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Are You Suited to Entrepreneurship

The 7 Traits of the (Really) Wealthy

How and why the wealthy got so rich. Here are alternative ways to learn to think about building wealth.

Arun Sangwan

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Wouldn’t you love to be wealthy? Most people readily confess that they would, and yet they do almost nothing about it.

Ask them why, and they typically state a range of reasons, including: A lack of resources, inexperience, skepticism and hostility of their surroundings, the absence of a mentor, a failed initiative in the past, the absence of a supportive societal culture, an adverse business environment and so on.

I can assure you, these are nothing but convenient excuses. To support my argument, think about this. As per Bloomberg, 73 of the 100 richest people in the world are self-made. Of these 36 had poor parents, 18 had no college degree and 8 had poor parents and no degree.

Notably Larry Ellison (Oracle), Li Ka-Shing (Cheung Kong etc.) and Leonardo del Vecchio (Luxxotica) are orphans. The parents of Amancio Ortega (Zara), John Fedricksen (Meisha etc.), Sheldon Adelson (Las Vegas Sands), Invgar Kampard (IKEA), Francois Pinault (Samsonite, Gucci etc.) were a railroad worker, a welder, a cab driver, a farmer and a lumber miller respectively.

So why is it that the illustrious entrepreneurs listed above achieved great wealth despite adverse conditions? Because they had unyielding commitment.

Someone who is ardently committed to creating wealth will instinctively show initiative rather than exhibiting inaction. They will also show a range of habits that include seeing and acting on opportunities, systematic planning, problem solving skills, commitment to work, concern for high quality, coordinating and organising skills, perseverance, persuasion skills, assertiveness, and self-confidence.

These are formally identified as the entrepreneurial competencies. The good news is that they can be learnt.

While most of us remain in awe of the wealthy, we’re not inclined to probe their journey to wealth. Instead, I have studied their early life to identify commonalities in their actions. I have not included people who attained wealth by inheritance or marriage, but through hard work.

Based on it, I present to you the seven traits of the wealthy.

1. Own a wealth-creation engine

The core belief that dominates their thinking is that wealth creation can never be outsourced or gained by partaking in someone else’s vision, but by persuading others to participate in your vision.

The wealthy do not ‘act in theaters’ owned by others. Quite the reverse, they’re the ones who:

  • Write the script (the business narrative)
  • Conceive of an output that is highly valued by customers
  • Organise resources accordingly: By devising sufficient incentives for others to act in their theater and/or persuade them to part with their resources – employees, investors, asset owners etc
  • Assign roles to people
  • Coordinate activities.

While they may invest elsewhere, the point is that it is never their primary wealth creation engine.

2. Resource-ownership is futile

The early life of most of the wealthy can be traced to humble or even disadvantaged settings. But a lack of resources never stopped them from reaching for their dreams. Their beliefs are:

  • Never restrict vision and goals to resources currently controlled, but rather set ambitious vision and goals, and then find ways to organise resources
  • Seeking resource-ownership is futile, as most resources are put to unproductive use by their owners, who will readily part with it for superior returns
  • It’s critical to devise ways of moving resources out of an area of lower and into an area of superior productivity and greater yield.

Accordingly, they develop a set of skills that are rare, unique and can’t readily be sourced from the market. These skills include:

  • Seeking opportunities where imperfect competition exists
  • Networking for accessing private information
  • Deal making to gain from temporary opportunities
  • Harnessing creativity of others
  • Harnessing innovation
  • Bringing all elements together.

3. Access to private information

They manage risk by acquiring private information. This type of information has limited distribution and is unavailable to the public. Their beliefs are:

  • The acquisition of information is an investment
  • Networking is a key to access to private information
  • Networks should be open and global, not local and closed
  • The choice of people in the network should be guided by people’s competencies and resourcefulness and not closeness

As Prof. James O Fiet states, ‘An entrepreneur is a person who optimises the tradeoff between investing too much and too little in specific, risk reducing information.’

