Entrepreneur CliffsNotes from a Penny-Pinching, Pajama-Clad, Self-Made Millionaire

Aim, Ready, Fire!

Entrepreneur CliffsNotes from a Penny-Pinching, Pajama-Clad, Self-Made Millionaire

Japanese Archery(photo by Okinawa Soba)

This is a lengthy post (2500+ words) as it contains nearly everything I know about how to be your own boss, in an abbreviated 3-phase format. If you’ve ever dreamed of making money doing something you love to do, I think you’ll find it well worth your time to read. First, a little about me and my entrepreneurial background to provide context for this filled-to-the-brim resource…

I’ve bootstrapped half a dozen small businesses including a couple of dog training schools, home and pet care services, a construction company and most recently, a coaching business. I started each business with less than $1,500 in capital investment. Because I hate alarm clocks, rigid working hours and panty hose, I choose to operate businesses that honor my personal preferences. I wake when I am rested, eager to do what I want to do, when I want to do it. More often than not, I work from home in my pajamas.

My entrepreneurial success didn’t require a diploma. Impatient with seemingly pointless prerequisites and eager to start making my own money, I dropped out of college. I now consider myself a lifelong learner and return to school whenever I want to learn a specific new skill.

“Most self-made millionaires possess average intelligence. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.” (The Seven Pitfalls of Business Failure and How to Avoid Them by Patricia Schaefer)

Unfortunately, I was a drop out with no vision for my future. I began my adult working life as a graveyard shift donut and coffee waitress. Fortunately, I realized that I was too good to settle for minimum wage. I quit pushing donuts and took a job that would allow me to explore my interests. Because I’d always loved animals, I applied for a job with a veterinary hospital and during this same time, I also negotiated an unpaid apprenticeship with a professional dog trainer to learn marketable new skills.

Don’t tell me what to do! I am the boss of me. As an employee, I resisted standard operating procedures — particularly when I could see a more effective process for said procedures. Recognizing that I found it difficult to do business someone else’s way, I took what I learned as an employee and apprentice and moonlighted with my own business. Once my own business income matched my employment income, I quit my job. I’ve been self-employed since my early twenties.

How much is enough? Unlike the typical American, I have resisted the temptation to inflate my lifestyle to match my income. Rather than make more and spend more to keep up with the Joneses, I enjoy a lifestyle of voluntary simplicity. I value my time, hobbies, recreation and personal relationships more than I do money. Therefore, my moneymaking ambition has always been to make just a little more than enough. Because I pay myself first, I am 100% debt-free and have accumulated over a million dollars. I can afford the luxury of free time. Here’s a wonderful story, written by an unknown author, that aptly illustrates the concept of ‘enough’:

Story of The Mexican Fisherman

(photo by CaptPiper)

Mexican Fisherman StoryAn American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “Only a little while.”

The American then asked him why didn’t he stay out longer and catch more fish. The Mexican replied that he had enough to support his family’s immediate needs. The American then asked, “But what do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life, senor.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats; eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”

The Mexican fisherman asked, “But, how long will this all take?”

To which the American replied, “15 – 20 years.”

“But what then?” asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would sell your company stock to the public and become very rich; you would make millions!”

“Millions – then what, senor?”

The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

Author Unknown

What drives YOU to want to be your own boss?

Aim…   (Step One: Zero In On The Right Business)


(photo by AjDele Photography)

What do you love to do? Do you make money doing this? If not, why not? What are your unique talents? What are your personal priorities and values? Your quirks? Your passion will be evident to your customers and will prove value. Put aside all judgement as you brainstorm ideas. Need inspiration? Try these exercises:

Is there a need for what you offer? Next time you can’t find what you are looking for, realize you just identified a business opportunity.

What is your risk tolerance? If your tolerance for risk is low, avoid reinventing the wheel. Pick a known moneymaker.

