Oliver Foote, Author at Oliver Foote

Pros and Cons of Being Employed vs. Self-Employment

Update Dec 14, 2024: Added Newsletter Email Archive at End of Post.

After having attempted to operate a few businesses over the course of my education and now post graduation, while also working some good jobs and some not so good jobs I have learned a few things that I thought might be interesting to discuss in this next blog post. What are the pros and cons to each way of doing things and what are some things that you should think about if you’re considering one or the other. Let’s start with the pros of being employed.

The Case For Staying Employed:

The nice thing about being employed, is that most of the time, someone else is telling you what needs to be done, depending on the job you can somewhat turn off your brain when it comes to deciding what to do day to day. When I’ve done self employed work, it becomes much more challenging to know what to prioritized, do you focus on marketing? Do you focus on building systems? Do you try to schmooze clients to make sure that you have clients going forward? The answer is yes, yes, and yes. You need to juggle many more priorities with self-employment that can compete for your time. When you’re employed, hopefully, you have a team to work with, while being self-employed inherently means that you are likely working solo at least in the beginning, so you don’t really have other people to lean on.

The Ugly Truth of Entrepreneurship

This goes well into my next point, when you are self-employed it can often be lonely work and this can be very demotivating, you need to build up a team of people or business associates who are doing, or trying to do a similar thing to you. No one can accomplish anything alone, so it’s important to get people on your team who you can consult with and bounce ideas off of, and often times that person will not be your group of friends who are working regular jobs and who aren’t concerned with what happens in a business. This doesn’t mean to stop hanging out with your regular friends, in fact, you’ll probably need them more than ever. It just means that you need to make sure that you are also building up a network of like minded people who can better relate to the struggles that you will inevitably go through while trying to launch a business. So lets call this a bit of a pro for being an employee, often the company is looking for a specific culture and if you fit in the culture you can make some great friends. At the very least you’ll probably be on ok terms with the people you work with and maybe even have a few people who are doing a very similar job to bounce ideas off of. Forced friends as I like to say. Obviously, if you don’t like the people you work with it can also suck just as much as having no people to work with, but at least in theory there is the option to find a new place of work that again doesn’t require you managing so many competing priorities. Regardless of whichever path you choose, I’ve learned it extremely difficult to go anywhere if you don’t build relationships or work on your ability to build relationships. In our current social media isolation era it’s easy to think all the answers are online, but the person to person component is still one of the most important factors in having both a successful business and a successful career.

Income “Potential” is Only Potential:

You will frequently see online that the way entrepreneurship or self-employment is sold nowadays is higher income potential. The important word in that phrase is “potential”. There is always potential, in whatever you do, but this seriously undersells the sacrifices that you have to make in order to reach that potential. The phrase entrepreneur comes from the phrase for someone who creates something new. So if someone is selling you on a form of self employment that is cut and paste, run away, every type of entrepreneurship is its own battle and everyone’s path is a bit different. I’m all for learning how people have come before you, but the most important thing in entrepreneurship is being a constant experimenter and being ok with constantly failing and trying something new until you find what works for you. There is so much free information, and so much information in books that you can read (for FREE, if you get it from the library) that you really should not be spending a significant amount of money when you are starting out to get your feet off the ground. The best use of money is running a short marketing experiment for the service or product you are selling for minimum a month and trying to learn from the experience and iterate.

Patience is Extremely Important

This brings my to my next point, specifically related to entrepreneurship, is that when you are trying something new, you have to accept the fact that it will take time to see the results of your experiments. You can’t expect an instant sale if you’re just running your first facebook ad, or after knocking on your first door. It’s a long, iterative, slog. A lot of entrepreneurship simply comes down to how many times you are willing to do the same thing over and over, rejection after rejection, until you finally see results. You have to be, or become someone who doesn’t give up easily.

