Jaspreet Singh Says You Shouldn’t Start a Business To Get Rich — Do This Instead

06/05/2024

Jaspreet Singh headshot

Money expert Jaspreet Singh, who runs the successful financial YouTube channel, “The Minority Mindset,” offers lots of advice to people who want to make a lot of money.

In a recent episode, he spoke to people who want to start a business, warning them that while getting rich is a great goal to have, it can’t be the only reason you start a business.

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Singh offered these tips on what to do instead.

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Want More Than Money

“You should not start a business if all you want to do is get rich and make a lot of money,” Singh said.

In fact, he said, when you start a business, you often have to do things that give you “zero return,” so if your mindset is solely focused on making a lot of money, “you’re not going to have the passion, the drive or the work ethic to do the things that don’t give you the return, which is what it takes to build a business because of something called resource allocation,” he explained.

Do Like Elon Musk

Singh used Tesla CEO Elon Musk as an example, pointing out that when Musk sold PayPal, he made $180 million, and “he was rich by any measure possible, and he could have never had to work another day in his life, but that’s not what he did. He took the $180 million and he reinvested all of it,” Singh said.

He put $100 million back into SpaceX, $70 million into Tesla and $10 million into Solar City. He even put himself briefly into debt after spreading his earnings into these companies before they started to turn profits.

Your Hypothetical Business

Singh gave an example of what this might look like in a hypothetical business that makes a million dollars a year in revenue.

“Your numbers might look like this: Your operational costs are $220,000 a year. Your labor costs are $280,000 a year, and then you pay yourself a small little salary of a hundred thousand dollars a year. Your profit is $400,000 a year.”

While many people might take that money to buy a big house, car, vacations and so on, Singh said that if you really want to build a business, you have to put that money back into it and not just spend it all away. By spending your profits, he said, “you’re killing your business’s life.”

Grow Your Business

Instead, you need to take your hypothetical earnings and invest it in things that will benefit your business, from advertising to operations to better technologies.

“That way, you can grow your profit margins, because right now, when you’re in the small stage of trying to grow, you have to stay aggressive [in] taking your cash flow…” he said.

Understand That Spending Your Earnings Takes From the Business

Any big chunks of money you take out to spend on yourself could instead do things like “help you revamp all of your branding to increase … the user experiences on your website or your app … [It] could help you buy new software, invest in new technologies, build new products to help increase your revenue…”

Accept That It’s a Full-Time Job

Just building a business is a full-time job, Singh said. “I don’t care how many people on the internet sell you this idea that you can just build this laptop business and never have to work a day in your life,” he said.

Instead, building a truly profitable business takes hard work, grit and risk. “Warren Buffett is in his nineties, yet still goes to work every single day,” Singh pointed out. Mark Zuckerberg is the same, he said.

The World’s Richest People Are Entrepreneurs

The fact is, the world’s richest people are largely entrepreneurs, he said — people who built businesses. “You can get extremely rich by building a business, but you’re not going to be able to build a business when your sole motivation is ‘I just want to get rich.’”

Singh shared that in his own business, he works “three times more hours” than his last, 50-hour per week job. “Building a business takes a lot of time. You don’t get paid time off when you’re starting off. You don’t get holidays. You don’t have somebody paying for your healthcare. You don’t have somebody paying for your benefits. You don’t have somebody funding your 401(k). You now have to create and build the whole thing, and all that risk is on you.”

People looking to get rich quick won’t want to hear Singh’s advice, but people who want to build not only lasting wealth, but a business that survives, will listen to what he had to say.