Reading Time – 10 Min

Many times I’ve talked about the key steps to starting an Alpha 2.0 business, a location-independent business that sets you free with high odds of success, a decently high income, and a comparatively low amount of work. Things like finding a narrow niche, only selling high-margin services, and so on.

That’s all in the short term. In the medium to long term, you ideally want 2-4 of these small, high-profit, location-independent businesses, all servicing completely different niches that have nothing to do with each other. That way, if something horrible happens you have no control over, like a sudden economic downturn or change in the law, if one of your businesses goes under, you’re upset, but you’re still financially okay because your other business(es) will continue onwards and support you.

Twice in my life this business model completely saved my ass. During the 2008 Global Financial Crisis, I was able to survive as a self-employed man and not go get a job even though one of my companies lost 80% of its business within a few weeks. I had a second business in a completely different niche that carried me through.

Twelve years later, when the economy of the entire planet was stupidly shut down during the worldwide overreaction to a flu with a 1% death rate, once again I was saved. One company I owned, which had been previously very profitable, pretty much lost everything and I had to permanently shut it down. It sucked, but it was okay since the two other companies I had in completely different niches skyrocketed in income. That year, instead of going bankrupt, my overall income increased by 38% despite the fact I had to shut down one of my businesses.

We live in an extremely complex, chaotic, unstable, and unpredictable world. Western Civilization is collapsing right before our eyes and even many countries outside of the West aren’t doing all that great either. We no longer live in an era where you can 100% rely on one business to take care of you forever (unless that business is massive and makes you millions upon millions of dollars a year).

Instead, you need at least two and up to four of these businesses.

Does that mean you start three businesses at once? Hell no. Even I couldn’t make something like that work. Starting a business, even a part-time one, is a decent commitment of time, resources, energy, and emotions. Starting more than one all at the same time would require superhuman levels of these things, which is certainly beyond me and probably beyond you as well.

Instead, you focus on what I call the Four Phases.

The Four Business Phases

The Four Phases of a business are:

• Startup Phase
• Optimization Phase
• Scaling Phase
• Maintenance Mode

The first phase is the Startup Phase. This is when you create a new business and get it to the point where it’s making regular monthly income.

You start your first Alpha 2.0 business, enter into the Startup Phase, and focus completely on that one business and no other business projects. You can have business #2 and #3 in the back of your head or some notes, but you don’t take any action on those and instead focus entirely on business #1.

You set a monthly income goal for business #1. This goal can be whatever you want. It could be $500 per month, $2500 per month, $10,000 per month, or anything else; whatever makes sense to you based on your business skill, age, desires, schedule, energy levels, motivation, and how hard you’re willing to work.

Once you hit that monthly income goal three months in a row, you’ve got a decision to make. You can either keep going with business #1 and get that income higher or you can shift it out of the Startup Phase and instead go into Maintenance Mode.

Maintenance Mode means you are only doing the absolute bare minimum actions to keep a business running at its current level of income. You do nothing to grow it or improve it. You just keep it alive, that’s it.

You can put business #1 into Maintenance Mode, only putting a few hours a week into it, and then start business #2, which will then be in the Startup Phase. You would then focus most of your time on getting business #2 up to its initial monthly income goal, just like you did with business #1, only this time you now have two incomes going from two different businesses (which is pretty cool).

Once business #2 reaches its monthly income goal three months in a row, you now have another decision to make, with three possible choices. You can…

1. Keep growing business #2, still keeping business #1 in Maintenance Mode.

2. Put business #2 in Maintenance Mode, keep business #1 also in Maintenance Mode, and start business #3 (which will be in its Startup Phase).