The Rejection Goal – An Entrepreneurs Lifeline

I read a book recently, Million Dollar Weekend by Noah Kagan, in it Noah relates the story of his father who was a door to door salesperson and his frame of mind when it came to getting rejected was to set a “rejection goal” every single day. Inevitably, within that rejection goal, you may have one or two people who are actually interested in talking to you, and one or two people who are interesting in what you are selling. If you make the goal the number of times you can be rejected, rather than seeing rejection as having failed, you are much more likely to get somewhere with your business. Contrast this to a job in which your goal is to create something, or build something. The only person likely to reject you is your boss or manager. If you are somewhat more client facing then you may also have to face rejection every day, but it’s likely that your income doesn’t completely depend on this one single client. When you are self employed and looking for work, it can be easy to feel like your income does rely on one single client and this can put you in a mindset of scarcity and fear, and while a little fear might be good to help you get motivated in the morning, too much can be debilitating. So it’s important to approach a business with the mindset of working with multiple clients, and even before you start a business trying to see if there might be potential clients that would want what you are selling is a great idea to validate a business idea, even better if they give you a deposit for the thing you are selling. It’s important to not rely too heavily on one single client for all of your income for all the reasons I stated above.

Employees Can Be Self Employed Too

Another pro for being an employee is that, frequently, there is a path to becoming self-employed. If you work in an industry long enough or become respected enough in the skills that you have and the things that you do, and have people that you know would want to continue working with you specifically. Then you have the foundation of a good business, and you’d be doing what you are already doing which would reduce the overall amount of skills that you’d have to pick up that relate to entrepreneurship, and you may be able to avoid marketing altogether and simply operate off referrals. From this point of view being employed can be very beneficial, but you’d have to work in an industry where your skills are important to the job, not just being a warm body that most anyone can replicate. The more regulation, the more difficult, the more qualifications you need the better because it will make the work that you do and the skills that you have valuable. I’m going to point to something that doesn’t immediately jump to most people’s minds when they things of “business” and that is healthcare. Depending on your healthcare profession, there may be a path to either a very high income, or opening your own practice, and “professional” degree in which you can open a practice or some kind can be a good path to self-employment if you work in the industry for a while first because there will be demand for your skills.

No Matter What You Do You Can’t Do It Alone:

There is no real right or wrong way to start a business, but there is a right and wrong mindset to operate from, ultimately, you are going to be working with people, and people involve relationships, so if there’s any one skill you absolutely need or need to learn its how to be a relational person, everything other skill or talent you have is not useful if you have no one to show it or sell it to. This doesn’t mean that you can’t create a business from nothing, there are lots of software companies that pretty much exclusively exist in website or app form. But these companies are still relational companies because they are solving a problem for people, without the people there would be no company. So it’s fine to make software, to learn skills that you can sell, to do something similar to what someone has done before, but at the end of the day it will always come down to how do you reach people and get them interested enough to pay you for the thing that you are doing or the product that you are selling. I’ll leave the discussion here for now, I’m still learning and reading a lot about building businesses and becoming a better communicator and working to build better relationships. All of these little things are important in the grand scheme of life and in the grand scheme of business as well.

Keep investing,

Oliver Foote

Newsletter #18: Employment vs. Self-Employment Pros and Cons, Manhattan Real Estate, etc.

This Weeks Blog Post:

Pros and Cons of Being Employed vs. Self-Employment:

Employment is a great way to start your own business
There are many things about self employment that people don’t mention when they are trying to sell you on something, you need to do it for the right reasons and realize the responsibilities that come with it
Dealing with rejection and making it a positive

Read the full blog post here: https://oliverfoote.ca/pros-and-cons-of-being-employed-vs-self-employment/

Real Estate News:

We are officially in the summer months where the market slows down as people go on vacation, so I’m just going to say that there’s not much to report right now since the last newsletter
The Toronto Honda Indy was in town last weekend, and as a somewhat new racing nerd I was able to stop by and see them do a couple laps last Friday after going to see a metal concert and then flying out Friday to see my family in Queens, New York and returning today (which is why this newsletter is late). On a related note, seeing their real estate prices made me grateful for Toronto prices, if you can believe it.
Another thing I noticed being in New York, although I was mostly in pricier parts of town and airports, is that things are really expensive, even the supposedly cheap spots. Inflation in the US is definetly a real thing, as it is here. But, seeing it first hand and also thinking in currency exchanged units really drove the point home.
I also got to see the Wall St Bull and the NYSE and all nerd out a bit about the financial district, as a bit of a finance nerd that was a must see for me. I also learned from someone who works at the 1 World Trade Center Tower that the tenants of the building after COVID reduced their footprints by around half thanks to all the work from home stuff that happened, and they have had to either sublease the rest of their space or eat the loss. But it’s interesting that even in one of the most sought after buildings in New York, the dynamics of the Pandemic are shaping the real estate market.
I wish everyone a great summer and hope you get a chance to rest and relax a bit and explore some new places.

