Interview: Do You Have What It Takes to Own a Franchise?

Posted by 25 December, 2008 (4) Comment

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This is the second part of two part series on franchising direct from franchising experts. In the first article, I was fortunate enough to speak with Leslie Kuban who is a consultant to people interested in franchising. In this article, I was fortunate to have Paul Segreto answer a few questions to give his perspective on franchising.

1. Can you tell me a little about yourself?

Paul:

Utilizing over twenty years’ experience as a senior level franchise executive, multi-unit franchisee and area developer, I started a coaching / consulting business As Founder and President of 21st Century Franchise Coach I am dedicated to franchise success at all levels. Complemented by a strong drive and passion towards establishing and building interdependent franchise relationships, I provide practical, innovative business solutions and comprehensive services to all segments of the franchise industry.

2. How did you become a franchise coach?

Paul:

More than anything, I believe in interdependent relationships and a franchise relationship should be just that in order for it to be successful. Unfortunately, as in many industries, people aren’t always what they seem to be on the surface and relationships suffer. Ultimately, businesses may fail as a result. My passion is to build and develop interdependent relationships and I’ve dedicated myself to franchise success at all levels.

3. If someone was interested in owning a franchise, what questions should they be asking themselves?

Paul:

Money and education being no object, what would be your ideal job? Why?

Do you consider yourself a leader? Why?

Would you describe yourself as a “people” person? Why?

What are your strongest personal attributes? Explain.

What are your personal weaknesses? Explain.

When thinking about business ownership, what excites you? What frightens you?

How will owning your own business help you realize your wishes, hopes and dreams?

Do you have the support of your family?

4. When I imagine a franchise, McDonald’s and Quizno’s pop into my mind. A large upfront investment also comes to mind. Do most successful franchises require large up front investments?

Paul:

Initial investments vary greatly based upon the franchise concept and industry segment. For instance a hospitality franchise (hotel) would command a total investment over one million dollars with initial cash requirements at two hundred fifty thousand or more. On the flip side I know of a networking franchise with total investment of less than twenty five thousand dollars and initial cash requirements at ten thousand dollars. Ultimatley, the answer to your question is yes, an initial investment is required equal to approximately twenty to twenty five percent of total investment. Of course, the candidate must be credit worthy to secure financing for the balance.

5. One of the topics I stress on my blog is passive income. Is there such an avenue in the franchising world (or at least close to it)?

Paul:

Yes there is but more so on the executive levels of franchising commonly referred to as Master Franchising. This business model affords the master franchisee the opportunity to share in royalty payments and franchise fees in return for subfranchising the concept to franchisees below him. This usually requires a large initial investment and covers a wide area, even statewide in some areas of the country and could be extremely financially rewarding.

6. A lot of business and families are financially stressed at the present time. Is this a very good time to be looking at opening a franchise?

Paul:

Historically franchising has seen explosive growth during a recession as many individuals are tired of be frightened about layoffs and are disillusioned by low or no returns on their investments. Instead, many choose to control their own destiny and venture out on their own. The safety net is a franchise because it is a proven business system where they’re in business for themselves but not by themselves.

7. Is there anything you would like to add?

Paul:

Franchises are not for true entrepreneurs. Franchisees must follow the business system provided by the franchise company with no exceptions where a true entrepreneur is more of a maverick and will try different things and take greater risks. That being said, it’s imperative a franchise candidate understand he will need to work harder than ever before and must wear many different hats in order to succeed. Many transitioning executives that venture into franchising ultimately fail because there is virtually no one to delegate to as in the corporate world and essential things fall by the wayside. Such as a P & L statement!

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I want to thank Paul for his time. Do you have any questions for Paul? I find it interesting that franchising has seen explosive growth during a recession, but he does make valid points! Have you thought about opening a franchise? I love comments!

Photo By: Striatic

Other Posts:

Interview: So You Want to Own a Franchise?
The 3 Myths of Happiness
17 Ways to Save the Planet
The Biggest Bailout Ever
Is Happiness Viral?

Categories : Entrepreneur Tags : ,

Interview: So You Want to Own a Franchise?

