If you love space (and I do), you have to admire Elon Musk. Despite being told it would never work, so many times, he has done what any boy dreams of. Making rockets and playing with them like toys.
Being able to strap a Tesla car, including Dummy pilot, and playing David Bowie en-route to Mars surely tells us something. He’s earnt the right to do what he wants, not needing permission or blessing from anyone.
This got me thinking about business, and how much it’s like his reusable rocket that he’s developed. The stages that a rocket goes through are very similar to your journey. Leaving the safety of Her Majesties Armed Forces and start a business on civvy street is will take you on a journey. If you’re thinking about being your own boss, you need to keep one important thing in mind.
Do you have enough rocket fuel?
Elon Musk knows about rocket fuel, having enough and what happens when things go wrong. he’s had so many failures that he acknowledges he was very close to bankruptcy. He used us all his spare cash and was bailed out by a billionaire to carry on the project. So how much rocket fuel, or in the case of business, do you need?
Let’s look at the stages
Building a Rocket
This starts as exciting, but soon becomes frustrating, simply because you just want to get going. You’re going to need money to set-up. How much depends on what you want to do. However, whatever the amount you have in mind, my advice is to double it. The bills have a habit of adding up, little things creep in, and accessories haven’t been allowed for. When I set up my car key business, I estimated I’d need to spend £15,000 on equipment. However, to trade, I needed stock, a software licence, Yellow pages, etc. So, my initial costs were in fact £25,000. Straight away, I’m £10,000 over budget! Who knows the total cost that Elon Musk invested into SpaceX?
The most exciting bit. Just like Elon’s rocket, you have all this money already tied into the launch, money you’ll never get back and the moment you do launch you are now trading. You’ll have your first ever phone call, the first ever customer (I still remember mine), and the it’s up to you and you alone to get on with it.
There’s also a tremendous amount of fuel used on the launch phase, or in the case of business, cash. It’s possible that in the first few weeks and maybe months you’ll not make any profit. This is very simply because you may not have any customers, or if you do, you may be working much slower than necessary, or you may have costs to pay back in the early stages. Unlike a SpaceX, that is in space in minutes, let’s say that you’ll be a few weeks before things settle down into a rhythm. Remember, all this time you’re burning fuel, or cash.
So, you’re off the launchpad and making some money, fantastic, you have a business. The aim now is to focus on getting into orbit. For SpaceX, the orbit will be wherever the satellite needs to be released from, and to get to this point in space, the first stage is released (more of this later). Next, there is a secondary burn and it’s the same with your business.
In fact, this is a common point that businesses fail and can be the saddest of endings for a business owner. The hard work is done, you’re up and running, but just when you can feel it’s starting to work, you’re out of fuel. When the spare cash is all used up, and you can’t find any more funding, you never reach the point at where you reap the rewards.
For you, instead of releasing a satellite, your rewards come from reaching orbit by getting regular customers and profits, and breaking even, after paying your tax bill. Now tax bills and break-even are articles on their own. Once this money has been allowed for, and you have reached the wage that you set yourself at the very start, then your business is self-propelling. Your fuel burn is over, apart from minor course corrections and if there are no emergencies, you won’t need any more cash.
Of course, you’ll still need to invest some money into the business. If you’re a painter and decorator, you’ll need consumables and hand tools. If you’re a plumber, you may need new power tools. For us, we allow at least £10,000 every year for new software and hardware. But if your business is performing correctly, it will generate this extra cash itself. It’s an amazing feeling.
Return to Earth, selling the business.
Remember the first stage rocket, the one that normally is lost into the ocean? Well as you’ll probably have seen, Elon Musk has taken it one stage further. His dream was to make space travel cheaper, by re-using the parts of the rocket that would normally be lost. His very public catalogue of failures must have made the final success even sweeter. On the 21st of December 2015, SpaceX landed its first stage, at Cape Canaveral in a perfect landing, they made history. Likewise, just four months later, they landed on an ocean barge, an amazing feat.
Why do we need to bother with this last stage? Well if you ever want to retire from your business, do something different, or start another business, the aim must be to sell it, and get some money back. Wouldn’t it be good to recoup all the money you invested in the initial rocket build and getting into orbit? Elon Musk certainly has now. By planning ahead, he has something that has real value should he ever want to sell it.
Of course, none of us have plans like SpaceX. However, to get repaid for all the work that it took, will hopefully be your goal, it’s certainly mine. Granted it will take some more fuel, more cash. SpaceX crashed over ten of these landing stages to get the final landing right. Now, they’ve done the hard work, they can save money every time they fly, and they are market leaders in Space Travel.
Lessons from SpaceX
Whether you have plans to build a bigger business or want to build a lifestyle business where money is less important, we can still learn a valuable lesson from Elon Musk and his SpaceX team. You must keep some cash back so that you never run out of fuel. To get so close and to fail through lack of cash would be heart-breaking and devastating financially. Imagine your gratuity money burnt completely and having nothing to show for it.
But more importantly, SpaceX shows us that failure is a part your final success. You should expect it, plan for it and with some hard work and good fortune, you’ll achieve your own orbit, whatever that may be.