Gelt Greener On the Other Side?
In a world where basic parnassah needs for a large frum family can easily exceed $250,000, and living b’ravchus can be double that, what are we to do? Many conclude that working for someone else on a capped salary is a dead-end approach. Being your own boss and reaping all the fruits of your labor is an enticing alternative. And indeed, business ownership is where the big bucks lie.
Big Money in Simple Ideas
One doesn’t have to start a Google, Amazon, or JP Morgan to earn wealth in America. Today’s world allows for quick changes in fortune, and most of the super-rich in the 21st century are “self-made” businessmen and women (rather than inheritors of wealth).
Technology has accelerated the ability to quickly create and spread new ideas and products to many thousands, millions, or even billions of customers, generating tremendous wealth. While the software and finance fields are famous for minting major moguls, riches can be rapidly accumulated in the simplest of fields, too. And there are BH many such business success stories within the frum orbit.
Turning Shmattes and Milk Into Fortunes
Two of my favorite entrepreneurial success stories from the broader business world are:
-Spanx Shapeware: In 2000, a failed law student turned fax machine salesperson, a 29-year-old Blakely used $5,000 and lots of grit to open her company, Spanx. Her fairly simple innovations in women’s garments made her a billionaire in just twelve years!
-Chobani Greek Yogurt: In 2005, a 33-year-old Turkish immigrant, Hamdi Ulukaya, purchased a shuttered yogurt factory in Upstate NY for $700,000, using an SBA loan. He spent two years perfecting his recipes for Chobani Greek yogurt. By 2012, Chobani had over $1 billion in sales, and Ulukaya is now one of the richest people in the world.
I find it pretty incredible that, in today’s advanced society, you can make billions, fairly quickly, by selling shmattes and curdled milk! And while most business owners don’t become billionaires, and you very likely don’t need or want that level of da’agah, there are literally millions of entrepreneurs who have become comfortably wealthy by opening and building companies. So let’s all jump in, right? Not so fast.
But Most Businesses Fail…
It is human nature to focus on success stories, but the overwhelming majority of businesses fail outright or enjoy just modest profitability. Don’t connect business ownership with a walk down Easy Street. According to the SBA, half of new businesses fail within 5 years, and only about a third survive past 10 years.
When talking about Google, for example, one of the most lucrative businesses ever built, people rarely pause to consider its extinct competitors, such as AltaVista, Lycos, or Inktomi! Those tech names were actually ahead of the search-engine game initially, and were later purchased by Yahoo and AOL. Remember those companies? Google’s fantastic rise was hardly inevitable. And neither is any other.
Most businesses that do survive are also quite small: some 75% of them have less than $1 million in revenue (not profit), according to the Census Bureau. It is true that most very rich people are business owners, but most business owners are not rich. You may get rich by leaving your job to open a company but you also may end up working like mad for years with little to show for it. A steady paycheck, on the other hand, is still a steady paycheck, even if it’s not as large as you’d like.
Businesses Are Very Hard to Launch
Even when entrepreneurship does lead to financial success, eventually, it is not for the faint of heart. Top business leaders all share the relentless drive and steely nerves required to face the trials and setbacks of business startups.
Ulukaya says, “It was two years of struggle. I thought I was going out of business every single day. There was a creek right next to this little plant, and I would go there and cry and cry and cry. I’m like: “Why did I get into this? And how am I going to pay for these people? How am I going to pay for the milk?””
Wearing Many Hats. Alone.
An entrepreneur’s challenges are formidable. Especially earlier on in a company’s trajectory, he or she may have to wear many hats to keep the fledgling operation afloat.
Blakely, who designed her new garment’s prototype, also handled her own sales and then ran around North Carolina to find a manufacturer willing to take a gamble on her innovation. She even wrote her own patent application because she could not afford to hire an attorney, and there was no ChatGPT to help her back then!
Being a boss may sound glamorous, but it can be quite lonely at the top. Business leaders must be prepared to deal with difficult employees, demanding customers, and unyielding suppliers. The successful entrepreneur somehow manages to keep it all together while facing the onslaughts of a competitive marketplace.
It Takes Money to Make Money
Money is the lifeblood of any enterprise, and underfinancing is probably the greatest cause of business failure. Most new businesses are cash-drains for months and years! And dealing with that negative cash-flow is the real monster of startups.
To pay her own bills as she launched Spanx, Blakely kept selling fax machines even after her clothing sales reached millions annually. As noted, Chobani faced significant financial pressure in the early years. Incredibly, at first, Ulukaya and his team filled many thousands of yogurt containers by hand because they could not afford modern automated machines!
Owners get paid last, so an entrepreneur needs to find sources of support for both the business and household until the enterprise earns consistent profits. That’s why many startups are led by young, single entrepreneurs who can afford to go years without drawing a salary. Is that realistic in the frum world, where, already early on, we tend to have ever-mushrooming household expenses?
The Kosher Connection
As an interesting side note about Chobani’s early days, their first order was placed by a kosher retailer on Long Island. The company also expresses public gratitude to the OU hechsher, saying, “When reflecting on our brand’s amazing growth, Chobani must express its appreciation to the kosher yogurt certification of the Orthodox Union.”
Ulukaya says, “We are so proud to work with and be certified by this amazing group, for using its trusted symbol of quality heightens our packaging and overall brand.” How’s that for nachas?!
Kesef Menah Lan
Those opening a business hoping to quickly improve their cash flow are typically going to be sorely disappointed. But difficult doesn’t mean impossible. Some combination of frugality, patience, and support from spouse, family, and friends can bridge the financial gaps that new businesses face.
In businesses with minimal overhead, it is sometimes possible to launch as a part-time side hustle, alongside a paying job. Depending on the job, it may be possible to scale down as the side hustle transitions into a full-fledged business. In dual-earner homes, perhaps they can get by on one salary alone, living very frugally as the fledgling operation takes off and stabilizes.
Alternatively, a founder may need to seek a financing partner in exchange for a big chunk of equity. But this approach could remove both autonomy and the potential for the significant monetary gains the entrepreneur seeks. While part of a pie party is usually better than no pie, partnerships create a whole host of new challenges and need to be very carefully considered.
Don’t Leap Without Looking
Because of all the risks and challenges, it is vital that an entrepreneur be very realistic about what going off on your own really entails. While I think many more people should be considering opening up businesses, and it’s frankly never been easier to succeed in business, it is not a step to be taken lightly.
A ton of financial planning, industry research, rabbinic guidance, and spousal input is required before taking this big step.
Hishtadlus+
Given the many difficulties of building a business, it is common to hear very successful gevirim acknowledge how clearly they saw the yad Hashem in their success. With lots of hard work and perseverance, you can follow in their footsteps and do your hishtadlus to build great wealth through a business.
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