that doesn’t suit your business either, there are a range of government grants out there to support new companies.

2. Finding the right bank for you

If you do choose to go with a loan from a bank, which is the most common form of raising capital, it’s important to find a sympathetic lender, preferably one with which you have an existing relationship or line of credit. If you have been using the same bank for your current and savings accounts for a few years, your first port of call for a business loan should be that one. If your bank doesn’t offer the right kind of loan for you, or doesn’t have a good enough deal, find a bank with experience of the trade or industry you are working in.

3. Shop around

In banking today, you are a customer, so behave like one. Don’t jump at the first offer a bank gives you and simply be grateful; exercise your ability as a consumer and look around. Get a quote from three or four lenders if you can to make sure you are getting the very best deal.

4. Protect yourself

The bigger a loan is, the greater the need for negotiation and care when entering into a contract. Before you sign anything or accept any deal, check it out with your financial advisor (if you don’t have one already, get one; they are often free) and if you can, with your attorney too. Ensure, with their advice, that the terms and conditions of the loan will not be ruinous to the business should something go wrong.

5. Think about collateral

Banks are more likely to lend to your business if you have something valuable to secure the loan with. In most cases, property is the best kind of security, and many business owners use their business premises or even their homes as security, but before doing this, make sure your business plan is watertight. If you can’t face the chance that, if you fail to meet repayments, you may lose your home, office or workshop, don’t sign on the dotted line. If you have no business premises and cannot use your home as security, banks then look at other assets you may have, such as a fleet of cars or any expensive equipment you have for your business. Again, make sure you will be able to meet repayments before using your assets as security; losing them could mean losing your livelihood.

If you have none of the above to use as security, you may be able to get an unsecured business loan, although, given the credit crunch, this has become even more difficult than ever. Be prepared, if this is the option you go for, to pay more for your credit; with the increased risk of losing money as you have no collateral, banks will charge higher interest rates to make sure they get their money’s worth from your loan.

About the author

Rachel is a freelance writer who writes about saving money, earning more and building wealth for a 100% free-to-use credit card comparison service where you can compare, review and apply for a business credit card for businesses located in Australia.

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All right, so we talked about getting a good job and a few promotions, we also talked about looking for a bonus based on individual performance and getting the most out of your employer’s benefits. Now, we are getting to what you are really looking for: how the heck do you create a viable sideline?

I’ll tell you something you won’t like: you have 90% chance of failure if you start a sideline.  Actually, most people fail when they try to create a real company (statistics demonstrate only 10% of start-ups survive the first 5 years of their existence and 10% of those survivors actually blow out 10 candles on their cake years later). So imagine what your odds are starting something as an alternative source of income? Yup, you are meant to fail! The good news is that we all are capable and some of us succeed. I don’t know about you, but if I play the game, I want to be a winner

Why is it so tough?

I think that the biggest cause of failure (and I didn’t find this in any relevant stat) is the lack of passion. Because if you are not absolutely passionate about what you do, you probably won’t make it. Being passionate means:

- Working several hours in a row, several days in a row, several weeks in a row and several months in a row without any meaning results.

- Doing stuff that you hate and doing it carefully since you can’t afford to start over and you can’t afford to pay someone else to do it.

- Asking your family to believe in your project no matter what. Asking them for support while you still have no tangible results.

- Taking your very first profit and reinvesting them instead of taking your wife out.

- It means continuously thinking about your ideas & goals and developing them regardless if it’s 9 AM or 2 AM

Sometimes at the peril of other important, more pleasant pastimes… (Ummmm forbidden donut… Whups, I digress ;-€ )

If you are not passionate about the sideline you are about the create, then go back on You Tube and look for the latest singing squirrel that will make you laugh.

At best, you will be able to build some decent income on the side for a while. It is true that if you are well organized, you can structure a profitable operation. However, at one point you will let your project die because you are sick of working hard on something that only returns a little. You will get tired of putting in the effort on a daily basis on something that you don’t enjoy that much. Basically, your lack of passion will take you away from the pleasure you had when you started your project.

We all have passions. Some people have thousands of them and others have very few. However, we all have something we really care about and this is what you need to find before starting any sideline income project.

Personally, I have decided to combine both my passions for writing and personal  finance. There is so much to say about finance, it’s a great topic. If you don’t like writing, then, you need to find another way of “producing” your passion. You can either produce a good or create a service, however, it must be related to one of your passions.