Market Performance as of open Tuesday July 23, 2024:

S&P 500: 5,555.74 (+17.14% YTD)
NASDAQ: 17,997.35 (+21.88% YTD)
S&P/TSX Composite: 22,813.75 (+9.30% YTD)

Canada CPI Inflation May 2024: 2.9% (0.2% Increase from Apr 2024)
Current BoC Benchmark Interest Rate: 4.75% (0.25% Decrease on June 5, 2024) Unemployment Rate June 2024: 6.4% (0.2% Increase from May 2023)

Subscribe to our newsletter!

[newsletter_form type=”minimal”]

Is Now a Bad Time to Enter The Workforce?

https://youtu.be/8l5jzZKb8eU

Update Dec 14, 2024: Added Newsletter Email Archive at End of Post.

Statistics Canada Thinks It Is

I have been hearing from many people recently that they are having a hard time finding work. This is not just anecdotal, Stats Canada came out with their most recent labour force survey and the unemployment rate is sitting at 6.4% as of June 2024 and has increased 1.3% in total since April 2023 which was a recent low (low = good). Among these groups, returning students (those who are going back to school in the fall) are at their lowest June employment numbers since June 1998. You may be saying not a big deal, students still have time to figure things out. While this is true, they are also the future of the labour market, and one of the most common ways for students to find their full time employment is through their summer internships or other jobs. If there are fewer students interning and less work for students overall I think this is a concerning development.

I think this lower student employment rate, and the overall high unemployment rate are leading indicators that we are heading for stagnation or even some form of a quiet depression. After having conversations with people from many different industries and hearing by word of mouth from friends of friends, a lot of companies are holding off on hiring right now, because there may be some level of uncertainty about whether their clients will continue to be in business in the coming year or two. This is leading to hesitation across the board regarding hiring people, and especially for new grads. This is making it even more challenging since companies that are shrinking their workforce or looking to hire would rather hire one senior person who can do the work of two people rather than hiring two junior people who need training.

Signs of a Drawn Out Downturn?

Of the types of economic downturns, in this case specifically a job market downturn. It is almost better to have a COVID-like situation where people get hit very hard but can bounce back relatively quickly. A long, slow, protracted downturn, meanwhile, may be felt by fewer people as a whole, but for those who do feel it they will not get a lot of relief in the coming years. It has become apparent that although the Bank of Canada has cut rates, the effect of the rate cuts will be fairly muted, as borrowing power only improves marginally for those looking to take out loans such as a mortgage and businesses are still hesitant to borrow money in order to invest. Because leverage is expensive as a whole right now, we will likely see less economic growth. In order for a business to get a good return on their investment they will need a rather high ROI to justify their cost of borrowing and justify a higher risk investment when a relatively risk free investment is still hovering around 3-4%. With inflation coming down below the risk free rate, there is almost no reason for businesses or investors to look towards higher risk investments which means that less money overall will circulate through the economy.

Canada is also in a special situation because we are always welcoming new highly skilled workers into the country, this could be a good thing for businesses because if there is more demand for their jobs they can theoretically pay a lower rate and get the same output. From the workers side this puts them in an unfortunate situation, they will have to find a way to stand out from the crowd or accept a much lower wage at a time when the cost of living is not improving much.

Real Estate Indicators of Slowing Growth

From the real estate side we are seeing some relief in the rental market, as a recent rentals.ca report showed the year over year rental prices in June 2024 were similar or lower in some of the larger metro areas compared to this time last year. We can also look to the resale market and the pile of inventory that is building up, especially in some segments such as condos. This has yet to manifest in much lower prices, but there are some individual great deals for those who are looking. The market is a whole isn’t seeing much price pressure likely due to the fact that owners are finding a way to hold on until they get the price they are looking for and aren’t in a rush to sell. The number of truly “distressed” sales has only increased marginally anecdotally speaking and banks have been instructed to help those who are in distressed situations to manage their real estate. We likely won’t see a significant decline in prices in the coming years, but prices may slide slowly downward until borrowing becomes a bit more affordable.

