Episode-1482- John Pugliano on Small Business as a Wealth Building Tool — 53 Comments

  1. What would it take to add a new board in the TSP forum to discuss business ideas? I realize it would need to be an “earned” board that would be hidden until people people prove they are legit members of the community.
    We could exchange business experiences, ideas and resources as well as figure out a way to try to do business with each other when possible.

    • We have such a board! I just updated the board name and description to make this more clear. Anyone who has been participating on the forum for a little while should have access to Work, Self-Employment, & Small Business (formerly known as The Work Board
      (Please, this is the place to discuss business ideas, not to look for customers.)

      • You know “tax breaks” for small business is a buzz phrase used to sell books and seminars. There really are not many tax breaks as a business owner, in some sectors there may be subsidies and grants for some things. Many you won’t want to do anyway though.

        What owning a business does is allows you to change one simple formula for MANY not all things but yes many.

        Business owners earn, spend and pay taxes.

        Employees earn, pay taxes, then spend.

        There are some things that are nice about that and some that don’t really matter.

        If you looked at my return you see some nice ones. Like home office deduction. Two rooms in my home are dedicated to business use, any auditor would have no way to say they were not. They are set up for recording, video, administration, customer service, etc. Now I would have bought a house this size if I owned a business or not, these rooms likely would still be “offices” just for personal vs. business use and I would not have a deduction, this is a clear win for me. This deduction isn’t that big but likely puts about 400-500 bucks a year back in my pocket in taxes I don’t pay, it is a “win”.

        But if you examined my return you’d find lot of big “deductions” but most are not wins or breaks, they are simply the cost of doing business. In hosting alone I pay about 8500 dollars a year, that is all a “deduction” from my income but it is an actual deduction. The expense does nothing outside of supporting my business.

        If I travel and take a course I can deduct it and do but MOST professionals can do this for most pure core development things as well. Yes I get more freedom! I can for instance decide that I want to go visit the guy in Allentown with 400 types of figs in his back yard. I can take my wife who is my assistant and cover 100% of our costs as deductions. We can visit local forests and say we are doing research into indigenous plants. The cost is real but I can deduct this and most people can’t. It is a win but it isn’t a “break”, it is simply part of the earn, spend, pay tax dynamic.

        When my wife and I go out to eat we can discuss business and deduct 50% of the cost of the meal. Likely we’d have gone out anyway so this is a win, it isn’t a break though. The cost is real and the savings not what you’d think.

        Say I take out a couple that we work with, say Bryan and Kelly from ITS and I pick up the check. Say we go to a real nice place and tip and all is 300 bucks. I can deduct 150 of that but it isn’t 150 in my pocket. It is by the time you factor in so many things like bringing down the tax bracket, the effective tax rate ect. 40-50 bucks they don’t get.

        It is a win, not a break, make sense.

        There is also another factor, say I make 100K in profit vs. 100K in employment.

        As an employee I would pay 7.65% in SSI Medicare or 7,650 dollars in taxes.

        As a business owner or self employed I pay 13.85% or 13,850 dollars in taxes. I pay the 6.2% you do, I also have to match that 6.2% as my own employer plus we both pay 1.45 in Medicare. So I pay 6.2 + 6.2 + 1.45.

        I do get to turn around and deduct the match or 6250 from my income. In the end I am paying about 12,400 by the time it is really all over with. In the end I am 4,750 bucks behind the 100K employee out of the gate just from SSI, so until I deduct enough “money I would likely spend anyway”, there is no win, there is no “break”.

        Now once you get above 118,500 you stop paying SSI so at that level you begin to have some income freedom.

        Trust me while being a small business owner is better, setting one up just for “tax breaks” doesn’t work. The tax advantages are something you learn and do simply so you can actually keep the money you earn for yourself. Frankly I personally think the self employed should pay LESS taxes because they don’t just earn their money, they are responsible for the opportunity to earn their money every day. There is no coasting, you do our you don’t, sadly almost no one in government at any level actually understands this.

        • This is definitely a good read that a lot of non business oriented people should read.