Posted by 23 December, 2008 (6) Comment

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A lot of Americans wish to work for themselves. One way to do that is through franchising. Franchising allows a person to set up a turn-key business in many instances with established systems in place. Having taken a look at Franchising.org, it was fascinating to see the sort of economic impact franchising has on the U.S.

HOW WIDESPREAD IS FRANCHISING?

The answer may surprise you.  By 2001, there were 767,483 business establishments in all domestic franchise systems (either owned by franchisors and franchisees), which employed almost 10 million people, with direct output close to $625 billion, and a payroll of $230 billion.  These establishments account for significant percentage of all establishments in many important lines of business: 56.3% in quick service restaurants, 18.2% in lodging, 14.2% in retail food, and 13.1% in table/full service restaurants.

I was fortunate enough to have two franchising experts who allowed me to ask them a few questions. This is a two part post, the first of which is an interview with franchising expert Leslie Kuban.

1. Can you tell me a little about yourself?

Leslie:

I have lived in Atlanta most of my life but feel more like a Midwestern girl; my folks are both from Ohio.   Vanderbilt University is my Alma Mater; I have a BA in Communications and also attended Leeds University in Leeds, England for one term.   When I am not assisting corporate professionals leverage their corporate success and experience into franchise businesses that they own, I am enjoying many personal interests; tennis, latin dancing, crafts, writing, yoga, cooking and entertaining to name just a few.
Feburary 2009 will mark my ten year anniversary as a franchise advisor and franchise owner with FranNet.    It has been a wonderful experience and I still have as much passion for doing this work as when I first started.   I am among the first to see up and coming growth franchise opportunities entering the Atlanta market place, which is exciting.   Franchise ownership has been very good to me in terms of personal satisfaction, lifestyle balance, and financial reward; helping others enjoy the pride, independence, and success that franchise business ownership can provide is work in which I feel a lot of pride.

2. I see that you have owned a Mail Boxes Etc. (currently a UPS store). Can you tell us about your experiences with that (good and not so favorable)?

Leslie:

Being a part of the Mail Boxes Etc. family was a super experience for me.   I learned a lot about managing financials of a small business, managing employees, customer service, and working within a franchise team.   It prepared me for the work that I now do.

3. You are currently a franchise owner at FranNet which is a franchise consulting business. What have you most enjoyed most/least about FranNet as compared with Mail Boxes Etc?

Leslie:

MBE was a great business and group of people; I learned however, that retail is not the best fit for me.    My personality is much better suited to a marketing and consulting oriented business with much greater daily flexibility and variety.    The day to day experience of running MBE stores became mundane because it was routine.   In my FranNet business, I work from home, every day is different and I meet new people all the time; this is a much more suitable “business lifestyle” for me.

4. If someone was interested in owning a franchise, what questions should they be asking themselves?

Leslie:

The search for the right franchise does not begin with looking at lists of franchise opportunities in magazines or on web sites.  It begins by looking in the mirror and asking:

~What is motivating me to own my own business?
~What specific results would I need from a business in terms of financial return (income and future equity value) and personal lifestyle for this franchise business to be a justifiable investment of my time and money?  In what time frame?
~What are my best skills?  Sales? Marketing? Customer Service? People Management?
~What do I NOT want to have to do in a business?
~How will I support my personal expenses for the first 6-12 months of launching the business when I am not likely to be able to pull a pay check from the business?
~How much of my liquid capital can I realistically and comfortably part with to start a business that is a good fit for me and that will allow me to fulfill my goals?

There are many more questions that must be asked; these are the starters.   From here, we reverse-engineer forward to what the business is that matches these criteria.  Too often people choose a franchise because they love the product or service as a customer and then realize that they are not suited to own and run that type of business from a skill, lifestyle, and/or financial position.

5. When I imagine a franchise, McDonald’s and Quizno’s pop into my mind. A large upfront investment also comes to mind. Do most successful franchises require large up front investments?

