Many people believe that in order to start a business, you have to go into huge debt and get investors. Or, like Shark Tank, you need a great idea that will change the world. I'm not saying you shouldn't get investors, or that you shouldn't come up with great ideas.
Obviously, to create a truly profitable business, a certain level of investment is required to earn a whole bunch of money. (Think, Apple or the next Starbucks).
What I am saying is that entrepreneurship is seen as very risky because a lot of people get into a whole bunch of debt and go bankrupt. This is not what we should do as beginners (assuming you are a beginner). Instead, we should use the lean hedging model.
“Simply put, you are creating a cash flow business to hedge the long-term expenses of a business getting rich.”
So when you first start a business, your money should go down, and after a certain point, your money should go up.
Many people may not survive the time when the business initially loses money and gets into debt. What if we set up a cash flow venture before we started Starbucks to hedge its initial outlay?
The lean hedge model has two parts. First, you create a "cash flow" company. Cash flow businesses require a small amount of investment and usually involve creating a fortune with your time, sweat, and effort.
Let's look at some examples:
Translation company
personal portfolio site for freelancers (you create a site and then do your cold email marketing)
> Freelancing (UpWork, Fiverr). You need to monetize links.
> Educational business.
> Marketing information. (You made
> Publish mini e-books on amazon.
> Youtube Channel, Cash Flow Channel
> Web development agency
> Digital marketing
> Dropshipping to a certain degree (Organic Tik Tok dropshipping, where you create content to drive traffic to your Shopify store instead of spending money on ads).
(Disclaimer, my first cash flow operation, which was teaching a language, failed miserably because marketing for language education was so hard. Getting started in translation, B2B marketing became fairly easy via cold email.) .
Note that there is a crossover point. At some point, your long-term business stops losing money and starts making more money than your cash flow business.
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