I do foresee a time in the next 3-5 years as things improve with respect to borrowing costs that prices will jump up due to the lack of new construction sales. New condo projects have been taking longer to sell and fewer people have been purchasing them. This also corroborates my previous point about lower investment as we’ve reached a point in Toronto where about 50% of condos are owned by investors which means that they are soon to be the majority of the potential buyers, if not already are, and if investors are not investing their money, condos are not going to be built. If condos are not built, there will be less housing while more people continue to come to the Toronto area which simply supply and demand says higher prices.

Potential Improvements in Student Economics

Another interesting development has been the cap on student visas. On balance I view this as a positive development as I believe the intention of capping them was to prevent predatory “career” schools from taking advantage of students and not providing them a proper education. I quite frankly see nothing wrong with this, although it may inconvenience people who were all but too happy to take advantage of these students whether for cheap labour or for absurdly high tuition fees. The only potential downside to this is that some reputable institutions may lose some of the funding they were anticipating from international students and have to make cuts. But again, I see nothing wrong with a little competition, and competition breeds innovation, so maybe in the end this will turn out to be a positive development across the board. I also see positives when looking at student adjacent market such as the student rental market around campuses.

They will likely become somewhat less competitive with this change. I recall from my time at university that it was truly a crapshoot trying to find a half decent student house. The number of questionable landlords who didn’t take care of their properties was high, the inability of students to clean up after themselves was bad, the SERIOUS lack of supply was horrendous. Overall, there were frequently poor outcomes and often just plain unsafe living conditions. So some relief in that regard is well overdue in those markets. Although, I’m not certain that this will affect the larger universities who may not be as highly affected by the student visa quota. Interestingly, Graduate level visas have not been affected at all which is in line with the concept that Canada is interested in highly skilled workers. (although arguably our problem is with trades workers not highly skilled workers).

Signals from The United States

Interestingly though, if you look to our friends in the south (the US) their stock markets are continuing to do well, which is arguably signaling that things are improving over there and there is confidence that they will continue to improve. The US employment rate is still hovering around an all time high (a positive development) and since they have a more diverse economy they are more resilient overall. You can’t predict the market, but generally when I look at my portfolio and get very happy that is usually a sign that it’s time to sell some of it and cut down on the risk. However, I’m more of a buy and hold type of investor rather than a time the market investor, so I’ll probably just ride whatever wave comes and try to build up some cash in order to purchase any opportunities that may come along in the next little while.

It will be interesting to see how all of these different aspects of the economy develop in the next couple of years, I will be following them closely and doing my best to keep you up to date on them. Hopefully you found this discussion interesting. Feel free to let me know your thoughts any time, I’m always interested to talk economics.

Keep investing,

Oliver

Sources:

Stats Canada Labour Force Survey June 2024: Click Here

Student Visa Cap News: Click Here

My last post: https://oliverfoote.ca/dont-invest-in-stocks-or-real-estate/

Newsletter #17: Cooling June Market, Rates Cut Not Enough, Unemployment Higher

This Weeks Blog Post:

Is now a bad time to enter the workforce?:

I talk about the employment numbers and general economic outlook
How interest rates will affect the economy and real estate market
Student visas and students high unemployment numbers

Read the full blog post here: https://oliverfoote.ca/is-now-a-bad-time-to-enter-the-workforce/

Real Estate News:

June market stats for the Toronto Real Estate Board:
Listings of all home types up 67% compared to June last year prices have remained consistent at an average price of $1,162,167, down only 1.6%. The number of sales were down 16% compared with the same time last year.
Even with the Bank of Canada quarter of a point rate cut last month, June’s sales results are suggesting that buyers will require more to encourage greater activity throughout the market. Many buyers kept their home purchase decisions on hold keeping the market well-supplied.
TRREB’s Chief Market Analyst Jason Mercer stated that the GTA housing market is currently well-supplied and recent home buyers have benefitted from substantial choice along with negotiating power on price. As sales pick up throughout the balance of the year alongside lower borrowing costs, increased inventory levels will help mitigate against any run-up on selling prices.
Months of inventory levels have doubled since June of last year, homes are simply taking longer to sell, however we are not seeing the downward pressure on pricing one would expect. This shows the resilience of the GTA housing market and the continued demand for real estate in southern Ontario. As the Bank of Canada lowers its lending rate expect more buyers to enter the market and prices to remain strong.
Traditionally July and August are relatively slow months of the year as people go on vacation with their families and put off and big decisions, so it’s likely that supply will continue to build up during the summers months and provide even more selection for buyers.