Leslie:

This is the best news!   There is no correlation between the upfront cost of a business and how successful or profitable it can be.   Large fast food franchises have a high start up investment need because of the real estate, the playground, all the equipment and inventory, a large payroll, tremendous expenditure in marketing, not because they are “better” franchises.   There are countless lower cost service opportunities that yield an equal or higher return than franchises with higher start up costs.   Find the lowest cost franchise that fits your motivations, needs, skills, and wallet.  Why risk any more than you have to meet your needs and goals; that is the FranNet mantra.   When coaching my clients, I advise them that they need to have 6-12 months of personal living expenses set aside to pay the bills at home during the ramp period.   On top of that, a minimum investment of $40,000 is likely required to capitalize a franchise business.    Home equity lines of credit, self directed IRA rollovers are the most popular sources of funds people are using to fund franchise businesses.   SBA lenders are still making small business loans but their requirements are even tighter than they were prior to Sept. 08; I have found this to be the least favorable way to fund a business due to the length of time it takes to secure the financing, and the fees and closing costs associated with SBA lending.

6. One of the topics I stress on my blog is passive income. Is there such an avenue in the franchising world (or at least close to it)?

Leslie:

Franchise business ownership is not like real estate investing where you can hire a good property manager and not have to do much and collect your rent money.   Overall returns can be higher but there is more work involved.   After growing a business over 4-5 years, it is possible for franchise owners to employ staff and systems to handle some or much of the day to day operations so that s/he does not have to be there all the time doing everything; Kiyosaki’s “B Quadrant” business in other words.  There are even some franchise businesses that can be started as a semi-absentee investment allowing people to keep their primary job or business.   In either case, a minimum of 10-15 hours a week of involvement is realistic to expect.

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Are there any other questions you have for Leslie? Have you thought about opening a franchise? If so, what sort of franchise and what is your motivation?

If you would like to contact Leslie Kuban with any questions you might have, here is her contact information:

Leslie Kuban

FranNet of Atlanta

770-579-3726

lkuban@frannet.com

http://www.frannet.com/lkuban

Other Posts:

The 3 Myths of Happiness
17 Ways to Save the Planet
The Biggest Bailout Ever
Is Happiness Viral?
What Determines Happiness?

Photo by El Gran Dee

Categories : Entrepreneur Tags : ,

Make Money with Judgements

Posted by 6 November, 2008 (1) Comment

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What is a judgement? Wikipedia defines a judgement as:

A judgment in a legal context, is synonymous with the formal decision made by a court following a lawsuit.

If a judgement is made, it entitles one entity (a person or business) the right to collect the amount of the judgement from the other entity involved. The only problem is that the court doesn’t help you find the debtor or the debtor’s assets. This is a huge need, but there are few services available that perform this task. Al Schweitzer, from my understanding, is the “father” finding debtors and a debtor’s assets. I recently went to a meeting where he was speaking. I go to a lot of real estate meetings and entrepreneur meetings in general and I was surprised I hadn’t heard of this before. Here are a few facts that he gave out (note I have not been able to verify whether these are true or not).

1. 80% of judgements go uncollected

2. Courts award judgements in the US every 1.5 seconds.

3. Judgements can last 3-10 years

As a wanna be entrepreneur, I’m always looking for other potential ways of making money. Al went on to state that:

If you are owed money from a judgement, you can legally take all of the money from his/her account, garnish wages, place a lien and all without being a bill collector or attorney.

I thought this was absolutely fascinating. I must admit that part of the appeal is that because it almost sounds borderline “dangerous”. I will certainly follow up with an attorney and follow up with a future blog post.

Here were some of the websites given that allow you to find people who in many cases, don’t want to be found.

Insightamerica.com
IRBsearch.com
Merlindata.com
Locateplus.com

So, all of this sounds cool. How do people make money?

1. Find the debtor

2. Send letters and call if you do not hear from them after a week or two.

3. Ask them if they would be interested in settling their debts if you could cut their debt in half. Do they have the cash to settle the debt now?

4. Call the creditor.

5. Ask them if they would consider selling the judgement for $.20 – $.30 on the dollar.

6. Purchase the judgement.

7. Settle the judgment with the debtor and pocket between 20 to 30% of the value of the judgement.

All of this sounds relatively easy, but it usually is when people are trying to sell you something as Al was at the meeting.

There are some other uses with this knowledge:

1. If people have judgements against them, do you think they might be potentially facing foreclosure soon? This could be a way to find pre-foreclosures for real estate investors months before other people start mailing to them.

