What do you think about when you read or hear the words “wealth” or “wealthy”?
Depending on where and when you live, these terms may conjur up different mental images. In today’s western society, people commonly relate them to either the amount of money a person earns, or the assets one has accumulated. In some parts of our modern world, however, tremendous wealth may be represented by owning your own shelter or having enough food to feed your family each day.
What a Difference a Few Hundred Years Makes
Webster’s defines wealth as “abundance of valuable material possessions or resources.” This seems pretty consistent with some of the ideas behind what we often call the “American Dream”.
The etymology of the word is interesting. The term “wealth” derives from the 14th century English word “weal”, which means simply a sound or prosperous state, or one’s “welfare”. Funny thing, today we generally think of the terms “wealth” and “welfare” as relating to groups of people at the opposite ends of the economic continuum.
In our current time, much of the thought in western society revolves around the concept of wealth creation. In large part, it is tied to our most basic human wiring for self-preservation. Creating wealth is fundamental to creating a better future and better prospects for the welfare of our families and ourselves. It’s one aspect of our legacy.
Pathways to Wealth
How can we best accomplish this? This question is the subject of endless books that occupy massive amounts of real estate at your local Borders or Barnes & Noble. Rich Dad author, Robert Kiyosaki, presents some interesting ideas in his “cash-flow quadrant”. He illustrates why those least likely to obtain financial security are “employees”.
Employee’s prospects for success are limited by several constraints. Employees, by definition, have little if any control over their income, duties, or their work schedule. Most critically, they are their own biggest limiting factor. Their ability to create wealth is tied solely to their own labor, what their employer is willing to pay for it, and how much time they have to perform their labor. As a result, employees are not statistically very likely to create significant wealth.
The second group in Kiyosaki’s quadrant, the “self-employed” have better prospects. These individuals have assumed at least some control over their time and earnings potential. Utilizing their creativity, they increase their potential for wealth creation. Michael Gerber, creator of the “Dreaming Room” explains that entrepreneurs do this because we “see opportunities everywhere we look.” Entrepreneurs, he explains, are more concerned with discriminating between opportunities than they are with failing to recognize opportunities.
However, self-employed entrepreneurs still face the major limitation that confounds all employees, they are constrained by the time they have available to work. They still only have 24 hours available each day and 7 days each week, so there is still an absolute ceiling on their earning potential.
Individuals who occupy Northeast quadrant have overcome this limitation by rising from the level of self-employed to business owner. These individuals use their businesses to leverage not only their assets – such as education, effort, energy and time – but also those of their employees. The individual entrepreneur’s time is no longer a limiting factor. He or she can benefit directly from the efforts of others. Furthermore, with a little creativity, the business owner can gain additional leverage by developing and/or implementing business systems and processes that can multiply the efforts of his or her employees. Now even greater value can be created without added expense, and the ability to create wealth is enhanced.
And don’t just think that this is limited to traditional bricks and mortar businesses. Thanks to the power of the Internet and modern communication technology, it is possible for home-based businesses as well. Many successful business owners have used the Internet as their hub for creating a low-overhead “virtual” organization, using online tools and services to coordinate the activities of employees, teammates and independent contractors. A large number of multi-million dollar businesses are managed this way, by owner’s that have determined to work from home. As a side benefit, these businesses are portable. You can actually work from anywhere with an Internet connection.
Common Threads at the Top
Entrepreneurs have created the vast majority of the wealth in today’s world. Just check out Forbes’ list of the wealthiest people of the world. At the time this was written, the top five includes Bill Gates, Warren Buffet, Carlos Helu, Larry Ellison, and Ingvar Kamprad. In each bio there is a tag that indicates the source of their fortunes. For each of these five, the tag is the same – “Self Made”.
Each and every one of these wealthy men created their fortunes through entrepreneurship. In fact, most of them progressed through the quadrants from employee, to self-employed to business owner. They have also progressed to the final and most valuable quadrant – investor. For investors, wealth is generated by not only the efforts of others, but also by the wealth you have already created. Money, as well as other people, now works for them.
The Pyramids Weren’t built Overnight
As with anything of lasting value, wealth creation is not an overnight process. The only “legitimate” instant wealth scheme is winning the lottery. However, just like in Las Vegas, that single person’s prize is bought and paid for by a countless sea of losers. It is also telling that over 70 percent of those that win squander their winnings within three years. Little value is placed on things that are gained with little effort; as a result, little care is taken to protect them.
Becoming an entrepreneur and charting your individual course from self-employed through business owner to investor remains the most likely and most predictable method for creating a lasting financial legacy. However, it is only predictable if you take action – if you act immediately when opportunities present themselves, and then follow up with consistent effort focused on a well-defined goal.
The word “entrepreneur” is derived from an Anglo-French term meaning “to undertake” or take upon oneself. Are you prepared to take action upon yourself today if confronted with an opportunity?
I have a challenge for you. At some point over the next week, you will be presented with an opportunity to do something that will change your life, if only in a small way. It could happen at church, in your office, while reading or watching something on the Internet, or even in a conversation with your spouse or friend. When this happens, take action right then and there. The more often you do, the easier and more automatic the process becomes and you will construct your legacy one stone at a time.
You make the call
Entrepreneurs undertake risks. They display initiative – a readiness to engage in difficult action. They also exhibit focus, commitment, determination, creativity and persistence. It is these qualities that sustain them in their journey. None have ever claimed that the roads to either entrepreneurship or wealth were smooth and easy. That is why 95% of the world’s wealth is controlled by 20% of its inhabitants. The other 80% either don’t recognize the opportunities to create wealth (to quote Ann Landers, “Opportunities are usually disguised as hard work, so most people don’t recognize them.”), or don’t have the stomach to do (legally and ethically) what it takes.
Entrepreneurs create wealth. It is the intentional result of their thoughts and actions. Of the 400 wealthiest individuals in the world, approximately 80% are entrepreneurs.
Through wealth creation, entrepreneurs look out for their own welfare.
Are you ready for the challenges and rewards of entrepreneurship? Are you ready to create a financial legacy for your family and yourself?
Entrepreneurial success is a choice – your choice.
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Fri, Sep 25, 2009
Personal Development/Mindset