          The reality is it really is THE COST of doing business. It’s not “tax breaks” but really just showing the TRUE cost of what it takes to run a business. It seems silly and with the wrong eyes one might view “oh he is viewing forests and taking it off his taxes”. No, Jack Spirko and his business needs just as much education and exposure as any other business. A business doesn’t exist in a vacuum and neither do the individuals who run them. Since Mr. Spirko still has to pay for those things, as he said the cost is real. It would be one thing if he got to go and somebody else paid for it (subsidy).

          Eventually you start to realize that in order to be good at business and stay “ahead” you have to dedicate money you’d otherwise waste on things like useless consumer devices, on things that will improve your attitude and perspective on the business climate. In a weird round about way the “tax breaks” end up encouraging you to use your time, money, and mental efforts towards paying attention to business related things, rather than getting side tracked. (Because there is an “incentive”)

        • Thanks Jack! I didn’t know anyone responded to this until I heard the listener call show today.

          As you can tell by my wording of “Tax breaks” I’m pretty new to the whole world of being self employed. Taxes and deductions were something I assumed played a major role in helping business owners keep more of their money.

          I’m thankful for the responses and the opportunity to learn more as I go heading toward living my better life.

          See you all at PV2!

        • All great points Jack. Many not self employed do not realize the burdens of having your own business. On a future show it would be great if you or a guest could delve into the formation of a small business (LLC, DBA, sole propr., partnership, etc.) and which makes the most sense for different types of online businesses or businesses that are into permaculture.

        • Hey Jack,
          If you don’t mind elaborating on as you’ve discussed types of businesses in the past (LLCs, sole propr.s, S corp, etc.), for your website and your permaculture business what form is it? Is it sole propr. or partnership (with your wife)? I have a husband-wife dba in Tx. that involves selling online. I want to take our businesses to the next level to an LLC/S Corp but she is wanting to continue doing our business as it is. Frustrating as heck at times. One drawback is Tx makes it confusing with their franchise tax and how they treat LLCs.

  2. One of my favorite subjects! =)

    A couple of thoughts for people getting started.. (all IMHO)

    >> Dig a well before you’re thirsty.
    AFTER getting fired/laid off, burning thru all your savings, and failing at finding a new job, is NOT the time to try and start a new business. Start NOW, while you have resources ($) and don’t have to deal with the DOUBLE stress of trying to start/do something new, while your family is freaking out about income.

    >> Small steps
    Make a list of the ABSOLUTE MINIMUM number of things you have to do to get to your first DOLLAR of sales. Do ONLY those things (add to the list when you discover the things you missed or didn’t know about).. DON’T do anything NOT on that list (What you’re doing is PROCRASTINATING because you don’t want to work on one of the things that you NEED to do).

    >> Mini Habit it..
    Do SOMETHING no matter how tiny, everyday. Not ANY something, something that is on your above list. You don’t have to complete it, but you have to make some progress on it.. no matter how tiny.

    >> Let Einstein help you..
    Einstein said ‘We can’t solve our problems with the same level of thinking that created them.’

    This has a number of interesting implications.. First, your life, now.. is the OUTCOME of your BEST THINKING. If you don’t like the way it is.. more of YOUR best thinking, isn’t going to change it.

    Remember? Insanity = doing the same thing and expecting a different result. So, one of two things needs to happen.. you either need to LEARN to THINK BETTER.. or BORROW someone elses thinking.

    Mentor = someone elses thinking. Massive reading/study of other successful people in whatever you’re trying to do.

    So.. if your thinking isn’t getting you where you want to be? Humility time. Admit you don’t have the chops, and seek out the advice/training you need TO GROW into what you need to be, to have the life you want.

    The only thing worse than a dummy, is an arrogant dummy. 😉

    And slightly unrelated.. every aspect of your business is an EXPERIMENT.. make that experiment as cheap as possible (fail fast, fail cheap, fail small) that means do all the experiments you can WHILE you are still getting income from something else.