Market Performance as of open Tuesday July 9, 2024:

S&P 500: 5,584.45 (+17.73% YTD)
NASDAQ: 18,474.51 (+25.12% YTD)
S&P/TSX Composite: 22,058.45 (+5.68% YTD)

Canada CPI Inflation May 2024: 2.9% (0.2% Increase from Apr 2024)
Current BoC Benchmark Interest Rate: 4.75% (0.25% Decrease on June 5, 2024)
Unemployment Rate June 2024: 6.4% (0.2% Increase from May 2023)

Hope you have an amazing week! Chat soon!

Best regards,

Oliver Foote

Subscribe to our newsletter!

[newsletter_form type=”minimal”]

Don’t Invest In Stocks or Real Estate

Update Dec 14, 2024: Added Newsletter Email Archive at End of Post.

Don’t invest in stocks or real estate. I know, probably controversial, allow me to explain. I recently read a business book that really brought home an important point that has been living rent free in my head for a while. Investing in stocks (less so in real estate) when you’re young is not going to make you wealthy. If wealth happens to be your goal. Now allow me to substantiate my claim. Surely investing in stocks and real estate is a good idea, surely I should save money from my job and invest it? People get rich all the time investing in stocks and real estate, right? Well, that depends. If I spend 40 years saving a bit of money from my job every week, and retire with a million dollars or two, sure, maybe I’ve done well. But, the elephant in the room is always inflation, which will eat away at my buying power. The $1 million dollars 40 years from now, won’t be worth $1 million dollars in todays money.

Real estate is a bit better because the power of inflation is working for you not against you, it tends to be a bit of an “inflation hedge”. If you increase your power to pay down a loan over the years (i.e. earn more), the loan value 20 years from now will not be worth as much and you’ll have an easier time paying it off. For example, if you can borrow money at 0% forever but inflation is 2%, the loans value drops 2% a year. Hence why lenders tend to lose money in a hyperinflationary economy, while borrowers tend to benefit. A very important concept that is overlooked when giving retirement and investment advice is the time value of money. Basically, inflation. Also, inflation during a high inflationary time is deceptive. Because when you go through a few years of close to 7-8% inflation, and then drop down to 3% a few years later. In 5 years time since the start of the pandemic the compounded TOTAL inflation has been close to 20%. So if your stocks aren’t keeping up, you’ve at best broken even.

Whenever there’s a story of some 25 year old who made it big did they work a regular job for 40 hours a week, then diligently save 15% of their paycheque and invest in stocks, and boom 5 years later they’re a millionaire! Unlikely, if not impossible. There are sound statistics and facts showing that the people who are young (and also how many older people made their money) did so by building a business. The capitalist system is built around rewarding those who create something the marketplace wants. There’s only one Apple (inc.), but MILLIONS of us buy their products. Simple math says if you sell a million of something you’ll be a millionaire. In the system we are in you have to be a “producer” in order to make it big. Sure, maybe once in a blue moon someone hits it big on crypto (assuming they don’t lose it all in the next crash), or managed to time an investment that went up 10x in value. But the large majority of people who speculate on stocks hoping to get rich inevitably get burned, just ask my friends and I.

For some people, they may not have any ambition to be wealthy and they may just want to have a decent job, and enough money to have a decent life. But for the people who want to be wealthy, they have to realize a few things. 1. No one cares that you want to be wealthy. What can you do for me? That’s what drives buying decisions. Generally speaking, I don’t care that a corporation is profit motivated, I care about the thing I’m buying or the service they are providing me. Maybe, I make my buying decision emotionally because they have built a brand that makes what they are selling desirable to me. 2. No matter what business you’re in, you have to sell. Whether “selling” means getting to the top of search rankings, creating a marketing campaign, or paying for ads. You can have the best product in the world, but if no one knows about it, it’s as good as having no product at all. (Luckily, nowadays social media is a strong method of selling and brand awareness that is largely free, Google My Business is valuable, and word of mouth is also very much still alive).

There are more intricate rules and considerations to think about if you are building a business. Do you want to build a business that can eventually work without your inputs, would be nice huh? But you have to remember that at the beginning the business needs you to be the one forcing it forward, building it up, and doing the stuff that no one else wants to do. A thriving business isn’t magically going to appear on your doorstep because you “visualized it”. You have to be actively out in the world providing input to the machine so it can start cranking its gears. Spend less time thinking and more time doing. Speaking of stuff no one wants to do. That’s a great way to choose an avenue that is ripe for disruption. There are a million different businesses you could start, but it’s important to consider if there is a need in the marketplace (the world probably doesn’t need another personal trainer, or blog for that matter, owch…).