2. You could use these techniques of finding information on people to screen potential tenants.

3. Do a thorough background check on potential business partners.

4. Locate abandoned property owners.

5. Use judgements to reduce the price of the property you are trying to purchase.

In my opinion there is certainly a lot of value that Al has to offer. I’m pretty frugal so I was not willing to fork over the $500 for the tapes and CD’s or the like. It’s $279 and $767 respectively for his kit through his website, Courtcash.com. I do have a friend that purchased the kit, but he reported that it’s been on his bookshelf, untouched.

photo by Dbking

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Other Posts that may interest you:

What Would Happen if More People Were Financially Independent?
What’s the Best Financial Decision You’ve Made?
10 Reasons Why You Should NOT Own a Pool

Categories : Entrepreneur,Real Estate Investing Tags : ,

Interview: CopperReflections.com

Posted by 16 October, 2008 (0) Comment

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1. Could you please tell us about yourselves?

We have been making handmade copper jewelry and gifts for almost 25 years. We have built our company from the ground up. We started with just a small table on the street, we had a retail store, we have participated in arts and crafts shows in Canada and the United States, exhibited at wholesale jewelry and gift shows and now we are online for the entire world! There is no overnight success in business; you need to build your business step by step on a solid foundation to ensure continued success.

2. You mentioned you are semi-retired, what all does that entail?

Ten years ago nothing was more important than building our wholesale handmade jewelry business, a legacy for our children. We spent night and day working, blinders on, seemingly unaware of the world around us. We focused on our goal so completely that there was no time for friends or family. We were on our own just trying to get everything done on schedule. All in all we were quite successful but something was missing.

One day we woke up and the enthusiasm was gone, we were tired of the stress of our dream. So we decided that the dream needed revising. After much conversation, not to mention a little too much wine, we came up with a new plan. We were going to change everything; we were going to begin living the life we always wanted.

We packed up the house and the kids and we moved to Turkey. At times it seems like a fairy tale! We live by the sea; we go for long walks and spend entire days at the beach. We take drives along the coast and the views take our breath away, it is a truly enchanted life; a dream come true!

We still work on the handmade jewelry business but we are a lot more relaxed about it. Now we are focused on our website and new designs for our handmade jewelry and unique gifts instead of the day to day running of the business. The wholesale jewelry business is now working for us instead of us being the slave of the business.

3. How long have you had your business, http://www.copperreflections.com/? What are some of the challenges you’ve faced in maintaining your business?

We started our business almost 25 years ago, but have only been focusing on the website for the last eight months. When we made our first website a few years ago, we sat down with a website designer and he made the website just how we wanted it. We were busy with our wholesale handmade jewelry business and didn’t focus on the website, it was just there. We had invested money but not time to understand how to make the website work for us. It was like printing business cards before you know what you are going to sell, pointless.

In the last eight months we have devoted a great deal of time to learn about internet marketing and to develop our website. It takes a lot of time, but research is the key to success. Knowing your target market and creating a marketing strategy are very important. This is not an overnight process; it takes time to find out what works and doesn’t work. It is a work in progress; every day we learn something new and try to apply it to our situation.

Six months ago you couldn’t find our website unless you typed in our URL. Now we are in the top ten for several of our keyword phrases and seeing improvement every day for the more competitive phrases. Every day we get inquiries about our handmade jewelry and unique gift ideas.

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4. How did you get started in your business? How do you plan to grow into the future?

My husband starting making jewelry and selling on the street, he had a 2’x4′ table in Gastown, a historical part of Vancouver, Canada. We’ve come a long way since then. We are very much looking toward the future. Being online is like having a store for the whole world! We have recently found a distributor for our handmade copper jewelry and gifts in Australia. We receive inquiries every day and hope to find distributors throughout Europe and the UK. The future is looking very bright.

5. Are most of your clients within Turkey or do you do a lot of your business overseas?

We just moved to Turkey about a year ago, we don’t sell our products in Turkey. We have been in business in Canada for about 25 years. Our customers are mostly in the United States and Canada, and our designs are fitted to that market. We sell to the top tourist attractions in Canada, like the CN Tower in Toronto, Butchart Gardens in Victoria and Capilano Suspension Bridge in Vancouver. We have distributors in Canada and the US who sell wholesale to retail stores, 90% of our sales come from there.