3. Put business #2 in Maintenance Mode and go back to business #1 and optimize it.

This third option means you put business #1 into the Optimization Phase. This means you get the entire business running perfectly. You do things like:

• Streamline all processes
• Update content, improve service delivery, and/or add new products
• Remove processes or products that aren’t working or aren’t making enough money
• Optimize and improve websites
• Optimize and improve marketing techniques
• Add new marketing techniques
• Outsource more items; bring on new staff if needed (virtual assistants and subcontractors, never employees!)
• And so on

By spending 6-18 months optimizing a business, you can jack its income to very high levels. Years ago I spent about 18 months optimizing my dating advice business for men and it resulted in me quadrupling its average monthly net income while the average amount of organic traffic on most of its sites went down (this happened to the entire industry back then; most guys lost money while I increased my income by 4X in the same niche).

When I optimized my consulting practice before that, I increased my income while cutting my average work hours almost by half.

Once one of your businesses is optimized, you can then put that business back on Maintenance Mode and optimize your next business. Or, you can start your third business (if you want three or four, which are not required as long as you have at least two).

Once a business is optimized you can then put it into an optional phase called the Scaling Phase. This is when you take your optimized business and go “all in,” putting a massive amount of time and money into it, pouring large amounts of new customers into your newly-optimized business so you can blast your income up to very high levels. When I put Sovereign CEO in the Scaling Phase, we got that company to seven figures pretty quickly.

Key point; it’s important to take the time to optimize your business first before you scale it.  Otherwise, you’re going to end up with a huge mess when your disorganized business grows into a monster. Many business owners make this mistake; they scale a business that’s already a mess, and just end up with an even larger mess. Not smart.

It could take a year or more to optimize a business that is already making a decent amount of money, so you need to be patient and not rush this stuff. Also remember that at this point, all of your businesses will be making monthly income already, so you’re already in a good place no matter what you do.

Here’s another thing that often takes business owners by surprise (including myself when it happened to me). You can’t keep a company in the Scaling Phase forever. Soon, the company’s new larger size will start to break the systems you have in place. Problems will arise in several different areas of the business. This means you need to take the company out of the Scaling Phase and put it back into the Optimization Phase. Once the second optimization is done, then you can go back to the Scaling Phase again if you wish and continue. And then eventually you’ll have to do the Optimization Phase again, and so on, rinse and repeat.

You can scale multiple businesses over time but I would never have two businesses in the Scaling Phase at the same time. Believe me, the Scaling Phase is the most time-consuming, energy-consuming, costly, risky, and stressful of all the phases by far. Doing this with multiple companies at the same time is not a good idea. (Yes nitpickers, I know Elon Musk does this. Are YOU Elon Musk? No? Then shut up. Scale one company at a time.)

Keeping in mind the minimum income requirement of Sovereign CEO is USD $85,000 per year (in pre-tax net profit), it may be possible that you’ll hit that $7000 per month figure by the time your #1 business is in the Optimization Phase and your #2 business hasn’t been optimized at all. You may decide (based on your goals) that $7000 per month is plenty of income for you and you don’t really want or need any more. Then you can forget all this optimization and scaling stuff and just put both of your businesses on Maintenance Mode. Perfectly fine… as long as you’re making at least $7000 per month on average.

If instead you want to go after the Big Money™ then at least one of your businesses will constantly be ping-ponging back and forth between the Optimization and Scaling Phases as it gets bigger and bigger while your other businesses just sit in Maintenance Mode as back-ups just in case your main business doesn’t work out.

How much time will all of this take? That depends on many factors, including:

• How large the margins are of what you’re selling
• How hard you work (i.e. the number of hours per week you put into your businesses)
• How well (or poorly) you niche yourself
• How well (or poorly) you manage your time
• How hard you market and sell (i.e. what percentage of your weekly work hours are in marketing or sales)
• How well (or poorly) you market and sell
• How high your income goals are
• How many businesses you want

Based on the above factors, you could have a Startup Phase in which a business goes from zero to $2000 monthly in 90 days or two years. Your Optimization Phase could be anywhere from four months to two years, per business. Your scaling phase (if you want one, and they’re usually optional) can go for as long as you want until lots of shit starts to break, forcing you to go back into the Optimization Phase again.

