AI tips + entrepreneur insights for building wealth
In the US, the median income in 2021 was $5,809 per month. However, only 8.8% of people were millionaires, and 95% of all millionaires in America have a net worth between $1 million and $10 million. While a higher net worth usually correlates with a higher income, this is not always the case, and many people have most of their paper wealth tied up in their home and/or other illiquid assets.
With the recent surge in popularity around using AI to do just about anything, I thought I’d ask ChatGPT to come up with a plan for a 28-year-old to become a millionaire in 10 years, earning $5,000 a month and seek to create their own business. I went with 28 years because it’s only slightly older than when I started my business, and a 10-year deadline because I wanted to see how creative the AI could be with a short amount of time. Here is the exact prompt I used:
Achieving a liquid net worth of $1,000,000 with these values is very difficult. When you make $5,000 a month, you’ll “only” have $600,000 liquid after 10 years, so unless you invest money and get a little lucky, you can’t take the money out of your own pocket.
But if you look at a net paper value (including assets you can’t immediately liquidate), things become more realistic. If you had invested $500 in the S&P 500 every month 10 years ago, you would now have $116,000. If you had invested $2,000 in Tesla in 2011, you would now have $231,742. But the best way to increase your net worth without relying too much on luck is often to start your own business, so let’s see how to do just that.
Note: The “business plan” part is based on 6 different parts generated by ChatGPT. Each part starts with AI advice (in quotes), and then I add my own insights based on my experience as an entrepreneur and business owner.
1. Identify your strengths and passion
“It starts with figuring out what you’re good at and what you like to do. This will help you identify potential business ideas that you are truly passionate about.”
It took me years to start working on my blog and commit to it because I couldn’t pick one thing out of all my interests. Before I started writing online, I tried dozens of other things:
- Creating a T-Shirt Business – Has failed
- I sell art on Instagram — Has failed
- Selling Trading Algorithms — Has failed
- Hand painted skateboards for sale — Has failed
- Encoding/reversing websites — Has failed
At least I tried, which was a great start. But I have never committed more than 6 months to any of the ideas mentioned above. I had to change my approach
2. Research the market
“After you have identified potential business ideas, research the market to determine if there is a demand for your product or service. Look at your competitors and see what they are doing well and where there may be gaps in the market.”
About 3 years ago, I decided I needed to try something longer than 6 months before giving up. To identify the area where I was most likely to succeed, I looked at everything I had tried so far and realized that many of these markets were saturated and/or required a large upfront investment to get started .
- A real t-shirt business required inventory, which we didn’t have the money for (Dropshipping doesn’t require inventory, but needs a lot of money for ads)
- An Instagram business required a lot of time to build a social media following and I was never into social media. I couldn’t bring myself to send messages to 100 people a day to promote my art.
- There were a lot of people much better than me at coding websites, so my market was limited.
Eventually I realized that I had been writing all my life, I loved it, and it was a great business because even though I wasn’t a talented writer, not many people were willing to put in the work. Writing an article a day every day is hard, especially when you have to do it at 6am before you leave for work. I learned early on that hard work without talent beats talent without hard work, so I chose writing as my next business idea.
3. Start small
“Think of starting your business as a side job while still working full-time. This will allow you to test the market and refine your business model without taking too much risk.”
Within 1 year of starting my business, I was making more money faster than I ever thought possible, but not enough to quit my job for sure. In my situation, it wasn’t a problem because I liked my job, and as AI advises, it’s always better to get a feel for things before going all-in with a huge risk.
“Starting small” is often one of the biggest hurdles people have to overcome, mostly because they don’t see the big picture. Either they want to be successful and make a lot of money right away, or they are willing to try to work, but the distance between where they are and where they want to be seems insurmountable.
As cliche as it sounds, Apple started in a garage before becoming the most valuable company in the world, and Warren Buffet started investing at the age of 14. Ben & Jerry’s started out of the back of an ice cream truck and is now worth $100 billion. Steady wins the race, so don’t be afraid to start small.
4. Develop a business plan
“Once you have a solid business idea, develop a business plan that outlines your target audience, products or services, and revenue model.”
