Society does not deify any group more than entrepreneurs. These titans of industry are willing to sacrifice it all to bring new products and services to market. And, of course, many lose.
This perspective, though, isn't one that you hear about very often. In fact, the word entrepreneur has become synonymous with a young, financially successful person.
Of course, the reality is different. Most entrepreneurs struggle. And even those who create viable businesses often require several decades to become truly wealthy. It doesn't just happen overnight.
The fact that not all entrepreneurs are rich should give everyone looking to start a business pause. There is no guarantee of success at all. In fact, business leaders who get wealthy are the exceptions, not the norm.
It's not all bad news, though. As with all success, there are certain methods and rules that you can follow to maximise the likelihood of earning a substantial income. While the following advice won't work in every situation, it will come in handy for most.
So, without further ado, here's what sets the successful apart:
They look for moats
If you look at some of the richest businesspeople in the world on sites like Wealthy Gorilla, you'll notice a trend emerging. They all made tremendous sums of money by creating "moats" around their corporate empires.
In the past, kings built moats around their castles. They were ditches full of water that made it difficult to storm the walls of the keep.
Now people use the metaphor in business to describe a company that other people can't easily copy. Facebook is a good example of this. While building the software for a social network is quite straightforward, getting a billion people to join isn't. And that's Facebook's moat – the fact that it already has a social network.
Tesla also has a moat. Its battery technology is more advanced than any other manufacturer so conventional car companies can't compete with it in the EV space. It is going from strength to strength while the rest of the industry is playing catch up.
Creating a moat is difficult, but if you can do it, you will achieve financial success. It is just a matter of time. Usually, the longer you invest in your business and build your defences, the higher your net worth will rise in the future as you begin to reap profitable rewards.
They build out their financial plans
Many entrepreneurs are excellent businesspeople, but they don't carefully consider their financial plans. And that's a pity. Proper financial planning makes it much more likely that your wealth will grow over the long-term.
For instance, make sure that you're saving in tax-advantaged accounts. Ensure that things like capital gains have a minimal drag on your ability to generate wealth over the long-run.
Explore how long it is going to take you to achieve your financial goals if you progress at the current rate. Will you be able to retire when you want to? Can you afford the lifestyle that you want on your current trajectory?
Learn how to invest your money in low-cost, proven investment funds. Avoid the advice of slick money managers, unless they have decades of experience navigating choppy and changeable markets.
They run their businesses professionally
Entrepreneurs regularly create viable businesses. But they aren't always super profitable. For many, they just tick over, generating revenues, but never really progressing.
Successful entrepreneurs do things differently, though. They comb their expenses and look for opportunities to eliminate expenditures that aren't contributing to their bottom lines.
They also pay close attention to leverage. If they can borrow money at a low cost to finance expansion, they will do so.
When it comes to operations, they look for ways to make them smooth and predictable. They don't want to spend their time putting out fires. If problems arise, they act immediately to prevent them from becoming issues in the future.
They also create harmony between the people around them. They understand that cooperation is inherently superior to conflict. They aren't afraid to hire interns, part-time employees or even external consultants to ensure that everything flows beautifully.
They don't just focus on selling more
While selling is important for business people, successful company owners don't just focus on high volumes. Instead, they analyse whether higher sales are good for profits or whether they should cut back. They always ask whether they are diverting resources to the most lucrative activities or if they could be better spent elsewhere.
They master their psychology
When you look at the most successful entrepreneurs, you notice that it isn't always their ability that sets them apart, but their psychology. They have a way of operating that is totally different from the status quo. No matter what challenges come their way, they can see them off. Even insurmountable problems aren't an issue for them.
In practice, they have a certain detachment from the businesses they run. While they are important, top entrepreneurs usually have a higher goal in mind. Most want to change the world in some way, rather than just make money.
But it is in this process that the magic happens. When they have a higher calling, all the material wealth and resources they need flock to them. The more they give, the more they get in return.
Ultimately, this advice is equally relevant in both business and life. The more a person spends their life in a state of giving, the more successful they will be personally.
Disempowered beliefs, on the other hand, change this dynamic tremendously. People who feel like they lack real agency in the world will act that way and will always struggle to make money.
Conclusion
Most entrepreneurs can develop winning businesses, but a much smaller number ever become financially successful. In many cases, that's because they don't understand the nature of the game.
The trick here is to recognise that a business isn't enough to get wealthy. You must also plan and think like a rich person.
Copyright 2022. Article was made possible by site supporter Jeremy Bowler.