TLDR Part two of my building indendent wealth guide. Outlines the technique of being antifragile which in this context means, fixing risks while ensuring there is is unlimited potential.


In my previous post the three roads to wealth, I showed that for most people the best possible way to financial independence is to start their own business. I then discussed the reasons why you should do this and the reasons why most people can or won’t start their own business. In this post, I will discuss how to setup your own business in an antifragile manner. Antifragile is a term invented by Nassim Nicholas Taleb, it means an object or system which gains from uncertainty or chaos. A common statistic cited is that 80% of business fail within the first year or only 20% of businesses survive the first year. Possibly this figure is low, if this is the case, what is the best plan for action?

Plan for the worst, hope for the best

Assume your business will fail, that means when starting up, invest as little as possible and keep expenses and obligations as small as possible. Ideally, you should do all the work yourself, of you need to get outside help, make sure it is done under contract. If possible start the business in your home, later if the business starts making money if you need to expand, rent a place. If you need to rent a place, make sure that you can break out of the rental agreement. If you are working, keep your day job and test your business during your spare time. If you are unemployed, you can experiment with your business while looking for work.

spend an antifragile approach because if you need to bail out of your business, you have minimized how much it will cost you. The logic is only 20% of businesses will survive the first year, if your business is going to fail you bail early. Bailing doesn’t mean always means abandoning the idea, if the idea appears viable, stop operations and restrategize. The problems will result in failure are the problems which you could predict. You ordered 100 widgets from China, you discovered that the marketing cost per widget is greater than you expected. You then need to figure out how to lower marketing costs or abandon the project. That means everyone you know will be getting a widget for Christmas. Put a label on the widget where to order them from, if people like their Christmas widget presents, maybe they will order more from you.

Assuming only 20% of businesses survive, then the solution is to start more businesses after a failure happens. To be able to do this, it means you have to be able to survive each business failure. Run away to live and fight another day. initially, your business doesn’t have to be antifragile, just you have to be. The majority of great generals were defeated because they got into a battle where they were unable to withdraw their forces without substantial losses. This is another reason why you do not want a business partner. Most people have a sunk cost fallacy coupled with pride or ego. Your partner might pressure you to continue on, even if he agrees to cease operations, it will cause bad relations between you. Except for a damaged ego, losing a battle isn’t bad, providing you preserve most of your resources, it will be a learning experience. What you want to avoid is getting yourself into a catastrophic event.

The do everything yourself philosophy doesn't mean that later on, you will not delegate. Delegation is an important part of expanding your business. One of the reasons I dislike automobiles is that I am at the mercy of the mechanic. If he tells me I need a new transmission, how do I know he is telling the truth? For this reason, running a business which relies heavily on automobiles isn't a good idea for me. A friend of mine has a van service, 15 years ago, he bought one used Mercedes van he then expanded it to a fleet of over twenty vans. He always tells me the tricks his employees attempt, like claiming they changed the oil, meanwhile they take the oil home or sell it. He isn't a licensed mechanic but he is able to repair all his own vehicles. If he didn't have this ability, he would be at the mercy of the mechanics.

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