Growing Your Magical Money Tree(s)

How to sow in winter and reap in summer

I see building wealth as a lot like creating a garden.

How do you start?

Before you head off to B+Q to load up on plants you will be well advised to check the condition of the soil. Your career is the plot of land you will plant in, many of us myself included overlook this when we start. Often we are swayed by what our parents or The Media suggest. But it is not the time to regret, you are where you are and we need to start getting our hands dirty.

Most of us have a job. We are trading our time to earn a salary. In the FIRE community having a job is sometimes looked down on, you often hear how you must escape working for The Man and break out of your cubicle. But of course, a job provides something vital in our quest to become wealthy -income. In our tree analogy, think of this as water, without which nothing will grow.

Next, we dig the soil. It is vital to check if it is fertile. Many people start a business in weird niches where there is simply no demand. How many banjo-playing unicyclists do you hear about making millions? Didn’t think so. Whereas a Manchester United game attracts 70,000 people each weekend. Too many of us plant in barren soil and the only thing that grows are weeds.

With a little upfront planning, you can avoid being one of them. In his excellent book Millionaire Fastlane (don’t let the cheesy title put you off) M.J DeMarco identifies 5 types of businesses (trees) that thrive in most conditions:

1. Real estate
2. Internet businesses
3. Content
4. Distribution

Plant Seeds

The mightiest oak tree starts as a tiny seed. These are your business ideas, the best gardeners plant a whole seed tray of ideas, many won’t make it but with enough persistence, you can nurture the strongest into a profitable company.

Success with your garden requires a radical mindset shift. You have to start to slowly divorce time from income. When you are working a 9–5 you are only being paid for your finite time. Sure you may get a 4% a year pay rise, a matched employee pension, but even 40 years of this is unlikely to make you wealthy.

Water, Water Everywhere

Income is like precious water in the desert. While you are in these early years you simply can’t afford to fritter it away on McMansions, BMW’s and trips to the Maldives, these can wait until your money tree is bearing fruit.

But water is no good to your garden if it is just sitting in your watering can. Held in a high street bank account money will slowly evaporate as inflation erodes your purchasing power. This is where a mindset shift is needed. Hoarding money is no path to wealth. You have to start putting it to work in your business.

If you have followed the steps above chances are your seed has grown into a sapling. Great work! But now is not the time to get complacent, sitting back at this point leaves your company/tree vulnerable to pests and diseases. At this point you are likely to still be working your job and tending your side hustle is only done on nights and weekends.

It is time to start divorcing time from income. As a salaried employee, you are trading your time to your employer for money. Companies exist for one reason to benefit the shareholders who are either the owners or if the company or publicly traded the wider investment community. This means your company is incentivized to keep costs as low as possible and pay you just enough so you don’t leave.

So you need to figure out a way to detach income from time. Trees grow around the clock. It is time my friend to earn while you sleep.

Code-Based Leverage

The internet has broken down many of the old barriers of entry. It is now possible for you or me to set up a company with the potential to reach millions of customers. Computers are an amazing Miracle-Gro like fertilizer that turns seeds into trees. Code works around the clock, doesn’t get sick, doesn’t take any bank holidays or turns up late and leave early. So if we all have access to the internet why are we not all rolling in it?

It’s because of one word. Distribution. Distribution is often overlooked when starting a business. You can have written an amazing book, developed a fab new perfume, or a potential hit record but if it is not in front of customers' eyes then it is worthless. You have to start sacrificing some of those freshly harvested Strawberries to the tech giants. Take the Apple or Google Play app stores it is no accident that they take a 30% cut of each paid download. Why do you think Jeff Bezos is the richest man in the world? He’s got an army of thousands of workers, not just the ones packing boxes; but thousands of third-party sellers running their own mini-companies. I should know. I’ve been there.

Next comes content. Back in the day to make it selling content you had to be part of an elite club- a newspaper owner, magazine publisher or best-selling author. The internet has done away with the old gatekeepers; it is now easier than ever to self-publish your ideas. Content also survives time. Writing a book may take a year to write but if someone buys your book in twenty years’ time you still earn a small profit. In a few years E. L. James, author of the Fifty Shades of Grey books has earned $95 million from her work. Being an author is similar to coding you put in the upfront work once and then it can be sold over and over again. Microsoft only had to make one Windows 10.

Harvest Season

Now it is time to gradually transition from the long hours of running the business. This is your first taste of passive income. At this point, you can start investing in other great businesses of the world.

If you haven’t done so already start taking that money and investing in other companies. Buying low-cost index funds mean you spread your risk in the sense you own a whole forest.

Congrats! Your money tree is now well established and your side hustle can become your main hustle it is time to quit your job. At this point, you mustn’t chop off too many branches that is where frugality and living within your means comes in. More money saved means you can reinvest in more fertilizer and accelerate revenue.

It is later-summer now and your money tree is bearing fruit. This is purely passive income. You can sit back with a cool beer in the shade and admire your handy work. It has taken a lot of hard graft, hard winters and the occasional drought but you have made it. You are now wealthy.

This article has been heavy on metaphors. So let’s look at a five-step concrete plan to build an internet business:

1. Go where the money is. As a rule, we are all interested in three things. Sex- (having more of it), money (getting richer) and fitness (we want 6-packs). So if you are writing or selling products in any of these areas, kudos! These areas are competitive but there is a huge market of interested buyers.
2. Build a following. This is a crucial step and takes years. Folk won’t come to you if they don’t trust you. Think about it; if you saw your personal training gorging themselves on McDonald’s you wouldn’t work with them again.
3. Provide coaching. The attention funnel means 10,000 might visit your blog each month, 5,000 might subscribe to your email list, 50 might buy and course and 5 may want 1:1 coaching.
4. Build a product. As we saw earlier, content products earn anytime. A quality book, YouTube video or podcast doesn’t care if it is the weekend they stand the test of time.
5. Marketing. Once you have a great product time you invest in the market it will pay dividends. Participate in a podcast that reaches millions and your hourly rate can go to the moon!

Remember: “The best time to plant a tree was 20 years ago. The second best time is now.”