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6. You guys seem to have done very well considering you are under the age of 50. Do you have any tips for other up and coming entrepreneurs?

If you want to be happy, sell retail; a store, online or craft shows. If you want to make money, sell wholesale to the retail stores; it’s a lot more work but it has its own rewards.

Sometimes a successful wholesale jewelry business just sneaks up on you overwhelming your life. It took years to realize that one person cannot be responsible for everything. In any type of business you must delegate the work so that the business is working for you. Choose what you like to do and outsource what don’t enjoy. Life is a balance; work should not overshadow all other areas.

Take time to enjoy life: family, friends and especially your kids. Before you know it they grow up, make sure you are the most important influence in their lives, not someone on tv. They are depending on you to show them the way to be happy and successful in life. Don’t let them down, be there for them.

To find out more about Tony and Jen, please feel free to visit their blog:

http://copperreflections.com/handmade-jewelry-blog/

or chat with them on twitter

https://twitter.com/unique_jewelry

Categories : Entrepreneur,Success Story Tags : ,

10 Reasons Why I Want You to Be Financially Independent

Posted by 13 October, 2008 (5) Comment

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I’ve wanted to be financially independent starting about 2-3 years ago.

I’ve been out of school and in the work force for 6 years. The first few years out of school, I think I was trying to figure out what I wanted to do. I wanted to make a difference. I wanted to help the world. I started out at a fuel cell company because I thought fuel cells would be beneficial in helping wane the US off of oil. Now I work in a lab playing with carbon nanotubes which have their own set of “green” possibilities not limited to being the best material for electrical conductivity. Working on the cutting edge of technology is very cool, but both scenarios have me working until I’m 65 or longer and that doesn’t sit well with me.

My idea of financial independence is a situation where one is in a financial position to work or not and still enjoy the necessities of life plus a few luxuries without relying on government assistance.

I want you to be financially independent. Heck, I want to be financially independent as well, but we’re focusing on you, not me.

Can you imagine what the US would be like if more people were financially independent?

Some questions I’d like you to ponder:

1. Would the US be happier?

2. Would there be a shift towards people studying the arts?

3. What would the stock market be like?

4. Would professional sports be as popular as they are today? Do people need this distraction if they are no longer going to jobs that they may not enjoy?

5. What about movie stars/celebrities? Would they be as popular as they are today?

6. Would we see a huge spike or slow-down in innovation?

7. What about professions such as psychology? How would it affect them?

8. If more Americans were financially independent, would we produce as much waste as we do? If we have more time, there is potentially less hustle and bustle and perhaps people would be able to fix household items that break instead of tossing it and going to Walmart to buy another.

I want you to be financially independent, and here’s why:

1. Stay in your relationship

Relationships are important. Life and business is all about relationships. One of the most important relationships you can have is with your wife, husband, or significant other. It is disputed whether financial issues are the major cause of divorce (see artcle by Liz @ MSN Money), but not worrying about money, I’m certain, would have a positive impact on your relationships. I’m not sure about you, but in my opinion, during a divorce, the only person that really wins is the attorney. In addition to not having disputes over finances, if you are financially independent, you don’t need to work. If you don’t need to work, you have a lot more time to spend on developing and nurturing those relationships. I know I would love to spend more time with my wife, family, and friends because time is our most precious commodity. You can never get it back unless you are Michael J. Fox in Back to the Future. It’s these strong bonds that I believe to be one of the most important ingredients to a “good” life and being happy.