    As an example.. if you were going to try out a new recipe, would it be better to:
    a) make one batch and try it out on your family
    b) make 100 batches, and send them to all of your friends
    c) make 1000 batches, that if not sold successfully will result in you moving in to your car

    How SMALL can you make your tests/experiments? How can you perform them more QUICKLY?

    And.. finally.. NOW NOW NOW NOW NOW NOW.. What? You think you’re going to live forever?

    • ..that first $1 in sales..
      I should have mentioned.. NOT your first dollar in sales to your FAMILY or someone who already knows you.. your first $1 to a stranger, who found you thru your MARKETING efforts.

      The pool of family and friends is rarely large enough to lead to a successful business.. unless you have hundreds of friends. =)

  3. QUESTION: Would you move prior to starting a (home based) business IF you have to have written permission from ALL the people that live on your private road? (this would be a COUNTY rule not HOA or CCR)

    This would be a 100% must should we have people coming to the house. Helpers workers students family friends delivery. It matters not why they are there or who they are you are only allowed 4 people per day including your own family members. Also the same people who gave their written permission could take it back. Which would cause a major change either to how you operate or a fast move. Thoughts …..

    • In my opinion yes. Now if you think you can or want to “change their mind” and change the rules, that’s up to you. I asked a similar question to Mark Shepard regarding site access for large trucks.

      If what you want to do isn’t allowed, the easy route is going to where you can, otherwise accept the scenario for what it is and your only choices is to head upstreams, WHILST starting a business. (already an upstream issue)

  4. ‘What business should I start?’

    To which I answer ‘There is no expedient to which a man will not resort to avoid the real labor of thinking.’

    If you don’t have a business idea.. how about finding someone who DOES (another entrepreneur) and work on their idea, while you learn how to be an entrepreneur?

    To SUCCEED at entrepreneurship.. you must become an entrepreneur. That means learning, practicing and mastering a new set of skills.

    Even if you go in as an EMPLOYEE.. act like its YOUR BUSINESS. Think like its your business, study like its your business. Work and put in the same number of effort/hours you would if it was your own idea you were working on.. this will teach you the skills you need to succeed on your own as QUICKLY AS POSSIBLE.

    At some point in this process.. you will GET your idea.. because your ‘new brain’ now thinks/sees/feels like an entrepreneurs brain.. and frankly ALL an entrepreneur sees is INFINITE possibilities for service.

    The PROBLEM with being an entrepreneur? The days are too short, the weeks are too short, life is too short! How am I supposed to take advantage of ALL of these opportunities!?

    • That’s definitely a problem. For me (and i’m sure others) are based on paralysis analysis on things that hadn’t even happened yet and won’t happen especially unless I were to get a business going. One of mine is feeling like I’m locked into something that has a ceiling. I guess the concern is being able to have “resources” to ramp up if I want to ramp up.

      But saying it out loud it’s all bullshit and I know it. =)

      • How can the (inanimate) business you own ‘lock you in’? You can only be imprisoned by yourself.

        If you decide you don’t like the cage you’ve built for yourself.. walk away from it.

        ‘I want to go for a walk, but I haven’t started because I might get tired of walking later.’

        Your fore brain is a ‘reality simulator’.. start running better simulations.

        What are you going to do with all of your success? Better plan now for when the business is too big to handle by yourself, or for when you want to sell it (eMyth).

        Running a ‘pre mortem’ on your idea is fine, but vague concerns about ‘something bad’ happening have no place in your battle plans.

        A specific ‘something bad’ (lack of capital) can go on the strategy list as a ‘problem to solve’.. but you have problems to solve NOW that are here NOW.. so that one goes on the back burner for your subconscious to chew on.

        Sufficient unto each day are the cares thereof.

        But.. you can’t be trapped.. by yourself. You can choose to pretend you are trapped.. but that’s it.

    • I’d love to do an episode with Jack on High Frequency Ham radio. Let people know that with little more than 100 watts (or much less) you can talk around the world. (I’m not into the small hand held UHF/VHF commo, unless it’s for local emergency support.)

      Maybe next year, if there’s interest from the audience.

      • “Maybe next year, if there’s interest from the audience.”