4. Believe in imperfect competition

In perfect competition, all participants earn the same levels of profits. None can get wealthy that way. If they could, there would be no incentive for them to bear above-normal levels of risk in return for average levels of profits. So the wealthy chose to operate where:

  • Imperfect competition exists
  • They have access to private information to manage risks
  • They can benefit from a situation where others are excluded by design.

 5. Crafty deal making

The wealthy are proficient in this art. I have seen sufficient evidence that:

  • As alert discoverers, all they see are deals around them
  • They instinctively engage in deal-making all the time
  • With private information they know dynamics better than others
  • While the rest consciously discard temporary opportunities to make money, they do not.

6. Unique key for choosing and rejecting ventures

Given alternatives, the wealthy trade-off between the probability of and magnitude of loss in a peculiar manner:

  • They  undertake alternatives with a high probability of a loss as long as it is small
  • They avoid any choice where the loss could be ruinous, even if its probability was low
  • They would reject an opportunity if they could not assess its risk.

7. Consulting and/or Intellectual Property

Let me explain this through an anecdote. Recently two homemakers confronted me on which entrepreneurial opportunities they could pursue.

Step one was figuring out what they were passionate about. We drew a blank except that they ‘liked’ shopping for sarees (a dress worn by Indian women). So, what could we do with this interest? I could only think of Indian weddings. The brides buy around 30 to 50 sarees.

The affluent spend upwards of R50 000 or even multiples of R50 000. Then there are Non Resident Indians and Persons of Indian Origin across the globe. That is a huge market. With specialist skills, one can be a consultant.

Surely, you would need to master what goes into making a saree – processes, materials and their sources, weaving techniques, designs, custom designs, number of man-hours it takes, pricing etc. and then of course the import of the occasion, customs and so on.

Be it any field, mastering skills takes years to perfect. However, it can be your primary wealth creation engine. Parallel to that, you should seek avenues for sharing it with others through books, videos, lectures etc, thereby creating intellectual property, and a second (and often more successful) revenue stream.

Create a portfolio of micro businesses

You do not necessarily need to be an entrepreneur to create wealth. An alternative is to learn to think, assess and invest in micro or small enterprises, just as venture capitalists and private equity firms invest in medium or large businesses.

Professor Arun Sangwan teaches strategy and entrepreneurship for the MBA programme at the School of Business, Alliance University, Bangalore. He is a consultant to leading companies in the financial markets for the development of newer trading strategies and algorithmic trading. His last corporate assignment was as the country manager - India & SAARC for Sanrad. Previously he managed strategic alliances for companies as Hewlett-Packard and Silicon Graphics in India. He has also worked for the Tata group and HCL. Connect with him on LinkedIn or email to arunsanguine@gmail.com for more information.

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Are You Suited to Entrepreneurship

(Podcast) Being An Entrepreneur Is Painful

There is a pain attached to running your own business. It’s time to discuss how tough it is – address the reality and you might just be one of the successful few.

Nicholas Haralambous

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Entrepreneurship is fun. But on the whole, running a business is hard. Far fewer business owners succeed than fail. Statistically your business is going to fail. Those are the hard numbers.

There is a pain attached to running your own business. It’s time to discuss how tough it is – address the reality and you might just be one of the successful few.

Listening time: 5 minutes

Related: (Podcast) Playing To An Audience Of One

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Are You Suited to Entrepreneurship

3 Dangerous Entrepreneurial Myths You Need To Ignore

This terrible advice won’t actually get you anywhere.

Entrepreneur

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Entrepreneurial Myths

We’ve all heard the numbers about how hard it is to build a long-lasting business. While there are many factors at play to get there, without effective marketing and sales a business cannot survive.

Unfortunately, there is a multitude of dangerous and destructive marketing advice swirling around the heads of vulnerable entrepreneurs. Like vultures seeking their next meal, “gurus” pontificate nonsense that these hard-working business owners follow, only to discover that what they tried doesn’t work.