Example: While plumbing isn’t a romantic business, it has been in steady demand for as long as humans have enjoyed running water.

Is the money worth your time? Calculate how much you anticipate making and how many hours you’ll need to work to earn the revenue. Then calculate the dollar value of your time.

Ask many questions:

  • Talk to people in your chosen niche: vendors, sales reps, technicians, consumers, your future competition.
  • Ask for feedback from those who are supportive, optimistic and successful. Avoid naysayers.
  • Interview those who have been-there-done-that.

Try it before you buy into it:

  • Find a mentor.
  • Be a shadow.
  • Volunteer.
  • Work to learn, not to earn. Negotiate an apprenticeship.
  • Work for your future competition.

Would you be better off buying an existing business or starting from scratch?

  • An existing business with a successful history is more likely to succeed.
  • A start up is attractive due to a lower beginning investment.

Ready…  (Step Two: Set Yourself Up for Success)

Missed the target(photo by andreasnilsson1976)

Do your research:

  • Be an ethical mole and work for your future competition. Learn how to navigate the maze on someone else’s dollar.
  • Analyze your competition: supply, demand, prices, strengths, weaknesses. What can YOU offer that your competition doesn’t?
  • What are the demographics of your targeted customer? How will you reach them?
  • Clarify your business identity by carefully selecting your niche and business name. Be sticky! (ex: Jen Smith versus Millionaire Mommy Next Door)

Spin your web (create a support system):

  • Don’t try to wear all the hats. Reports on business failures cite poor management as the number one reason for failure. New business owners frequently lack business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Build your team of players and seek help from a bookkeeper, CPA, attorney, manager, sales and marketing specialist, etc. Weigh the advantages of hiring subcontractors versus employees.
  • Participate in networking, professional and business support groups.
  • Limit your exposure to toxic people. Don’t allow negativity to bring you down. Surround yourself with those who are happy and successful.
  • Be mindful of your own internal dialog. Eliminate the words ‘but’, ‘try’, and ‘can’t’ from your personal vocabulary.

Get your dollars in a row:

  • Starting a business is risky. As a rule of thumb, new businesses have a 50/50 chance of surviving for five years or more (source: Small Business Association). Don’t let statistics discourage you; just be properly prepared for success.
  • Plan for the best AND have an exit plan in place.
  • Start with sufficient capital and operating expenses. Establish an emergency savings account equal to at least one year of operating and living expenses.
  • Cover your ass(ets). Obtain appropriate insurance policies to protect you from catastrophic events: medical, disability, liability.
  • If money is tight, moonlight. Keep your day job and work your business between working hours. Cut back on your employed hours incrementally. Once your part-time business is earning enough money to replace your day job, quit.

Establish yourself as an authority in your niche:

  • Volunteer
  • Blog
  • Write a book
  • Teach
  • Speak

Eliminate the need for costly advertising expenses. I’ve never spent a dime on advertising. Referrals and word of mouth come free.

  • Seek symbiotic (mutually beneficial) relationships with existing, complementary businesses. For example, I offered on-location dog training classes for the clientele of participating veterinary hospitals.
  • Allow potential referral sources to experience the value you provide firsthand by offering them free or discounted services. Example: I offered free dog training classes to veterinarians, groomers, kennel owners and their staff.
  • Find relevant ways to help your community. Submit public service announcements to your local newspapers, radio and TV stations.

Fire!  (Step Three: Become the Boss of You)

Bullseye(photo by – POD –)

First impressions can be a matter of life and death for your new business. Now that you know what you want to do and what you need to do, it is time to launch!

Focus. Keep your commitments. Don’t branch out in too many directions.

Prevent burnout. Assuming you plan to be your own boss for the long haul, it is imperative to keep your work and personal lives balanced:

  • Take time off to play.
  • Get adequate sleep.
  • Hug your family.
  • Be there for your friends.
  • Eat your vegetables.
  • Express your gratitude. Psychologists say that establishing a habit of gratitude plays a significant role in a person’s sense of well-being:

“The study required several hundred people in three different groups to keep daily diaries. The first group kept a diary of the events that occurred during the day, while the second group recorded their unpleasant experiences. The last group made a daily list of things for which they were grateful.

