Who wants to be a billionaire?
I do? Well, why not. After all, as an avid fan of Succession, they have a lot of really nice toys to play with (especially that superyacht in Season 2).
Who cares? As a financial life planner, I care about what lessons you can learn from billionaires. At Kenwell, our passion is to help people achieve their life goals through a smart money plan – our Kenwell GAME Plan. Studying how extraordinarily successful people have become is a natural place to get some good lessons from.
Billionaires are great to study as they have many of the same issues that you and I have – but they have greater resources to solve them.
Think of billionaires as the ultimate manifestation of capitalism. They are the Mt Everest (or maybe the Mariana Trench?) of manifesting creative energy into economic wealth. In that sense, there is a lot we can learn from what billionaires, as businesspeople, do.
What can we learn from billionaires?
There is a lot of fascinating research on billionaires available. The lessons research reveals are very useful, especially looking at how wealth is accumulated and grown.
And there is a lot to learn: For example – despite COVID-19 – there are more billionaires than ever before. Just take 2019. In that year, there were more than 18 new billionaires created every month. There are a lot of people making a lot of money today.
Forget the impression that all the super-rich simply inherited their wealth. Nearly 60% are self-made and nearly 90% are self-made in combination with an inheritance. Most weren’t born billionaires, they created this wealth themselves, in this lifetime.
Of all the great information in these studies, when I ask myself ‘what can we learn from billionaires?’ I come up with three key lessons.
Lesson 1: Opportunities are endless
Most of the recent billionaire wealth came from industries that didn’t even exist 20 years ago. Tech and healthcare are by far the biggest growth areas. From 2018 to mid-2020, tech wealth amongst billionaires increased by 42.5% and healthcare by 50.3%.
What I take from this is, we need to look at societal trends and spot the business opportunities that come from it.
This isn’t always easy. I come from Australia, where it seems that unless you own media or dig up stuff from the ground (that is, two hugely capital-intensive industries) you can’t get super-wealthy.
While many businesses have suffered terribly from the effects of the COVID pandemic, others have thrived on the opportunities. Physical distancing and working from home accelerated the ascendance of digital businesses, compressing several years’ evolution into a few months.
Aging, longer living and increasingly affluent populations mean that spending on health care is only going to go one way: up.
What excites me about tech, is that, unlike many other businesses, the barriers to entry are relatively low. You don’t need millions of dollars of capital or huge laboratories to start your business today. Many businesses I know have reduced their costs by lowering fixed overheads by embracing tech to improve their client service.
And the opportunities for a bright entrepreneur don’t just happen at the big end of town. The pandemic has created a whole new generation of entrepreneurs that are realising that there is no finite limit on the available opportunities.
Lesson 2: Be prepared to pivot
You may be a market leader right now, but that guarantees nothing in the years to come. In fact, the more successful you are, the more likely you are a target for one of your competitors.
Billionaires don’t mind pivoting away from what worked in the past to what worked in the future. Even billionaires must keep reinventing their businesses and reinvesting their gains into new ventures.
It’s telling that over the past 12 months, over 22% of billionaires have made a change to their business strategy. The big news though is that over 52% plan to do so in the next year.
I love examples such as teachers and other professionals in the USA that have seen the opportunity to change careers and get into vending machines.
Billionaires, teachers and even this financial life planner aren’t resting on their laurels. Be prepared to pivot and to take advantage, because if you don’t, you may be a victim of lesson number 3….
Lesson 3: Diversify your income
Even billionaires can get it wrong. Over the past ten years, over 150 people dropped out of the billionaire club. The main reason for this was a lack of diversification in their business interests.
Every small business knows the joy of winning a big account, and they should celebrate. It’s a double-edged sword though – suddenly a large percentage of your business can come from one client.
Equally, most of your revenue may come from one type of goods or service.
The lesson from the billionaires is to diversify before the market makes you redundant. One of my clients owns an elevator-installation business. His income mainly used to come from installing them. This meant his business, although profitable, had very ‘lumpy’ cash flow, and his success was closely tied to the overall building industry. Plus, if you miss out on just one job, you could take a 15 – 20% hit on your revenue.
What he noticed after installing the elevators was that somebody else was making money from serving them. Yes, he got the risky once-off big fee for the installation, but someone else was getting the regular income stream for providing service over the 30-year life of his elevators! He decided to make a plan to build up his service department. It was a natural decision for someone buying an elevator from him to also get him to service it as well.
After five years, the service division was bringing in over 80% of the increased business revenue, and with a greater degree of certainty.
What extra revenue streams can you develop from your existing expertise?
Your most valuable asset is the six inches of grey matter between your ears. What skills can you develop to realize some of your income dreams?
How can Kenwell help?
Striving to be a billionaire or even a millionaire isn’t the point. It’s that each of us has more opportunity today than ever before to realise our dream in business.
Think about it:
- Most billionaires are self-made
- Most of their money is in their own business
- Most made their money in the past 20 years
Does that tell you something about how wealth is created? It’s people backing themselves with their business ideas and having a go – and often against the odds.
They have faith in themselves and believe that they have innovative solutions to customers’ problems, then work their butts off to make their vision come true. And, like billionaires, they get a team to support them all the way through.
At Kenwell, we build a unique GAME Plan for each of our clients. This plan outlines what is important to you and your family, and then looks at how we harness your money assets to make this life become reality.
We assess our progress not only through financial measurements but your life satisfaction too. We do this through our Financial Wellbeing Scorecard – why not measure yours right now?
If you would like to know more about how Kenwell can work with you and your family contact us today.