I don’t know if it was the same thing for you, but where I grew up; there is an old saying about money: you need money to make money. Is it linked to the old Christian mentality that money is the root of all evil? Is it a simple way to explain one’s failure to make money because he doesn’t come from a rich family? I don’t quite understand the whole reasoning behind this line of thought. All I know is that it has always bothered me. It’s bothering me because I don’t come from a rich family. I wasn’t sponsored nor had a rich mentor when I was younger. And still, I hope to make a lot of money in my life. Unfortunately, I have found that this old saying is sometimes right…
A few years ago, I was living in a small city in Montreal’s suburbs. This city was recently booming since there wasn’t much land available for new construction nearbyMontrealand one of the only spot remaining to buy a decent house at a fair price is where I used to live. It was a very nice city only 25 minutes away from downtown. The city is situated right beside 2 highways which makes it quite accessible. Near the highway exit going towards this city, there was commercial land for sale. The land was right on a corner and it was the first spot before entering the city (or last spot before leaving for the highway). I thought to myself: I should buy this land and build a Tim Horton’s. For US readers, Tim Horton’s is almost as popular as Starbucks in Canada. Mind you Starbucks coffee is a lot better than Tim’s! The place was perfect for a last stop for a coffee before hitting the road. It was also the right time as we were seeing new houses blooming all over the place.
Here’s the catch.
The land was $500K, the Tim Horton’s was another $500K and at 26 with barely 20K in my pocket… I was frustrated because I was convinced I had a great idea but was short on money. For me, it was obvious that we could make money from this commercial spot… but we needed money to make money. What was even more frustrating is that a year after I had my idea of buying the land to build a Tim Horton’s, someone else did buy the land… and did built a Timmy’s on it! I don’t have to tell you that this coffee shop is making a lot of money right now…
The reason why I never believed that you need money to make money is because I couldn’t understand where all the rich guys come from. I mean; it’s not the hen or the egg here; someone must make money first before having money. Therefore; this guy had to be poor first, and then make his millions. To the best of my knowledge, I’m not aware of an island where millionaires grow-up before entering the real world. For those who know Montreal, I know that there are a lot of them in the West Island but that’s another story ;-).
In my quest to understand how someone could become rich while others stay poor or in the middle class all his life, I’ve started asking questions. Since I have the opportunity to meet a lot of rich individuals in my day job, I was able to gather a lot of information. Their stories are exciting and very interesting. I’ve found out that most of them didn’t have money when they were young. In fact, you don’t need to make money; you need a big fat heart! A heart so big that it is never tired; a heart that is ready to hustle day and night. A heart that never sleeps, that is always thinking about a project. This is how you grow rich: hustle and passion (did I ever write that? 😉 ) .
According to our evaluation, our online company is worth at least 200K. It is currently generating over $100,000 in gross revenue and roughly $40,000 in after tax income. At 5 times the net income, the classic valuation still makes sense. So I could have built a 200K company starting with nothing back in 2008? In 4 years, we have built a real company making real money. 4 years ago, we didn’t have an internet empire. In fact, our only web property was this blog and we were getting 300 visitors… a month! Now we have over 300,000 visitors/month! We are now able to buy sites that worth 10K, 20K, 30K, and more! At first, we could have never be able to find so much money. Someone who wants to enter the blog business today and buy a web property will find it very hard since interesting sites are being sold for over 10K. But if you have hustled with a passion, you can do it today!
The thing is that money is an exponential accelerator. When you have $100, you can’t do much. But when you work very hard and amass ten $100 to make $1,000, you can do a little bit more. Then, you can amass ten $1,000 and make $10,000. And after that, you amass 10 $10,000 to make $100,000… you get the picture to reach the million? ;-).
When we started TFB, it literally cost us $10 ($9.95 for the domain).
After a year, we were able to amass all the $10 we could to build a few hundred. We reinvested those few hundreds to make a few thousands.
Those few thousands were used to buy Intelligent Speculator.
Then, after another year, we amassed all the thousands we could and leveraged to buy Gather Little By Little.
We have continued the strategy of saving as much money as possible in the company to reinvest it while using leverage when it’s the right time. We are now gathering near $4,000 per month net of taxes. I guess that we will eventually talk about bigger numbers in a few years since the revenue seems to grow big time.
What I came to realize is that you don’t need money to make money. When you have money, it’s easier to make even more money. This is what the old saying should say!
Readers; do you think you need money to make money or you can start making your own today?
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