The results of the study indicated that daily gratitude exercises resulted in higher reported levels of alertness, enthusiasm, determination, optimism and energy. Additionally, the gratitude group experienced less depression and stress, was more likely to help others, exercised more regularly and made more progress toward personal goals. According to the findings, people who feel grateful are also more likely to feel loved. McCollough and Emmons also noted that gratitude encouraged a positive cycle of reciprocal kindness among people since one act of gratitude encourages another.”  (source)

  • Be happy! Happy people make more money. Newsweek reports:

“although money doesn’t buy happiness, happiness can buy money. Young people who describe themselves as happy typically earn higher incomes, years later, than those who said they were unhappy. It seems that a sense of well-being can make you more productive and more likely to show initiative and other traits that lead to a higher income.”

Measure and evaluate your progress. Regular evaluations using analytical measures are important for keeping on track and staying in alignment with your vision. Identify what works, what doesn’t and what you want to accomplish next:

  • Keep a journal.
  • Maintain an accurate bookkeeping system and chart your financial progress.
  • Track the ratio of repeat customers versus new ones.
  • Ask for feedback from your customers, employees and referral sources.

Stay connected. Nurture professional relationships with people who have the potential to help you with contacts, information, referrals and advice. In turn, be authentic and mindful of how you can add value to their lives. Your professional community is a rewarding place to practice good karma.

  • Send a periodic email that reads, “I’ve been thinking about you. We haven’t talked in a while — I’d love to meet up for coffee or tea sometime next week to catch up.”
  • Build ‘virtual’ relationships via e-mail, conference calls, online courses, blogs, forums, chat rooms, and social networking sites like Twitter and Facebook.

Consider expansion carefully. Remember your priorities and do the math. For example, my husband and I considered expanding our small construction business to include a staff of workers. Here are the two options we considered:

Option A = Continue to manage a small in-home business:

1 full-time tradesman (my husband; 35 hours per week)
1 part-time apprentice (20 hours per week)
1 part-time bookkeeper (me; 15 hours per week)
Total employees = 3 (1 full-time, 2 part-time)
Total labor hours per week = 70

Gross annual revenue = $250,000

Net profit = 50%
Low overhead expenses (work from home, one truck, one set of tools) means a higher percentage of revenue remains as profit.


Option B = Expand our business to include 5 tradesmen:

5 full-time tradesmen (5 x 40 hours = 200 hours per week)
5 part-time apprentices (5 x 20 hours = 100 hours per week)
2 full-time bookkeepers (5 x 15 hours = 75 hours per week)
1 full-time manager (40 hours per week)
Total employees = 13 (8 full-time, 5 part-time)
Total labor hours per week = 415

Gross annual revenue = $1,250,000

Net profit = 10%
Higher overhead expenses (leased storefront location, five trucks, five sets of tools, increased salaries and administration costs) means a lower percentage of revenue remains as profit.

Which business would you rather operate? At first glance, many would likely say, “I’ll take Option B and make one-and-a-quarter million dollars each year!”

Whoa now, let’s slow down and finish the math:

Option A = $250,000 gross annual revenue x 50% net profit = $125,000.

Option B = $1,250,000 gross annual revenue x 10% net profit = $125,000.

That’s right — both options provide $125,000 in annual net profit. Now that we’ve completed the math, which would you choose?

Option A comes with less expenditures of time, energy and capital.
Option A reduces risk.
Option A requires very little initial capital investment.
Option A allows us to work from home.
Option A puts the same amount of dollars in our pocket as Option B.

We chose Option A. Every business is different, of course, so run your own numbers.