Often, once the damage is done, it is too late for them to do anything else about it.

If you want to not only survive, but thrive, here is some of the terrible advice you need to start ignoring:

1“You need to be everywhere”

I’m sorry, but how do these people sleep at night without the use of narcotics? “Experts” spew out dribble to make headlines saying you need to get on Snapchat, get on Periscope, do YouTube Live … be everywhere! They’ll say you need to get on this platform or that social media network. Oh, and use LinkedIn Live! And make sure to post on Instagram three times a day and Facebook twice a day. And don’t forget those Facebook Lives. Make sure to do them every day.

Related: The Journey Of Entrepreneurship: How The Tough Get Going

ACK! Just writing that paragraph stressed me out. How the heck are you supposed to be on all of those channels, never mind doing it all effectively, and still run your business? Of course you can’t. And you shouldn’t. (Unless self-torture is your thing, in which case have at it. There are books about that, but I’m not giving any titles because I’d have to Google them and then I’d be retargeted by the ads and that would just be gross.)

It is impossible to spend even half an hour on each major network and still get any work done. Forget about focusing on measurement, profit and return on investment. They don’t mention that on purpose, because then these crazy-pants suggestions would really make no sense. But, then these “experts” would stop making the headlines, so they keep serving up spoiled advice for the poor folk who chow down and then get sick on it.

Don’t allow yourself to fall victim to their plots of deception. Demand strategies that value your time and produce results in a significant and measurable way quickly.

2“It takes money to make money”

cash-flow-management

I didn’t take the easy way out. I am part of a group of scrappy entrepreneurs who have a lot of hustle and heart and little/no/negative funds. I didn’t come from family money, and the big banks certainly weren’t lending to businesses like mine.

The only way I was going to get a big pile of cash was if I won the lottery. And since I’ve only played about four times in the last decade, the chances of that happening were slim. What I had to find was the same thing you most likely want – a solution to predictably bring in customers when there is no marketing budget to play with.

3The Schmo-bags

The worst are who I call the “Ferrari Marketers.” They rent a sportscar for an hour or two, hang out in front of it and then sell us shiny object strategies that they haven’t even used in their own business.

Related: 6 Timeless Strategies That Drive Successful Entrepreneurship

They are abhorrent, hideous and dangerous. Not only are they crooks stealing the money of the people who are seeking a solution from them, but they may prevent really talented people who have a gift/service/product/offer to share that can help someone else from ever reaching them.

Did I mention they suck?

But, once you discover a game-changing system, you are responsible for implementing it. You can’t be distracted by shiny objects any longer.

As Jack Welch says, “Good business leaders create a vision, articulate the vision, passionately own the vision and relentlessly drive it to completion.”

Don’t allow yourself to be enticed or distracted by fads or the “latest and greatest/not greatest” new social media strategy, channel or tactic.

Once you uncover how to truly get results, be strong-willed and stubborn. Repel any idea, strategy or initiative that requires you to keep spending money to make money. If you keep throwing dollars and time at a goal, hoping and wishing that it will work, yet not tracking or measuring the results and scaling accordingly, then you cannot expect results.

Start measuring, tracking and demanding results from your time and money, rising above others and landing in the successful minority that thrives instead of survives.

This article was originally posted here on Entrepreneur.com.

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Are You Suited to Entrepreneurship

5 Mindset Changes You Must Make When Going From Employee To Entrepreneur

As one prominent author wrote, “Entrepreneurs don’t finish when we are tired. We finish when we are done.”

Sujan Patel

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Thousands of people dream of the day they can quit their jobs and escape the 9-to-5 life. In fact, Gallup found that 87 percent of the employees it surveyed worldwide did not see themselves as engaged.

But quitting your job and starting your own business is only half the battle. You need to prepare to be an entrepreneur. Besides getting your finances in order and having a plan in place, you also need to prepare your mind.