        Oh, there definitely is! He did do an interview episode a couple of years ago (Ep. 928) with Tim “The Old Grouch” Glance, but it was more of an overview.

        OTOH, it’s not Jack’s thing, he’s touched on the subject, and there are some other podcasts out there that do the subject in more detail. is done by SCWolverine, a regular on the forum. Maybe something there?

        • My problem is MOST not all HAMs are over the top with evangelism. I swear the people that come to my door on Sunday to help me find Jesus are less intrusive into my life then many HAMs I have met.

          It happened enough times to turn me off, so it isn’t that it isn’t a Jack thing, it is HAMs themselves have largely ruined it for Jack. I don’t want to hear about it at all, anymore, at all.

          In sales we have a phrase we use to teach new sales people, it is called,

          “verbal vomiting”

          As in “listen knuckle head you didn’t close that deal because you verbally vomited all over the potential customer.”

          It sadly applies here. Doesn’t mean I won’t do a show on it or anything, just has made it a VERY low priority. I even had the book and was going to take the test, after dealing with quite a few people going ape shit over HAM as though it was the only thing that mattered, I just felt like the hell with this. I don’t need another piece of paper (contract) with my government to talk to other people.

        • Also after listening to HAM chatter off the Little Rock repeater for a while when I lived on my little mountain top, I pretty much decided while not as technically resilient Zello is a lot more useful and interesting.

  5. I hated this episode! I should have loved this episode! I shouldn’t be saying either of those things. I get depressed listening to this type of stuff because I feel depressed that I haven’t done more with my life. I feel like jack must have when he was 38 doing his podcast in his car and here is am about to hit 39 in 8 days. It’s so frustrating! yet so invigorating! I sell cable internet and phone service door to door which is just like anything else. It has it’s advantages and disadvantages. Anyway, who wants to listen to me ramble? ……..

    • Andrew if you can make a living selling door to door than you are one disciplined persistent SOB. You’re one in a million, that’s a rare talent. Now take that talent and focus it, make it work for you. You want to do agriscaping? The quit complaining and go do it. I know you have it in you. If you were a quitter you couldn’t do sales. When you’re done working your day job, don’t go home until you’re sold an agriscape, one a week. Give them away if you have to. Get better with each job. Start small and scale up. Develop a system, add some part time labor. At the end of the year you’ll have a portfolio of 50 jobs and satisfied customers to show case your work.

    • Andrew, I’m 53, my wife and I just got out of debt a few yrs ago and have a small 401k (less than a yrs income, a good amount of physical silver, and just built up our emergency fund to 6 mos, other than that I’m barely getting started), I’m excited about my future! Hang in there, I wish I had heard this kind of stuff when I was 38!

  6. Actually, I have no shortage of inspiration. I get inspired to wanna build a microgreens business one week, and then it’s a worm farm, and then it’s a nursery, and then it’s agriscaping ( but it’s a problem only me myself and I can fix.

    • That’s actually I think where most people end up, so you end up having to choose. I think what ends up happening is since we’ve all kind of pin balled around through life we end up losing specific desires and end up getting enchanted all over the place. So when the question of “what was I put on this earth to do” comes up, you end up gravitating all over.

      You’re not alone!

      • Hey, Andrew! My name is also Andrew. I am also 38 and I also have business analysis paralysis as described above by the New Mike. I used to work at the same company as Jack 10 years ago. I “marketed” phone and internet services very, very well. However, I can’t “sell” to save my life! You have a huge advantage there! Happy Birthday!

  7. I’m not seeing the Work, Self-Employment, & Small Business board on the forums so here is my biz idea:

    A Prepared Meal Delivery Service based on a Paleo/Ketogenic Diet

    1. Establish that this type of meal is beneficial. This has already been done by Mark Sisson, lots of MDs, studies, etc.
    2. Offer info/videos on cooking recipes, menu planning, etc.
    3. Offer a delivery of this meals. Maybe a $50 minimum? Maybe twice a week? To be legal, a catering kitchen is needed. This could be a non high priced location.