It’s a much better idea to begin a business in a market that doesn’t have a ton of competition, that being said, you’ll almost always find someone who’s “already doing it” and if that business is smart they’ll do their best to deter you from even thinking of competing. But if the barrier to entry is relatively high, and building that business would be “hard” and you think you could do it better, then you’ve got an opportunity to innovate. The higher the barriers to entry, the better the potential idea, you want to be in a space that is “hard” to work in (or where all the current options suck), because that will act as a moat to your business.

You also have to consider the scale of the business. Would it be feasible for this to be a national or international business? Or am I just going to open one restaurant on the street corner. Not saying you can’t have a thriving restaurant, but notice that the chains who are global have found a way to replicate their formulas using the franchise model. Again, depends on your motivations. Do you want to be global, or are you stuck thinking local.

As a bit of personal experience allow me to divulge a bit of an internal battle between two businesses. When I was originally thinking about real estate sales as a business, I was noticing a lot of the warning signs that this book pointed out and that I’ve mentioned above. Does the world need another realtor? Quite frankly no. Unless, you have a super innovate or weird business model, it’s an oversaturated market. Can the business be global? Not really, unless I was to start my own brokerage like Re/Max or Sotheby’s. Can I detach from the business in the future? Not really, unless I build a team of agents who handle all my clients for me, but even then many clients would likely just prefer to work with me if we have built up a relationship. Do I have control over my own brand? Somewhat, but also not really. I work under a brokerage company, and I have to use their brand in all my marketing. They are probably the one making the big bucks. 1400 agents under their belt. Yeah, that’s a nice business. But I will say, the owner/operators are VERY involved in the day to day operations, and the business needs their constant inputs to grow and build relationships otherwise it would likely fall apart and agents would begin to leave. But, eventually, they could train and hire people to handle their roles if they so desired, it’s a pretty well oiled machine.

Then I started to muse about my YouTube channel where I posted engineering content for a period of time and now sits at 25,000 subscribers. I decided against posting about real estate content on that channel in the worry that I would upset my current audience 99% of whom subscribed from engineering videos. So I started to post some real estate content on a second YouTube channel and I had this realization of how brutally limited my market is. If I’m just talking about “Mississauga Real Estate” MAYBE at most 1,000,000 people are interested. But considering the demographics of Mississauga and that most of them aren’t on YouTube daily, it’s probably closer to 100,000 people who are relatively active on YouTube. Of those people, VERY few of them will be buying real estate because the average price of a home is $1 million dollars, and most young “Mississaugite” is probably not thinking about buying (or selling) anytime soon. That leaves the intersection of my online, “social media” market in “Mississauga Real Estate” to at most maybe 1,000 people. What a terrible business and waste of time. (If I sold houses to 1,000 people I’d be laughing, but social media and real life are very different). AND YET, I’ve been to so many “marketing training sessions” harping on how you should be posting to social media daily and how making YouTube videos about real estate is “essential”. But the market is inherently limited, unless you are building a separate online media “brand”. One way to overcome this limitation would be to focus on a larger market, all of Canada for example. But then your strategy won’t be relevant to the hyperlocal markets that all of “real life” real estate lives in. Two streets in the same neighborhood have very different dynamics, and that expertise is very boring to everyone except the clients you are working with at the time. The upside is that even if you get 1 sale from social media marketing you’ll probably see an ROI since commissions in real estate are so high. Real estate is a relationship building business, an “in-person” relationship building business, a local business. So if you can simultaneously build a unique online media business, while also working on your local real estate business, sure go crazy. But I don’t think from a strategic perspective a social media strategy is a good use of time for the average realtor. You’re better off just picking up the phone and calling people.

Now let me analyze my Engineering channel. What a great concept. My target market is high schoolers and university students. Who just so happen to be chronically online and advertisers love selling to the young crowd. Universities and colleges have never been more desirable, they are degree printing machines in the modern era, so channels with “studies” as their focus have the opportunity to grow. I also found a niche in Mechatronics engineering, since there wasn’t really anyone making videos on the topic online, yet the google search queries were quite high. Again, perfect unmet market need/opportunity. I hardly realized all this at the time, and it took me about 4 years to really put this all together. As a business with growth potential, and something that actually meets the needs of a market, an engineering YouTube channel is not a terrible business plan at all.

