On Monday, I gave you some advice to help you choose a career. Today, I’m going to talk about something else that might help you make that decision. At the very least, I hope it gets you to think about jobs and careers in a new way.
Whatever you intend to do for a living – whether it’s selling stocks or painting landscapes – it’s a business. And all businesses fall into one of four categories:
Business and/or economic textbooks would call this an oversimplification. But for the purposes of our discussion about your future, it works well. It simplifies the world of working into four categories, each with its own pluses and minuses.
Here’s the dope on retail …
Retail is usually the first thing most people think of when they think of business. They think of restaurants and supermarkets, bookstores and movie theaters. The retail business often seems fun and easy and for that reason, it is very attractive. But the reality of working in the retail sector is usually very different.
There are several distinguishing features of retail that set it apart from the other business sectors in terms of how you might enjoy (or detest) the work experience:
1. Generally speaking, the retail business requires you to be in one place for regular periods of time. It does not allow for a great deal of flexibility in terms of hours or travel. Being in the retail business in a serious way (serious enough to make a good living from it) means that you will be tethered to a ball and chain. The ball is the store. The chain is your obligation to keep it running properly. The most common problem retailers have is finding good people to sell the product and protect the merchandise. Finding, training, and managing retail workers is not something that can be done here and there on a hit-or-miss basis.
2. The retail business is heavily dependent on location. If the city you are in decides to do six months’ worth of roadwork right in front of your store, you may go bankrupt waiting for them to finish. Your customers can find somewhere else to go, but you can’t. You’re chained to that location. While this is going on, you still have to pay all your bills, including rent, utilities, and employee expenses. You can boost sales with good marketing and sales strategies in the retail business (just as you can with any business), but you can’t work miracles. The lion’s share of your success will depend on walk-by traffic.
3. It’s tough to get rich with retail. You can make a living, maybe even a good living, and you can enjoy yourself. But you can’t get rich. The only retailers who are rich have thousands of retail operations. But they are not retailers themselves; they are marketers of retail operations. There is a big difference.
So if you (a) don’t really like to spend time talking to people, (b) like to travel a lot, and (c) want to get super-rich, retail is probably a bad choice for a career.
What about the service industry?
The service industry, too, is something that quickly comes to mind when we think about business. Maybe you can start a lawn care service. Or maybe you can hire a bunch of plumbers and have them work for you. How much you can make depends on what service you provide. But the services that seem the most fun or glamorous usually pay the least. Why? Because of supply and demand. Plenty of bright people vying for a limited number of good positions.
Service businesses include everything from blue-collar hole digging … to middle-level technical work … to white-collar executive work … and, finally, the professions.
Yes, accountants and lawyers are service providers. So are plastic surgeons, speechwriters, and most entertainers. I include entertainers in this category, because they share the essential characteristic of the service sector: At the end of the day, you are charging for your time. And if you want to make more money, there are only two ways to do it: Charge more per hour … or work more hours. (Though there are only so many hours you can work and still have a life.)
Ask people who are undecided about a career what kind of work they want to do and you’ll often hear, “something that involves working with people.”
And that’s what is good about the service business. You will indeed spend most of your time interacting with people.
Much of that time will be a lot of fun, where your affability and social skills will come in handy. But some of that time will be stressful. Some of it, downright disagreeable. No matter how much of a “people person” you may be, it’s hard to enjoy yourself when you are being screamed at by some rich slob who isn’t happy with the color of the trampoline your event-planning service provided for his five-year-old’s birthday party.
The lower ranks of the service sector are replete with high-stress, low-pay jobs. And the upper echelons don’t pay as well as you might think. The average physician, for example, makes about $145,000, the average dentist makes about $116,000, and the average attorney, makes a measly $108,000.
Want to be a comedian? Actor? Writer? Filmmaker?
Now you are really talking bad pay and crummy working conditions. The last time I checked, the average compensation for a professional writer was less than $5,000 a year. Acting? Not surprisingly, it averages close to what you’d get for waiting tables. (Why? Because that’s how 90 percent of so-called professional actors pay the rent.)
The travel and hotel industry is famous for demanding long, hard hours from its rank-and-file workers, and even more grueling time commitments from management. Pay levels are miserable and benefits are next to nothing.
As you can see, I’m not too hot on service-sector jobs. It seems to me that they offer the patina of fun and/or glamour but deliver lots of stressful hours at relatively modest pay.
Now, let’s say something good about the service industry.
All that said, if I had nothing going for me today – no money, no education, and no connections – I’d probably start a service business. I’d cut lawns or install shutters or fix roofs.
Why? Because the world is always in short supply of good service people.
Service is a great entry-level business opportunity, because it’s an easy industry to get into. And starting a service business is a great way to learn a trade while earning money. If you make up your mind to do a great (not just good) job at a fair or cheaper-than-average rate, meet your deadlines, and keep your promises, you’ll find yourself climbing to the top of the ladder in no time flat.
As your business grows, you can gradually increase your fees. If you work hard to find good workers and offer them the chance to develop in their own right, your business will grow. Eventually, you won’t be doing any of the actual service work yourself … just developing new client relationships and renewing old ones.
This pattern isn’t unique to the service industry. It’s a blueprint for success no matter what you do. Start off by providing a great service (or product) at a reasonable cost. As your business improves, you can raise your prices. As your prices increase, your clientele will become wealthier. A wealthier clientele means more and better backend sales opportunities. And that means a better and more financially rewarding life for you.
The problem with the service industry is related to its main advantage. It’s so easy to get into that you will have lots of competition as your business grows. That means you’ll be squeezed on your prices, making profits tough to get and salaries low. This is especially true of the glamour service industries like travel and anything to do with the media.
Then, there’s the wholesale business …
Wholesale is a pretty good business, although it takes a while to develop. Today, the opportunity for wholesale is in China and Indonesia. Anything made in the U.S. can be made in those countries at a fraction of the cost.
But getting good, inexpensive products is only the beginning.
The tough part of wholesale is developing a customer list of retailers. And, unfortunately, your customers will eventually figure out that they can probably cut you out and buy directly from the manufacturer.
The secret is to develop unique products that can’t be duplicated. This, you won’t be able to do right off the bat. But over time, it’s the way to go.
Once you’ve developed your unique product, you’ll need to sell it to retailers. This will involve going to trade shows, which can be expensive and time-consuming. The top trade shows, for example, can cost thousands of dollars to attend. You will spend a lot of time talking with retailers and displaying your product, and you may end up with no cash – just a pile of orders to fill later.
Discouraging as it may seem, this is where you have the potential to make the big money. You could possibly take orders worth tens of thousands of dollars. (Remember, though, that you won’t see the cash up front. You’ll receive payment for those orders over a long period of time.)
And,finally, my favorite type of business …
My favorite type of business is what I’m calling “manufacturing.” And in that general category, I include all sorts of things that aren’t normally considered to be in it. I include, for example, publishing and the selling of natural products, nutritional products, and so on. Manufacturing, to me, is any industry where you create the product and sell it directly to the end user.
I love this type of business, because it gives you complete control over the entire selling process – from inventing the product to closing the sale and even going back to the customer for more sales.
In this age of the Internet and globalization, manufacturing is a great business to be in. To create your product, you can use anyone the world over. And you can sell to the entire world, too.
So if you don’t know what you want to do but want to get wealthy while you figure things out, get into a business like manufacturing.
[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]