Pay yourself first and invest for a lifetime of freedom:

  • Be a tightwad. Thomas Stanley, coauthor of the bestseller, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, found that the prototypical millionaire told him, “I am my favorite charity.”
  • As your profits grow, be watchful of lifestyle inflation.
  • As a rule of thumb, put at least 15% of your net profits into a diversified retirement account.

Once you achieve financial independence, give back and help other get started:


Note: All told, this post took me more than 8 hours to put together (and over twenty years to learn!). If you found it useful, please share it with your friends, bookmark it, Stumble it, Tweet it, link to it from your blog, etc. For your convenience, there is a “Share This Post” link in the footer of this post. Thanks!

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Millionaire Mommy Next Door

A self-made millionaire shares her recipe for success, happiness and financial freedom.

28 thoughts on “Entrepreneur CliffsNotes from a Penny-Pinching, Pajama-Clad, Self-Made Millionaire”

  1. Nice post. I love this part…” I hate alarm clocks, rigid hours and panty hose”. LOL

    I’m glad you gave details. Most millionaires do not give details. Only the good parts to keep you motivated. But explained the transition from minumum wage to sucess.

    I must add that your partner played a good role in your success as well. So picking the right partner makes a difference in success also.

  2. Thank you for sharing this! You are a great inspiration. I just scrolled to the bottom because at first I thought it might be a guest post for some reason. I’m going to read it in detail now. Will definitely retweet etc.!

  3. This sounds like a road map I’d like to follow alongside my academic work. I enjoy teaching and research, but there are other projects I’d like to do, as well. No use running on the same wheel forever – wheels come in all sizes, some nice and shiny – but a wheel is a wheel.

  4. Many thanks for sharing your expertise.

    In the version of the story of the Mexican fisherman I know, the Mexican fisherman says at the end, “But senor, I’m doing that already.”

  5. Thanks for this post! My husband and I have been managing his graphic and web business for 10 years and we didn’t know a lot about running a business before we started. We made a lot of big mistakes, but we never gave up and we’ve learned from our early errors.

    Another thing I want to add about running a business from home (however, I can’t work in my PJ’s) is that sometimes it helps in the beginning if your spouse is able to continue working part- or full-time to help bring in additional money. I’m still doing this to help my husband with his business. I’m a substitute teacher, and I love the flexible hours and the cheery children. Luckily, I’m able to help him and love what I do outside of his small business.

    thanks again-
    Little House

  6. You put in a great deal of work on this post and it really shows.

    This could be the basis for an entire book actually. What I love is the part about “leverage” – a huge issue that few think about until it’s too late.

    I actually have a business with a ton of leverage but now that I’ve gotten into blogging, I can see that the more successful I become, the less leverage I’ll have. How do you resolve this?

  7. @Neal@Wealth Pilgrim: Thanks. It is an outline for part of a book I have planned.

    Can you please explain what you mean about “leverage” as it relates to this topic? I’d like to understand your comment better so I can respond to your question. Are you referring to the figurative meaning of the word leverage (the power to influence a person or situation to achieve a particular outcome) or the financial meaning (the ratio of debt to equity)? Why do you think blogging and your success decrease your leverage? Thanks.

  8. Just a question re: the construction business examples..

    One thing not shown there is that the construction business is that Option B could likely be sold as going concern. I’m not sure I could see that happening for Option A. Surely that changes the risk/reward a little bit?

  9. Jen,
    This post has got to be THEE best one you have done so far. I’m blown away. Cheers and thank you for all your effort.

  10. Neal – I’m not sure I agree re: Blogging.

    Some bloggers write 7 posts / week and have 100 visitors.
    Some bloggers write 7 posts / week and have 1,000,000 visitors.

