Most corporate workplaces are instruments of psychological torture, yet it can decades (even if you’re ultra-frugal) to build up an escape fund.

Starting a business instead is risky, while even small passive income streams can take years to establish.

You only live once, so for most people the answer must be to find a better job. But what do we mean by better?

• A decent salary is important, but beyond a certain point a higher salary does not increase happiness.

• Jobs that give you a lot of time management freedom are great – but here we’re trying to define a job that you don’t want to avoid at all costs.

• Many doctors, vets, architects and other professionals have off-the-shelf satisfying careers. Is it too late if we’ve already become office wage-slaves?

What’s it all about, Alfie?

Interestingly, we’re not the only ones asking these questions.

In the wake of the credit crisis, Governments are exploring how the bonus culture in banking led to wanton risk-taking and the abandonment of any sense of fiduciary duty. Obviously they’d rather it didn’t happen again.

Early findings back-up other research into the limits of using money as a reward in the workplace, as summed up in this fantastic video:

There aren’t any easy answers to these questions.

For a start, motivation at work is something you want to harness for yourself and your own plans, not a carrot that helps your employer keep the workforce in line on the cheap. Yet in the bigger scheme of things, selfishness is perhaps part of the problem, too.

I discovered the video via Financial Samurai, who muses that:

Purpose is something that can either be questioned before you start your journey or after. You can be a high school or college student who has no freaking idea what you’re supposed to do in life. Or, you can be a 20 year veteran in the workforce who has built a great resume, as well as financial security, but realize you’re middle-aged now and wonder if there’s more to life since you’ve already conquered insecurity, be it financial or otherwise.

Leaving your job has a big opportunity cost – swapping to a new career or starting a business an even bigger one. Yet do nothing, and you can become a Reginald Perrin for the 21st Century.

I’m happy to tell you all I know about saving and investing – and even making money – but I don’t claim to have got the career and purpose stuff quite right in my own life so far. Have you?

A successful start-up is about the most inspiring place you’re likely to work, in my experience. If you own the growing company, it’s even better:

• A guaranteed corporate nonsense-free workplace.
• Control of your own destiny.
• The slim but real chance to become a millionaire.

Set against those benefits is the opportunity cost of losing your salary, impacting on your savings strategy.

Crash course in entrepreneurship

One interesting start-up is Crashpadder, a London-based web service that hooks up homeowners with spare rooms with those looking for a temporary bed. It’s potentially cheaper – and friendlier – than a budget hotel.

While all start-up business have big risks, Crashpadder is the sort of clever and affordable idea that’s within the reach of most spare room entrepreneurs. I was curious to know more, and Crashpadder’s Josie Anderson kindly obliged.

Monevator: Who is behind Crashpadder?

Josie Anderson:

Crashpadder is:

• Stephen Rapoport, Founder. Background in entrepreneurship having founded two previous businesses.

• Josie Anderson, Communications Guru. I left John Lewis to join CrashPadder back in January having spent a number of years managing content for various big brands. I previously worked with Stephen at a web start-up and we’ve been close friends ever since.

• Daniel Hill, Technical Wizard. Dan taught himself web-design in order to help make ends meet whilst he became a world-renowned classical music conductor, but proved so good that he was soon running his own agency.

What is the business model?

Guests book rooms online, paying in full for the stay. We transfer 90% of this to the host after the stay has taken place. We also earn a £3 booking fee from the guest.

Where did the idea for Crashpadder come from?

Stephen was in Sydney during the Olympics in 2000. He arrived the day after the opening ceremony and couldn’t find a hotel or hostel room for love nor money. When a bed was available, it would cost many times what he could afford.

He ended up crashing with one of my colleagues and contributing a little towards the rent, which worked out well – and the idea was born.

Homestays are commonplace across Asia, and even the UK in the past. We hope that this fun, friendly and affordable way to stay will come back in vogue.

How was the business started?

Working from the British Library’s IP centre in mid-2008, Stephen got a basic website live and a business plan written before taking it to various Venture Capitalists for seed capital, which was secured from a High Net Worth Individual.

Did you all quit work straight away?

Stephen gave up his job immediately. For Crashpadder’s first 12 months he lived on the income he made by offering his house as London’s first Crashpadder property. After a time, additional funding was secured, which enabled him to draw a salary as well as employ Dan and myself [Josie], both of whom had previously worked for Crashpadder on a freelance basis.

How is the business going, and what are your targets?

The business is growing fast, increasing revenues by 100% every four weeks since January 1st 2010. We have growth targets in place that reflect this strong start, but we recognise that this rate of growth is unsustainable in the long-term.

The next big step will be a third (and hopefully final) round of investment.

What have you found hardest about setting up Crashpadder?