    I’m thinking this might appeal to more high $ earners who want health and convenience. They could therefore pay a premium price. Could it be that many people would like to shop for food locally but don’t know what to do with it?

      • btw.. if you want to talk about EXTREME value add.. take your beyond organic stuff.. and package/sell it like this.

        this is a ‘franchise’ waiting to happen.

        • A part of my idea is borne of a lack of direct marketing. My farm is not up and running yet, I’m still researching what to grow or produce. Right now pigs, chickens, and vegetables are potential players.

          I am intimidated at the idea of how to sell whatever I produce. My business idea it would be a backdoor approach to using those items. It’s variation on the Joel Salenton fiefdom idea. If the business could be started and makes a profit it could be sold or taken over by someone.

          Also I have a strong background in cooking, I was in catering for a long time. Of course, trying to produce pigs, vegetables, and catering could be a bit much.

        • @Whalspicy –
          This is exactly the ‘problem’ that Insidious Industries is currently working on..

          Tools to enable/empower marketing/CRM for small farm enterprises.

          When its done I’ll probably hit Jack up for an interview to describe what we believe the NEXT generation of customer communication will be.. and why the first vertical market we’re pursuing is the small farmer.

          (this is an ACTUAL insidious industries product.. in design phase)

      • I definitely agree with we’re hitting the stages priming for “beyond organic”. Organic is becoming more of the “standard” (at least I think so). So many people talk about the “cage free organic eggs” now. Ok well, let’s take it to that next level of quality.

    • Insidious’ link to PetesPaleo is a great example.
      My wife and I eat Paleo, and to do it well requires a prep time commitment.
      – We source the best meat and veggies we can.
      – We try several recipes until she finds some recipes we both like.
      – Once we got some of those figured out, we make large batches of awesome food then store it in glass pop-top containers for re-heating.

      If you can find great local sources and provide high quality food I believe you could develop a cult following of busy Paleo people. Instead of shipping all over the country, you might be able to reduce costs by doing drop-offs once a week like other direct meat providers do.

      I bet you could even video a few of the dishes you make…”Dinner for 4″ including all the prep time, etc. and show what a project it can be to get a great result…thereby demonstrating the value you’re providing. Good customers with money to buy from you will see the value of outsourcing their prep and shopping time.
      Single serving samplers might also be really helpful so people can try new things without plunking down $20 each.

  8. I realize not everyone wants to do a food-based business, but I think more people are connecting the dots between poor quality food and poor health and vice verse. Some of us would like to avoid the health care system more than ever before, and putting high quality food into our system is a cornerstone of that effort.

  9. Definitely. I work in a large hospital and although it is a great hospital I do not want to be a patient for a chronic issue. We already have plenty of those.

  10. Insidious,
    I’m in on your service! As I often say, I need all the help I can get. Do you have any idea how well Petes Paleo does?

  11. Very apropos episode. I always like John Pugliano’s interviews. Unfortunately, I recently lost my job. I had the good fortune of working with a few listeners and a guest. I am conflicted with the opportunity cost of trying to find a job again that makes six figures versus the benefits of self-employment. My fields of employment have been very unstable in the 15 years I have been working. Ideally, I would like to do something with Agorism, Permaculture (hence, my handle) and food (like other posts here 🙂
    About light bulbs, there is a light bulb that has been burning almost continuously for 113 years in a firehouse: There is an almost “20th Century Motor Company” angle to the history of the lightbulb (as in Atlas Shrugged). GE bought the Shelby lightbulb company 100 years ago and squashed the product line. Light bulb makers formed a consortium to regulate the lifespan, quality, price and other factors of light bulbs. Who knew? I just found this out when looking things up for my comment! This article also addresses the decline in quality and planned obsolescence that was discussed in this show. What is the impact of planned obsolescence? The toxic electronic waste is sent to third world nations for processing, causing great damage to individuals and the environment as the refining techniques are very crude.