Your habits dictate your success, and if you’re still stuck in that 9-to-5 mindset, your endeavors will fail. You must adopt an entrepreneurial mindset and start thinking the way the world’s top leaders do.

Being an entrepreneur is very different than being an employee, and the way you envision it may be completely off base. Here are five changes you must make to your thinking in order to prepare yourself for the realities of being an entrepreneur.

1Train your mind to think outside the box

Once you leave your office job, you’re no longer confined by corporate life. That means you need to open your mind to new possibilities – possibilities that may not have been an option in your old life.

Related: For Shatty Mashego Success Lies In Maintaining A Positive Mindset

In an article for TIME magazineWarren Buffett, CEO of Berkshire Hathaway, said, “People will always try to stop you doing the right thing if it is unconventional.” In short, others may not see your vision, but you can’t let that stop you. You need to be creative with your business, offer something new and be different to be successful.

2Develop both short-term and long-term vision

Albert Einstein once told the New York Times, “A new type of thinking is essential if mankind is to survive and move toward higher levels.”

That new type of thinking needs to be focused on a strategic goal. You must have a vision for your company – an idea of where you’re going and how you’ll get there.

As an entrepreneur, you are the leader of your company, and your team members are looking to you to show them the path to success.

What’s your plan? You should be able to see the big picture as well as all of the steps it will take to reach your main goal. Then, you must communicate that vision to those on your team and ensure they each understand their individual roles in the plan.

3Let it all fall on your shoulders

stress-on-shoulders

Becoming an entrepreneur can be scary. Your success is now completely dependent on the work that you do. You can no longer fall back on a salary or benefits.

As an employee, if you had a bad day at work, you were still paid your salary, regardless. But as an entrepreneur, if your business isn’t successful, you won’t make any money. Plus, you now have others relying on you for their livelihood.

Ryan Farley is a typical example of corporate employee-turned-entrepreneur, quitting a fast-paced finance job to start lawn care marketplace LawnStarter Lawn Care. “I was used to working extremely long hours in the corporate finance world,” Farley told me. “I thought that would have conditioned me well, but nothing can prepare you for this amount of stress.

“It’s pretty common for founders to have the stress get so bad it affects your physical and mental health,” Farley continued. “But you have to press on, and you’re better off for it.” Prominent entrepreneurs like Brad Feld and Mark Suster, have expressed similar sentiments.

Working for yourself also means you need to be your own motivator. You no longer have a boss hounding you to get your work done. You need to stay organised and focused, and you’re going to have to be comfortable with hard work and long hours.

Related: 8 Mindsets That Will Set You On The Path To Success

4Get ready to be a jack of all trades

As an entrepreneur, you can’t say “That’s not my job.” Every job is your job now. There’s no one else to pick up the slack but you. You need to make sure everything in your business continues to run on track, and that may mean doing work you aren’t used to doing. You may need to be the accounting department, IT, marketing and more in addition to leading your company.

Entrepreneurs wear many different hats and are constantly learning new skills and working hard. If you think becoming an entrepreneur means you get to sit back and kick your feet up, you’d better stick to your day job.

As entrepreneur, author and investor Robert Kiyosaki has written on Twitter, “Entrepreneurs don’t finish when we are tired. We finish when we are done.”

5Be flexible, focused and positive

Attitude is everything in business. You can’t let challenges get in the way of your dream. Entrepreneurs need to be optimistic and stay focused on their goals. Your passion must drive you.

Related: An Entrepreneurial Mindset – Why And How To Develop One

As Steve Jobs once said in an interview with the Smithsonian Institution, “Unless you have a lot of passion about this, you’re not going to survive. You’re going to give it up. So, you’ve got to have an idea, or a problem or a wrong that you want to right that you’re passionate about; otherwise you’re not going to have the perseverance to stick it through. I think that’s half the battle right there.”

This article was originally posted here on Entrepreneur.com.

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