    Sure there are some differences in scaling / moderation / ad sales / etc along the way – but the point is that selling information is a scalable business. It’s like writing a book. The real cost of manufacture is the time spent writing/editing. Once the book is written each additional copy is a negligible cost to produce. Contrast to construction – where each customer needs their pipes unblocked.. If you’ve got 1,000,000 customers you’re unblocking 10,000 times more pipes than the plumber with 100 customers.

    To me – that’s scalable. And scale creates leverage.

  11. Sorry for not explaining myself.

    When I use the term “leverage” I’m referring to leveraging my time. Blogging requires a great deal of time and the more successful a blogger becomes, the more time s/he has to spend writing. In this arena, I feel that you can’t just hire someone to write for you. We all develop our own style and our readers come to expect to hear our “voice”.

    If we own a restaurant, for example, that becomes very successful, we can hire cooks, servers etc. That would be an example of a business with leverage. We can hire others to do the work that we were doing but because they generate more money in sales than they are paid, we can (and should) hire them. This is a good example of leverage.

    So if the end goal is to have a business that “runs itself”, blogging doesn’t seem to be it.

    I am OK with this as I’m not blogging to replace my primary business but I don’t know how others approach the blogging business as anything other than a job. I say this because I don’t see how a blog can ever run itself. It has no leverage.

    Does that make sense?

  12. Rob,

    You are 100% correct and you expressed your point really well. Thanks.
    That is leverage (on steroids) and a prime reason why blogging is so attractive to many. I missed that and I appreciate you pointing it out.

    Still, and I’m not being argumentative I hope, the blogger who has 1,000,000 has to write every day. Right? When she stops writing, the blog suffers to some extent. On the other hand, when Henry Ford sold a few model T’s, he could hire people to assemble them for him. Pretty soon, he didn’t even get his fingers dirty on the shop floor. In contrast, we’ll be writing until our fingers fall off.

    So we can leverage our success….but not our time. That’s what I’m struggling with. I’m not going to stop writing but I am thinking about this issue.

    Love to hear you (Rob and/or others) chime in of course.

    Does that make sense?

  13. @Rob, we’ve consulted with a few business brokers to discuss selling our construction business in the future. We’ve been told that we’ll be able to sell it for 1x net seller’s discretionary cash (net profit + personal benefits/expenses paid through the business) plus tools, equipment, truck, inventory, etc. I would assume the same sort of equation would be true for a larger operation so in the case of my example, $125k + might be the sales price either way. Some potential buyers will likely be tradesmen themselves who are eager to get out from under their employer’s thumb and make a go of it on their own. Others will likely be large construction corporations who are sweeping up the local competition. I’ve seen both types of sales transactions in our local area. Over the years, I’ve also watched many construction businesses grow to include 5-10 tradesmen, then go bankrupt when the local economy and new home construction market takes a downturn.

    I should note here that we’ve significantly downsized our construction business since we brought our daughter home four years ago. My husband works 10-20 hours per week now and I’ve outsourced to a bookkeeper. Our construction biz management and admin tasks take me about 2 hours per week. Therefore, our net profit is also about half of what it was before. This obviously means it is worth less to a buyer today. Explaining why we kept the biz and downsized it — rather than sell it before — would take another post, but to summarize, we enjoy the tax benefits of keeping it.

    All this said, I do understand your point. The way that we operate our construction business requires our direct input. If we expand to Option B, we, hypothetically, could outsource the tools and serve as managers alone. This would make our biz more attractive to a buyer who doesn’t hold a tradesman’s license.

  14. @Neal, thanks for explaining your previous comment and question. I agree, Rob did a great job of explaining scalability and leverage.

    I’d like to add a few differences between a book and blogging:

    – Blogging is an ongoing effort – it requires continuous writing. A book, once it’s published, is a finished product that can be resold ad infinitum.
    – Marketing is an ongoing concern for both.
    – The reach/audience for both book and blog depend greatly on quality and getting the word out.
    – Publishing a book appears to lend the author more credibility and authority than a blog does. Writing a book might open more doors for the author.
    – A blog is a business that can be sold.