So today, take 30 minutes and write down every single topic you find interesting. I’ll talk about what to do with the list later on

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Last week, I had started my “making a 6 figure income” series with the main source of income for most of us: our employers. Getting rich or making 6 figures doesn’t happen overnight. It requires a lot of hard work and more importantly, a consistent effort. Getting a good job and looking for promotions on an annual basis is the first step to obtaining a higher salary (this is when you can get in the very fast lane, if I was able to get 3 promotions in 4 years, anybody can do it, trust me on this!) .

However, your employer can offer you much more than a considerable base salary. He can open the doors to many other sources of income that will help you achieve the “magical” 6 figures.

Before I continue on that path, I wanted to share how my sources of income were distributed to make a little bit more than $100,000 in 2009:

As you can see, most of my income came from my base salary. However, there is also a big part from my bonus and other employee benefits. And this is the part I want to focus on today.

Selecting a position with Individual Performance Based Bonuses

The last 4 years, I had been working in a structure where our bonus was  company performance based or also known as “Team bonus”. What I don’t like about this structure is that your bonus is being decreased by people on your team who don’t work very hard. Unfortunately, there are always a few lazy people concentrated on finding a good deal on Expedia for their next vacation than on actually doing the job! This is the main reason why I decided to switch to a job with individual performance based bonuses.

Optimizing other employee benefits

Sure you can dabble with insurance and dental care. However, this becomes too complicated for me to consider so I don’t take them into consideration in my overall income. However, I want to concentrate on other employee benefits such as the deferred profit sharing plan.

This is a very interesting part as the employer tends to put money in it too. I actually put the maximum I am allowed in my company’s stock (which is 8% of my base salary) and they add an additional 2% (so 25% of my contribution). In order to not be over exposed in my portfolio, I cash in my shares once a year. I still get more than a thousand dollar in my pocket through this method.

Another very interesting point is the rebate I get on my mortgage and line of credit since I work for a bank. This would make my decision much tougher if I ever wanted to quit. Along with the money I save, it’s also come down to a psychological effect.

Without making much noise, those benefits represent slightly over 4% of my 6 figure income. So it is definitely worthwhile spending a few minutes on what your employer has to offer in term of marginal benefits

I know that most of you read this series to know about my alternative source of income and how I manage it despite my busy routine. This is why I will spend more time on those aspect in the coming weeks Stay tuned next week for the next post on the series

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A little bit more than a week ago, Citigroup announced that they would sell 100M$ worth of shares during the first Primerica IPO. Last year, they tried to sell the company and were unsuccessful, since then they have decided to “pull a few bucks” out of their cash cow.

Over last weekend, I spoke with my friend who still works for Primerica and I asked him if he was nervous about the concerns I outlined in my post about Primerica going public. He told me that he wasn’t nervous at all.  Actually, the news was not introduced to the agents with the same information.

While the Primerica IPO information from Bloomberg last week was quite limited (the journalist spent more time describing Primerica and explaining the timeline than talking about the IPO), my friend received more detailed information.

Primerica goes public… for a second time

This fact was confirmed by another Primerica contact, it is the second time that an IPO was issued for this company. Primerica was founded in 1977 by A.L. Williams . At one point in time, Primerica had over 250,000 agents and decided to go public (for the first time) under the ticker ALW.

Then, Citibank (the former appellation of Citigroup) bought all the Primerica shares and took it private again within the Citi family. At that time, they had decided to trim the Primerica sales force and change the name of the game for insurance agents. This is why many of them either quit or were invited to to pursue other career options. They went from 250,000 agents down to about 80,000.

The main goal behind buying Primerica was to benefit from the huge sales force and not only offer insurance and investment services but all banking products (bank accounts, loans, lines of credit, mortgages, etc.). As of today, that vision has been a partial success since most Primerica agents didn’t offer all products. Time has changed, and so did the vision, so I was told.

It’s good news overall

My friend was telling me that the IPO was pretty good news as most shares will be offered (and probably bought) buy Primerica VPs. Therefore, they will regain more control over “their” company and will try to dissociate themselves from Citigroup (who might not have the greatest image to be associated with these days).

Who knows, at one point (this will require additional public offerings), they might even offer products other than Citi’s. This could transform them into real insurance brokers and offer even better (less expensive?) products.

While 100$M shares is just opening the door to a world of opportunities, this won’t change much in the day to day for now. If Primerica VPs can afford to buy all the shares and remain in control, I guess this could be very good news for them. It is interesting to see how news can been seen from 2 different perspectives, both with valid arguments. Only the future will tell us if the Primerica IPO was a good thing or not!

One thing is for sure, once Primerica shares hit the public floor, it will generate some interest for stock traders and will show on their track investment apps!

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