You need a minimum of two businesses to meet Alpha 2.0 business model standards, but you could have three or even four. This number between two and four is purely up to you and your long-term Mission and goals. You could even change your mind down the road. As just one example, I’ve bounced between two and three businesses throughout my life; I’ve never had just one (too risky) but I’ve never had four either (four sounds like a lot of work to me; but many others love having four or more).

Once you get your income goals and financial life to where you want them, you can decide to do pretty much whatever you want, including putting all of your businesses on maintenance mode and then just kicking back for the rest of your life, working around 10-15 hours per week forever in a sort of semi-retirement. Or go crazy, work even harder, and scale everything to massive income.

The beauty of this model is that it’s customizable to you and what you want as an individual. It’s all about what makes you happy in the long term.

Question of the Week: Can I Do Five Flags But Live In One Place?

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J.E. Writes:

I am an admirer of your five flags concept and believe I have a fundamental understanding of its principles. Additionally, I agree with your assessment regarding the decline of the Western world and recognize the necessity of internationalizing our lifestyles to ensure our future freedom and happiness.

However, I find myself grappling with the concept of a permanent residence. I want a consistent, steadfast home. You have previously said you are reluctant to embrace a lifestyle of a digital nomad or perpetual traveler at your age. That’s what I’m talking about. What about those among us who deeply desire rootedness? To clarify, I refer to the aspiration for a home that remains constant in one location, in the same house, city, and country, over an extended period. I know many people desire this, even if we agree with your advice to internationalize somewhat.

If we fully adopt the “five flags” philosophy, it appears that this desire can’t be satisfied. It implies maintaining residences in several countries, yet never establishing deep roots in any single location. Even if we were to establish a singular home, it might be subject to change within a few years.

In light of this, how do we navigate this emotional dichotomy? I am torn between the desire for a fixed, unchanging home and the ambition to embrace an internationalized way of life. What are your thoughts on this?

Your question is basically, can you do five flags and/or live an international lifestyle if you live in one single home 12 months out of the year? The answer is yes, but it’s a qualified yes.

You can indeed live in the same home for 12 months a year (more or less) provided you also do all of the following:

1. 100% of your income is location-independent. So you can move anywhere you want, whenever you want, and you’re still able to support your lifestyle.

2. You have a 100% completed and fleshed-out international backup plan. This means you have a second country (not where you currently live) where you have:

A. Full legal residency (your residency card is valid, etc).

B. A bank account there, with a Visa or Mastercard debit card attached, with local currency in it.

C. You know the layout of your favorite city there very well.

D. You either have an apartment there or if you can’t afford that you know where and how to get an apartment there very fast if needed (who to call, how much it will be, what part of town to live in, etc)

3. Much of your money/assets (if you have any assets) is located offshore and/or is stateless (like cryptocurrency).

4. You travel to your backup country at least several weeks a year to do things like keep your residency valid, make contacts, and understand the country more.

5. You have emotionally committed to the possibility that, at any time, you may need to move out of your current rooted home and go live in your backup country. I’m not saying you have to love that idea; I’m saying you need to have accepted this as a real possibility and actually you’ll do it if needed. You don’t want to be like those old men on Mount St. Helens who refused to leave the mountain when they were warned to do so (“Fuck you! This is my home! I’m ain’t leaving it!!!”) and then were quickly killed the next day by the volcano.

I fucking love Dubai, I am very happy here, and I never want to leave. But I promise you that if Dubai ever pulls something stupid, like jacking up my taxes to 25% or launching a major war against another country, I’d be outta here within 48 hours and living it up in my backup home of Paraguay. I wouldn’t like to move and I would be upset that I had to do it, but I would do it.

So if you do all of that, yes, you can stay in the same place year-round while still enjoying the protection and other benefits of an internationalized lifestyle.

Now get to work and actually do this stuff. If you live in a Western country, you don’t have any more time to waste.

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