    Here’s why I blog:

    – I enjoy expressing myself and getting immediate feedback from readers.
    – Blogging is helping me define my book because it serves as tool for feedback. The book I am working on today is much different than the one I would have written before I started blogging two years ago.
    – It feels good to help others when I can. I like the notion of paying it forward.
    – It serves as intellectual and creative exercise for me.
    – It opens doors for paid opportunities: coaching, teaching, speaking, etc.
    – I’ve enjoyed paid travel expenses to NY City, twice, to participate in media. When I have a book, I will have a product that will benefit from the media exposure my blog provides.

    In summary, I see blogging as a way to spread your message and open new doors, not as a way to make a bunch of money directly. Yes, there are a few pro-bloggers who make a great income directly from their blog, but it usually requires a lot of ongoing time and effort.

    Via my newer blog, Puppies Are Prozac (puppiesareprozac.com), I’m experimenting with blogging for dollars AND outsourcing all of the work. I’ll let you know how it goes…

  15. MMND,

    Excellent and thoughtful. Our situations are similar and your explanation of how you position your blogging is very helpful. You’ve clearly thought this out.


  16. MMND,
    Brilliant! And as usual you nailed it. It could easily be the missing chapter in my book, and I’ll be sure to point other ‘would be’ entrepreneurs to this post as an excellent primer… you offer far more detail than is usually offered by other successful entrepreneurs. You are authentic; and that is the best compliment I could ever give anyone. You are indeed the real deal and I’m grateful to have you in my life.

  17. Really like your blog. I’m from Holland and read it often. I’ve started a blog recently (in Dutch, but some is in English). Hopefully I will be a millionaire as well in time.

    I’m a thirtysomething girl with a huge debt.

  18. Hi Jen – I was just reading Tim Brownson’s new book – where he talks about you and i thought I’d drop by – as it’s been a while.

    Reading Tim’s book and your post here is hopefully going to be the start of the new me. Your most important point here for me is pay yourself first. Even when I was earning a lot, I was hopeless at doing that.

    In one I was working all the time – so I wasted a lot of money on things I “needed” to help me carry on with my torturous 80 hours a week – like eating out most nights.

    And it’s not like I even enjoyed it most of the time – it was just convenience. Also, I was a real sucker for loaning folk large amounts of money that I knew I’d never get back.

    So now, I’m sussing out what will make me happy and going for it.

    By the way – your construction business example is excellent. For many of us, employing people is stressful and it makes far more sense to employ fewer people and make more profits.

  19. Thank you for sharing I was starting to think the way I live my life focusing on my children, sleep, doing for other was diffected everyone put money above everything else.I’m not so off track just need to focus on future finaces more.Thanks again,single adoptive mom in Tampa.

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  21. I agree often better to be the small guy. It kind of limits your exit options and you impact. If you were really psyched about “ethical construction” or “green construction” then maybe expansion could be warranted but if you just doing it to put money in the bank not alot of point. Plus the example with the tradesmen might not be such a good one because you have to purchase “skilled” labour ie plumbers. If you could higher minimum wage people and still keep the same level of profit perfect. Also there can be scalling benefits as well

  22. THANK YOU! My husband and I have been seriously talking about our goal to own our own business so that we can life comfortably, vacation annually, visit our family across the country and just LIVE! THis article/blog is EXACTLY the push and encouragement we needed!! Thank you ! We will definitely be paying it forward.

  23. You are so inspiring, thankyou for making me smile and giving me back that faith in myself and the world. Nowdays I so often hear stories of failure and lost hope that it is sometimes hard to belive I can suceed. People like yourself renew that faith so thankyou :)

  24. This was great information. I am going to begin to brain storm of ways to create a home based business. As I was reading this I remembered my father telling me that it is important in business to keep a low overhead. He had no education, but he was self employed as a junk man ans made a good living at it.

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