100% profitable! Entrepreneur Follow This Formula to Start 6 Successful Startups

There are 4 ways to speed up your financial freedom:

Professions

Work outside job

Entrepreneurship

Investment

This article will focus on Entrepreneurship.

Startup research showed that 90% of startup will fail in the first 5 years. 90% of the remaining 10% startups will fail within 10 years. The odds are against entrepreneurship. But with greater risk comes greater return, you may find yourself a gold mine being in business.

The difficult part about entrepreneurship is that there is no rule to follow. What brings success to one startup does not mean doing the same thing will guarantee success for another. Founders are forced to experience, trial and error, hence there are lots of time and resources wasted and the rate of success is so low.

What if I tell you there is an entrepreneurship formula that guarantees success if you follow it?

A friend of mine is a 6-times entrepreneur — Let’s call her Molly. Molly started 6 business in the last 10 years — all up and running, profiting over six-figures. Her startups are not advanced technology or rocket science, but Taiwan-style drinks, fast fashion clothing, pets utilities etc.

Rule no.1: You need to read financial statements

The best way of starting a business is that you work in the field — at least for a few months. “That way you understand the operation.” Molly shared.

Even if you will not be personally working in your startup business, you need to read, track and understand the financial statements. “Knowing where your money comes from and where it goes is very important in a business. I read financial statements of all my business at least once a week to track the expenses and income. I also have a cash flow statement for each of my business that anticipates the cash flow of the business for the next 6–12 months. If you want to be an entrepreneur, a business owner, what you need to focus is not the product. Of course, the product has to be of good value, but if you can’t control the cost and profit margin, you do not have a business.”

Rule no.2: Trouble shooting report

Unlike many business owners who rely on the managers to prepare business reports, Molly wrote business reports herself.

“This is perhaps as important as being financial literate. In the process of writing the report, I have to speak to the staff and conduct due diligence fact-findings to understand their difficulties, where the obstacles are, what the problem is, whether a certain marketing campaign is bringing enough customers to the shop, whether it is worth continuing certain business decisions, where needs to cut costs etc.”

Rule no.3: The golden formula to profit

“I follow this golden formula in all my business. They are small business and they are nothing new, but they bring in steady income each month — all because I follow this formula strictly.”

And the golden formula is:

100% profitable business = 30% manpower and staff, 30% material cost, 10% rent, 20% hidden and miscellaneous costs (including utilities, cleaning, accounting, tax, marketing, and all other expenses), and 10% profit margin.

Of course different industry may have a variation in these ratio, for example if you run an online business you may not have rent to pay. But you still have domain name and website hosting which is the equivalent of your physical store.

“You may think that this is too simple for startups, but I think people complicate starting a business. You do not have to know A.I, technology, coding in order to start a business.”

“It looks like a simple formula, but it is very hard to follow in reality. In many months, the manpower is overspent and I have to somehow fire someone or re-arrange the workflow to reduce the manpower spending.”

“And many people overlooked the hidden and miscellaneous costs which could actually kill a business. They maybe small in amount or seem insignificant, but these little things add up. If you do not keep track of them, they will go out of control and eat into your profit.”

That is how Molly operates her businesses. Nothing fancy actually but it works. The businesses are bringing in good income every month and she has already full-paid two luxury properties simply by following these three rules and the golden formula. If you are considering starting a business or have already started one but struggling, you may want to try implementing this.