Why Teacher Ma doesn't recommend young people to start a business!!!

Many people may have never opened a company or done business, and they simply don't realize that 5,000 is an extremely high salary.

Suppose you invest 1 million yuan, paying each person 5,000, plus social security, which at least costs 80,000 yuan annually for hiring—meaning you need an 8% net profit per year to break even.

Go ahead and look around—how many people can turn 1 million yuan into an 8% return? Even breaking even is considered quite an achievement.

If you hire 3 employees, that's directly 24%, plus office costs, totaling 32%. What is Warren Buffett's annual ROI after deducting all costs?

About 25%. That means your small company of 3 people would need to outperform Buffett's investments in those huge monopolistic giants to break even. Just think about how high that probability is.

It's practically impossible.

And this calculation doesn't even account for your opportunity cost. Suppose a young person like Xiao Ming, who can go to Pinduoduo, has 1 million yuan in savings. Besides earning from Pinduoduo's total package, BRK.A can give him a 25% annual return.

Taking that 1 million to Beijing, Shanghai, or Guangzhou to find recent graduates and encourage them to start a business—I guarantee no one’s capital curve can beat Xiao Ming’s.

Therefore, the risk-reward ratio of starting a business is extremely unreasonable. It’s not really an investment but more like a form of performance art or, intentionally or unintentionally, charity.

This is why I keep advising young people not to start a business, unless you are a one-man operation. Once you hire people, forget about 5,000 yuan; even 2,000 yuan is very hard to earn back.

Many uneducated people in Guangdong like to start businesses, often because the boss has no financial literacy. The ignorant venture boldly—if you really dig into their cash flow, they probably can't beat a Pinduoduo worker.

Many so-called studios in Shenzhen claiming to do startups are often involved in gray industries. Many so-called operations are scams, and if caught, they will be imprisoned.

Unless the macro economy is booming, money is very hard to earn. Running a business is not easy at all, with a failure rate as high as 99.9%. When can you start a business?

First: You find a very unique and new demand that all the giants haven't seen or haven't thought of yet. Even in Guangdong, many bosses don't understand this. Plus, your business model is very cost-effective—for example, a software business with just ten programmers can generate hundreds of millions in revenue.

Second: You have some special relationships, such as a boss who is a relative giving you orders, or a school cafeteria contracting with you, and this money is guaranteed to be paid back.

Third: Your business doesn't require hiring people, with no fixed labor costs or large monthly investments.

For example, selling lemonade at scenic spots, live streaming on the street, or selling fruit salads.

This version of the path is the best for ordinary people—really, going abroad to do manual labor, like building walls in New Zealand, picking strawberries in Australia, or becoming various coaches in Norway, such as ski instructors.

Never think you're so awesome that you need to start a business. I guarantee you'll lose your family’s fortune.