    • Agorculture- opportunity costs of startup are immense. If you don’t have the savings or a working spouse then find a way to get on a payroll. Six fig income is not to be taken lightly. Once you’re employed then kick it in gear. Focus on one thing. You don’t have to save the world. Start building some type of business part time. Find a mentor doing something similar. Work for him for free for awhile. Don’t compete against him compliment his business. Work your way out of the day job.

      • @John, great points and let me add something. Warning this will sound sort of bad in a way, but the math is just the truth.

        One of the best situations you can be in on a build up is making good money from a business 50-100K in revenue (say 40-80k Profits) and have a job paying very well at the same time. Say you made 110K and had a business with 80K in profits. There is a tax reality here that is hard to argue.

        If you have a business doing 190K, as to my earlier comment you are going to pay the following

        SSI – 118,500 x 12.4% = 14,694
        Medicare 190,000 x 1.45% = 2755

        Total SSI and Medicare cost to you 17,449 all strait from your pocket.

        Now split the income with employment income where your employer pays the match

        On the 110,000 employment income you pay, 6,280 and your employer pays the same for SSI and you also pay the 1.45 medicare, we will save that for later.

        On 8500 you pay 12.4% in SSI till you hit the SSI cap, that is 1054

        Just as before you pay 1.45 on the entire amount for medicare so that is 2755, so we get 2755 + 1054 + 6280 = 10,089 dollars in total SSI and Medicare. So in the end.

        Self employed with 190K in income pays on these taxes 17,449
        Self employed and employed with a 110K job on these pays 10,089

        Meaning the guy with a job wins by 7,360 dollars.

        Now consider the guy with 190K in income 100% from business ownership or self employment is 100% responsible for every bit of business. He either succeeds or fails, he makes it or goes broke.

        Don’t get me wrong it is 1000 times better on this side of the fence but most people would never do the math I just did for you, because they are unaware of it. This is why I want as many people to have their own businesses as possible! It is the only way our people will ever choose to rein in taxation.

        The scum running this nation know they can say “well SSI is in trouble let’s just raise the cap a little more, all those rich people can afford it”. And since the majority doesn’t make 118,500 there is little opposition to it. But to be blunt, fucking hell, the people are stupid. In 1989 the cap was 48,000 dollars! In 79 it was 22,900! Get it now?

        It is called forward lift, you lift the cap when no one cares, inflation does the rest and the people who supported the lift when they were young, pay for it at mid life. Duh!

        I’m telling you no one without self employed or business income will ever truly get it. Build your own income and you will understand the truth. The employee is paying the same in reality!

        Would I pay an employee 6.2% more IF I didn’t have to match SSI? You bet your ass because the competitive market would require me to.

    • Hey my friend. Last time I was in dfw I didn’t have time to contact you. I think I’ll be back in late April. I’d like to see your garden and take you to lunch. Always enjoy your comments.

    • Hello John,

      I appreciate your lunch offer. We can have lunch at my house if you wish. By late April the garden should be looking great. This weekend I have been working on expanding it by 250 sq’. I just took a break from sheet mulching 100 sq’ of the 250 for a 3 sisters garden in spring.

  12. Spot on the Christmas ornaments. Jack, that is my next business – I currently manufacture cufflinks – encouraged by your entrepreneurial example. We will be making heirloom quality solid silver Xmas ornament. Only a couple of companies in the market – Tiffany’s, and a GmbH. About 20 years ago when I left college I priced the cost of entry – north of 300K in equipment alone ( no marketing, no space, heck no silver) now less than 20K.

    Thanks for your inspiration to launch my current businesses, both started for less than the cost of a nice dinner. Both profitable from week one, and currently producing solid middle class incomes.

    Thanks. Thanks. Thanks, for all you do.

    • That is SUCH an awesome friggin idea. Not going to lie but I’m blown away with how “simple” of an idea that is. I would most definitely buy one. My wife’s family loves buying ornaments as christmas gifts. I could certainly see having heirloom ones.

  13. Jack the refrigerator your speaking of is most likely a Servel. We have one at our family’s off grid hunting camp. It runs on lp gas has no moving parts so it’s silent! We have had it since the 60’s. It was made in the 30s or 40s thought. Now that’s quality!