As a totally new model and concept, it was hard to establish the business operations in a way that is both efficient and scalable. Another huge challenge is one of marketing and communications – we have a sea change of public opinion to affect before we can be considered a legitimate accommodation choice for some demographics.

I’m pleased to say we seem to be overcoming both of these challenges.

What’s been most enjoyable, from an entrepreneurial perspective?

Walking to work in the morning, knowing that everything that awaits is self-selected. The intellectual and commercial challenges inherent in start-up life have been amplified by the fact that the business model is new.

Do you think the gold rush is over for Internet businesses, or are there still plenty of opportunities?

There are huge opportunities, more now than ever. The Internet as a public-facing consumer medium is still only 15 years old – hardly out of seedling stage. Furthermore it is developing technologically at a tremendous rate, making more and more things possible. The transition to mobile Internet in particular will throw up countless new opportunities.

Any last words of advice for would-be entrepreneurs?

Stop kicking your heels and jump in – you’ll know within a month if it was the right thing to do.

Read my interview with an iPhone app developer for more on DIY start-ups.

My weekly musings, plus some other good reads.

For the past few weeks I’ve been saying shares are cheap. The FTSE 100 is pricing in another recession, but double-dip recessions are very rare.

It’s true we might stand on the edge of a depression (as Krugman argues this week in The New York Times) but then, we always might. The important point is whether the price you’re paying to bet that we don’t is a good one or not. Economic cycles have never run like clockwork.

Besides, I wouldn’t bank on an economist’s forecast. It might be right, but so might a coin toss. Economists are like bad haircuts – best kept in the past.

If I’m going to be wrong, I may as well be wrong in company. You have to look pretty hard, but there are a handful of us idiots out there.

Here’s Neil Hume in today’s FT:

Valuations are increasingly reflecting a slowdown in economic growth. The 2011 price/earnings ratio for the FTSE 100 is around 8.3 and the prospective dividend yield is 4.57 per cent. That compares very favourably with a 10-year gilt yield of 3.34 per cent.

Analysts are putting through more downgrades than upgrades, which is a reason to be wary of PE ratios – previous collapses in corporate profitability have been preceded by negative earnings revisions.

However, they have also been accompanied by inverted government bond yield curves – where 10-year notes yield less than short rates – and high levels of inventories. Neither are present at the moment.

Here’s David Cumming, head of equities at Standard Life Investments, in CityWire:

Cumming believes the panic triggered by the collapse in Greece has been overdone. ‘The EU has bailed out Greece and that has thrown enough liquidity in the market. Our view is there is enough liquidity in the system. Not so much confidence – but eventually this will come back.’

While he is not hugely optimistic about the prospects for this year’s market, he remains part of a band of specialists, including UBS and Morgan Stanley, that believes the FTSE will jump to around 6,000 points by the close of 2010. ‘That is not being wildly bullish, just based on the assumption we won’t suffer a double-dip recession,’ he said.

Malcolm Wheatley puts the negativity nicely on The Motley Fool:

Early on in my consulting career, I learned to watch out for the ‘blockers’.

Blockers, in short, are people who resist change by pointing out all the reasons why something might not work, and isn’t a good idea — rather than thinking about the reasons why something should work, and is a good idea.

And with the FTSE 100 index now down just over a thousand points since mid-April, the blockers are certainly out in force. I expect to meet at least one in my local this evening, shaking his head and pointing out the folly of investing in anything other than nice, safe deposit bank accounts.

(Update: 14:47 Thanks to the commentators below who’ve pointed out the next comment from Alan Steel is from early June, NOT July. I blame the vino (or rather the after effects!) For what it’s worth, the Baltic Dry is a volatile index).

Here’s Alan Steel, a rare financial adviser who was bullish about the next decade for equities at the market bottom in 2009. He is [ahem – was!] telling clients:

Instead of getting our knickers in a twist over headlines about Dubai collapsing (remember that?), or Greece’s debt triggering a global depression (it constitutes 0.6% of the World’s income), we should pay more attention to the fact the Baltic Dry Index, a function of rising World trade, is up 32% in 6 weeks.

And there are 3.5 billion consumers in Emerging Markets desperate to be better off. That’s a heady combination of high demand, low debt and fast growth.

So our message is still the same. We expected the Summer to be bumpy and that’s why we introduced caution to your portfolios. But by late September, we would expect to be fully invested again in growth assets with the main focus overseas.

Shares are too volatile to be a sure bet in the short-term, but that’s really the point. As investors, we can:

• Either: Relentlessly drip-feed money into the market (probably via an index tracker) and benefit from its ups and downs.

• Or: We can follow valuation to try to buy when the market looks cheap, since we know the economic picture is always unpredictable.

Or we can do a bit of both. Either way, logically you’d buy shares today.

[continue reading…]