As I lean back in me chair, and tell you that the only things certain in life are death, taxes, and the never-ending itch of a man wanting to be his own boss, most people know what I am going to tell you but will never do anything about it. The land of opportunity has always been fertile ground for the ambitious, the risk-takers, and the downright stubborn. No one ever got rich working for someone else—well, except maybe in Silicon Valley, but we’ll get to that later. It’s the great American Dream, after all.
Many dream of owning a business—some imagine a quaint little shop, others a towering corporate empire. But no matter the size, all businesses start the same way: with an idea and a whole lot of hard work. A business is half job and half investment. You’re not getting paid for the countless hours you pour in or the money you sink into it. You’re taking a gamble, betting that your idea will take off and provide a return.
Think of it like the guy who buys a patch of land, clears it, builds a house, and rents it out for a steady income. He put in the work, took the financial risk, and now enjoys the rewards. But let’s separate investment, risk, income, and profit. And, of course, let’s consider how Uncle Sam views it all.
My First Business—A Lesson on Opportunity vs Risk.
Let me take you back to my first venture. Hot dog carts were the rage when I was starting college. A friend worked for a guy who owned three. I saw an opportunity. I rented one for $500 a month, gave a two-month deposit, stocked up on supplies, and borrowed an old car from my dad, who also chipped in $800.
For a couple of months, I was pulling in $100 to $200 a day—not bad for a 17-year-old about to enter college. I even had visions of expanding, hiring people to run the carts while I managed things. But there were… complications. I was operating without a license, parking in questionable spots, and dodging the police regularly. Eventually, I found a prime location at the airport near a construction site. My daily profits jumped to $200 to $300, and things were looking up.
A car then plowed into one my hot dog cart. Six months later, I was still left with bills, no cart, no car, and no university scholarship. The business was gone, my dreams derailed. But I had learned my first major lesson in business: just because you have a plan doesn’t mean it will go the way you expect.
Understanding Business Ownership
Too many people mistake being self-employed for owning a business. If you can step away for a few weeks and your business keeps running, then you own a business. If you’re tied to it 24/7, you just own a job. REMEMBER the vacation test, can you go on vacation for a week, and it stills runs otherwise it is a job. Nothing wrong with that, just understand it so you can change that.
Take the potato chip truck guy. He buys a truck for $20,000, gets a franchise, stocks it with $5,000 worth of chips, and starts selling. But his overhead is killing him. He’s not making money; he’s just buying himself a low-paying delivery job. That’s not wealth building.
The Blueprint for Success: Learning to Multiply
Now let’s look at a trade business, like plumbing. A plumber starts solo, charging $50 an hour. At 10 hours a week, he’s doing fine. At 20 hours, he’s making as much as a new lawyer. At 35 hours, he’s earning more than some doctors. Then, he hires another plumber, keeps a cut of the profits, and eventually scales up to five trucks, an office, and a fleet of workers. He is now a millionaire.
He did three things right:
- He used a high-value skill to command a premium wage.
- He multiplied his efforts by hiring and revenue-sharing.
- He expanded naturally, without taking on crippling debt.
But then, reality strikes. He’s older, stressed, with a mortgage, a family, and looming financial threats. One accident involving an employee in a company truck could wipe him out. He also played a little fast and loose with taxes, and now the IRS is on his tail. Despite all his success, he’s still living paycheck to paycheck.
Why? Because he didn’t separate his business from his personal finances.
The Golden Rule: Pay Yourself First
The biggest mistake business owners make is not paying themselves first. Set a salary, live within it, and take 25% of your profit and stash it away—out of sight, out of mind. Not under the mattress, but in a real investment, protected from business risks. The remaining 50% should be set aside for taxes, expenses, and future growth.
This is how you avoid being the millionaire who looks rich but is one bad month away from bankruptcy.
Lessons from a Cuban Immigrant
One of the hardest-working business owners I ever met was a Cuban immigrant who arrived with no English, no education, and three kids to feed. He took a job cleaning at a newspaper while running a weekend car wash in gas station parking lots. He gave the owners 25% of earnings as rent. Before long, he had multiple locations, hired staff, and reinvested everything. He worked nights at a gas station, saved relentlessly, and one day announced he was buying his own gas station. Ten years later, he had a million-dollar empire.
His formula? Work hard, multiply income streams, avoid unnecessary spending, and—most importantly—don’t die before cashing in.
Navigating the Hidden Dangers: Death and Taxes
Small business owners often overlook estate planning, tax laws, and legal protections. The government wants its cut, and they’ll take it whether your business succeeds or fails.
Just ask Joe Robbie, founder of the Miami Dolphins. When he died, his family was hit with a $100 million probate tax bill and had to sell everything to pay it. The IRS wins.
Or Wesley Snipes, who was told by his advisors that he didn’t owe taxes on overseas earnings. The IRS disagreed, and he went to jail until he paid up. The IRS wins.
The Bottom Line
Owning a business is one of the greatest paths to wealth, but it’s not for the faint of heart. Success requires more than just hard work—it demands financial literacy, risk management, and strategic planning. Know your numbers, understand your tax obligations, and protect yourself legally. If you play your cards right, you can build something that not only provides for you but survives beyond you.
But if you don’t, well… the IRS and the Grim Reaper are always waiting. So go hire a good accountant and tax planner before it is too late.
EXTRA CREDIT
The Billionaire Next Door
.The Time Value of Money
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Ten business mistake many business large and small make.
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