2. Volunteer

If you are financially independent and not working, you need to be doing something productive. Why not volunteer for a local organization or habitat for humanity. Here is a list of possible reasons you may want to volunteer per Susan J. Ellis of Energize, Inc (find the original post here)

  • to feel needed
  • to share a skill
  • to get to know a community
  • to demonstrate commitment to a cause/belief
  • to gain leadership skills
  • to act out a fantasy
  • to do your civic duty
  • because of pressure from a friend or relative
  • satisfaction from accomplishment
  • to keep busy
  • for recognition
  • to repay a debt
  • to donate your professional skills
  • because there is no one else to do it
  • to have an impact
  • to learn something new
  • for freedom of schedule
  • to help a friend or relative
  • for escape
  • to become an “insider”
  • guilt
  • to be challenged
  • to be a watchdog
  • to feel proud
  • to make new friends
  • to explore a career
  • to help someone
  • as therapy
  • to do something different from your job
  • for fun!
  • for religious reasons
  • to earn academic credit
  • to keep skills alive
  • because an agency is geographically close
  • to have an excuse to do what you love
  • to be able to criticize
  • to assure progress
  • to feel good
  • to be part of a team
  • to gain status
  • because you were asked
  • to test yourself
  • to build your resume
  • to be an agent of change
  • because of personal experience with the problem, illness, or cause
  • to stand up and be counted

3. Increased Mental Health

If you aren’t worrying about money, you probably aren’t as stressed out. Stress kills. Have you ever snapped at your kids or significant other after a long day at work? Gone. Traffic to work and the mental strain that is puts you through. Gone. All of that sounds pretty sweet to me. I try VERY hard to make sure I don’t bring work or traffic stress home, but sometimes it’s a bit overwhelming. I’m not trying to say that if you are financially independent stress will permanently go away, but I’m sure your stress level will decrease significantly.

4. Increased Physical Health

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You aren’t in the office 40 plus hours per week. You aren’t in the car for upto 8 hours per week (16 hours if you live in Los Angeles). That’s a lot of time that is now available to you to take care of you and your body. There are a ton of benefits that you would see in your physical health without worrying about money. Without a job, you would be able to dedicate more of your time to working out.

5. Time with Friends and Family

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I often feel badly that I don’t spend time with my little brother or that I don’t make it down to Austin to hang out with old friends. There is no good excuse, but unfortunately there are only some many hours in a day.

I hope this is never a scenario that anyone has to go through, but if you are financially independent and a family member falls ill, you would be more able to help out. I know quite a few people who tend to their friends or family at the detriment of their own financial well being. Financial independence would put you in a position to help if needed.

6. Foreclosures

I feel greed fueled a lot of the foreclosures we are seeing today. If you were financially independent, you more than likely wouldn’t have a mortgage much less have the need to borrow 106% to purchase a house.

7. Happiness

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I truly hope that you enjoy what you do 8+ hours per day and 40+ hours per week. The unfortunate situation is that most people do not like their jobs. Financial independence could put an end to your ball and chain routine and enable you to find something that will make you happy. Life is way too short so you should focus on being happy during the time you are here.

8. Pass the Knowledge of Financial Independence to Family and Friends

Pay it Forward. You could help your friends and family achieve financial independence. This would not only help them financially, mentally, etc, but you’d be able to spend more time with them since they are no longer working the long hours required by their jobs.

Teaching your kids to be financially independent will give them the flexibility to choose the major they desire as opposed to choosing the major that pays well in order to pay back student loans (I’m not speaking from experience 🙂 ).

9. Hobbies

It’s tough to keep up with any hobbies. My wife and I have a tough time keeping up with hobbies and we don’t have any kids so I can only imagine how hectic it gets with a full house. Well, if you just added 40+ hours to your week, you’ll have time for some hobbies. You could finally learn how to paint, write the great American novel, or take up yoga. I’ve always wanted to take up some sort of martial arts. I think that the discipline would be good for me, but it would also help me stay flexible, meet other people with similar interests, and I’m sure I would become stronger.

10. Education

You should go back to school. Because you would have 40+ hours of extra time every week, you could go get that art history degree! I know I would like to learn a foreign language or take a carpentry class.

Do you want to be financially independent? If so, let me know how I can help. If we are able to gather a lot of support for this goal, perhaps we can all help each other achieve it. Are you already financially independent? If so, send me an e-mail and I’d love to interview you about your adventure.

happinessisbetter [at] gmail.com (sorry, spam likes me 🙂 )

Photos by Tigr, Joe Shlabotnik, kiskisbreeze, Hamed Masoumi

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Categories : Financially Independent Tags : , , , ,