Now, one of the challenges of building an “influencer” business is that you are often at the whims of an algorithm that can be challenging to predict. So you don’t REALLY control the means of production, and control is important in a business. Likewise, for real estate you could say I don’t REALLY control how many clients I can get, but in theory you have more options to gain some control over your real estate business than you do in an “influencing” business.

Additionally, you really need NUMBERS for it to be a viable business model. Over the past year I got around 750,000 views, which worked out to an average of $300/month from ad’s that played over my videos. Now an extra $300 a month is fricken sweet (pardon my French). Especially considering that I’ve all but stopped posting to that channel and 99% the views are coming from old videos. But unfortunately, no one can live on $300 a month. If I didn’t know better I’d say this YouTube thing is screaming into my face “HEY THERE’S OPPORTUNITY HERE!” And you know what, it might be right.

The creator business model almost always has multiple components for generating revenue, and like any sound business requires a component of sales. Whether that’s building a product and selling something you think your audience may want, creating a course for people to take, or doing a “brand deal” and selling someone else’s product during one of your videos. Building an online brand requires a little more than just ad revenue to be sustainable. But the great thing is, that if there is demand for your content, those other things can often fall in place. Some other positives is that your reach is global, you have a lot of creative control, and once you make a video once it can continue to get views (hypothetically) forever. Creators often branch out to build traditional businesses around the “influence” they hold. Anything from merchandise, to experiences, to streaming platforms of their own, or “exclusive content”.

So, where do we go from here. Hopefully amongst all the rambling I was able to put across the idea that if you want to make money, you have to make something that other people (“the market”) wants. Once you’ve made a chunk of money, THEN I would highly recommend stocks as a passive income and wealth preservation tool (but if you don’t have any grandiose plans then, yes, please save and invest for your future). If you are doing something because “you love it” or “you want to work for yourself”, you’re doing it wrong. You work for the customer, you work for your audience. Once you meet their needs, then and only then will they help you meet yours. The world is a selfish place, work selfishly hard to build something other people want or need and become great at it. How do you know if other people want something? Throw it into the world and see what happens. Call up your friend and see if they’ll give you a $20 deposit for a service business, then provide the service and get feedback. Call 20 professional’s or small businesses in your market and ask them what they struggle with, then solve their problem. Look at your YouTube comments and find a common thread amongst requests and complaints that can help guide your future content. It’s not “what you can do” or “what skills do you have”, but “what can you do for me”. Give the people what they want.

Keep Investing,

Oliver Foote

Newsletter #16: Don’t Invest in Stocks or Real Estate. Bank of Canada Rate Cut! May Market Stats.

This Weeks Blog Post:

Why capitalism is won by the people who produce things
When you should use stocks as an investing tool
How to choose a business to start and a market to start in

Don’t Invest in Stocks or Real Estate:

Read the full blog post here: https://oliverfoote.ca/dont-invest-in-stocks-or-real-estate/

Real Estate News:

Bank of Canada finally cut interest rates! By 0.25bps. This means that slowly borrowing money is going to become cheaper, which means that slowly you’ll see people coming back to the real estate market.
May market stats for the Toronto Real Estate Board came in, and prices were a bit lower than last year due to a somewhat short lived spike in pricing that happened 1 year ago. More homes were up for sale last year than the year prior, and less homes sold than last year. So supply is building up in the market, but with the interest rate cut this increased supply may not last.

Market Performance as of close Friday June 7, 2024:

S&P 500: 5,346.99 (+12.74% YTD)
NASDAQ: 17,133.12 (+16.03% YTD)
S&P/TSX Composite: 22,007.00 (+5.44% YTD)

Canada CPI Inflation Apr 2024: 2.7% (0.2% Decrease from Mar 2024)
Current BoC Benchmark Interest Rate: 4.75% (0.25% Decrease on June 5, 2024)
Unemployment Rate Apr 2024: 6.1% (0.0% Change from Mar 2023)

Have a Great Week!

Oliver Foote

Subscribe to our newsletter!

[newsletter_form type=”minimal”]