I didn’t develop a business plan until over a year after I started. That’s when I started making real money, so I looked at my options to maximize my chances of success. I decided to start a one-man company, set up a bank account for it, and never pay myself until I started making serious money. Everything I spent from this account was supposed to be a growing investment and the rest was sitting there while I figure out what to do with it.
I also came up with hard targets within 1 year and a check-in after 6 months. I got this idea from the company I was working for and it is based on the OKR (Objective Key Results) strategy, which consists of 2 main components:
- Objective: explain where you want to go and what the desired end result is. Once an objective is achieved, another objective will replace the current one. The objectives of the OKR strategy are non-technical, non-measurable and usually contain no numbers. It should be as easy to understand as possible.
- Key result: unlike the Objective, the key result should be as precise, technical and measurable as possible. It is used as an indicator of whether the Objective is being worked on or not. Key results should be time bound, often quarterly or annually.
The key to strategy is that it focuses on the actions needed to achieve big overall goals, rather than short-term goals, tiny details, and daily tasks that can seem boring, unmotivating, and sometimes unrealistic. Here are some target examples I set for my blog.
Objective A
Optimize my marketing funnel to increase my conversion rate from people reading my article to becoming newsletter subscribers.
Key results A
Revamp your signup landing page to make it more appealing and write clearer CTAs for the articles below.
Objective B
Launch a productivity guide with 50 interviews by the end of the year
Key results B
Ask 100 people, select the best 50 interviews and prepare the guide
Objective C
Make money from my own digital products
Key results C
Release a premium version of my interview guide (with 75 interviews instead of 50) and promote it on my site right after people download the free version
5. Leverage technology
“Use online platforms to promote your business and engage with potential customers. Set up social media accounts, create a website and consider investing in search engine optimization (SEO) to help your business appear in search results.”
Especially as an online writer, investing in technology that can help me increase my reach has always been essential. I’m not big on social media so I tend to stay away from it and I’ve used paid Google ads before without much success. I generally find that the tools I get the most value from are either cheap or free, and the biggest ROIs I get are almost always from hard work. For example, I wrote a top Google article on Ticktick, which brings me thousands of visits to my site every month. Of those visits, a few turn into sales.
Here’s a quick overview of some of my favorite tools I use and how much they cost me per year:
- Mailchimp — $2,000 (email marketing)
- Zapier – $712 (automation tool)
- Revolution – $330 (Bank account)
- Sendowl — $230 (digital product sales)
- Elementor – $100 (website creation platform)
6. Reinvest profits
“Instead of taking all of your profits out of the business, consider reinvesting them back into the business to fuel growth. This could include investing in marketing, hiring employees, or developing new products or services.”
2 years after I created my business, I still haven’t paid myself a penny or even a bonus. Sure I’ve spent on gear, things I enjoy using, and that’s also rewarding, but I’ve never taken cash out of my account.
This is another advantage of keeping your job for the first few years: any money you make from your business is a bonus, so even a few hundred dollars a month can add up very quickly. Even though I sometimes spend a lot of money on equipment and/or new equipment, I rarely spend more than I earn each month:
At the end of the day, even if you can build a business that consistently generates $100,000 a year for 10 years, you won’t end up with $1 million in cash after taxes and expenses. Then why include the $5,000 salary figure? Because again, keeping a job aside will allow you to keep the business money in the business account and reinvest it in growth.
The truth is that a business is only worth what someone is willing to pay for it, and luckily for us entrepreneurs, investors have invented a gauge to estimate how much they would be willing to pay for any business in any industry. It’s called EBITDA and it’s pretty cool.
“EBITDA is an acronym that stands for earnings before interest, tax, depreciation and amortization. EBITDA is an indicator that is often used by investors or potential buyers to measure the financial performance of a business.” – Source
When looking to put a price on a business, potential buyers look at EBIDTA and multiply it by a number based on the industry your company is in. Here are some examples:
A blogging/writing business would fall under the “Online Services” category, which has a multiplier of 15.88. Based on that number, here’s the value of the business based on how much it earns:
This means that if your business can make $8,333 per month ($100,000 per year), if you find the right person to sell to and are good at showing value, you could technically sell for over $1 million.