Who wants to be a billionaire?
Actually, who cares about being a billionaire – as a business mentor, I care about answering the question of what can start-ups and small businesses learn from billionaires? My passion is to help entrepreneurs achieve their business goals. So, studying how extraordinarily successful people have done that is a natural place to get some good lessons.
Billionaires are great to study as they have many of the same issues that small businesses have – but they have greater resources to solve them.
Think of billionaires though, as the ultimate manifestation of capitalism. They are the Mount 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 business people – are and do.
What can start-ups and small businesses learn from billionaires?
There is a lot of fascinating research on billionaires available. The lessons that it reveals are very useful for small businesses and entrepreneurs.
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 start-ups and small businesses learn from billionaires?’ I come up with three key lessons.
Lesson one: 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 that we need to look at societal trends and spot the business opportunities that come from them. These trends are ever-changing and so they continually create opportunities for entrepreneurs.
This isn’t always easy to do. 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 changes. 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. They’ve embraced tech to improve their client experience.
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.
In 2019, on average there were over 18 new billionaires each month...and most of the recent billionaire wealth came from industries that didn't even exist 20 years ago.
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, 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, as that over 52% plan to do so in the next year.
I love examples like the teachers and other professionals in the USA that have seen the opportunity to change careers and get into vending machines.
Billionaires, teachers – even Yours Truly, a former financial planner – aren’t resting on their laurels. Be prepared to pivot to take advantage. Because if you don’t you may be a victim of Lesson Number 3….
Lesson 3: Diversify your business
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 you 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 good or service. The lesson from the billionaires is – diversify before the market makes you redundant.
One of my clients owns an elevator-installation business. Historically, his main revenue stream came 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 he missed out on just one job he could take a 15 – 20% hit on his income. That’s a big variation when you are trying to grow and have a payroll to meet.
What he noticed was, after installing the elevators, somebody else was making money from serving them. Yes, he got the risky once-off big fee for the installation. But a someone else was getting the regular income stream for providing service over the 30-year life of his elevators!
So, he made 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 much greater degree of certainty.
What extra revenue streams can you develop in your business. What other services do your customers need that they are getting somewhere else?
How can a Business Mentor 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
- They have most of their money in their own business
- Most made their money in the last 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 they work their butts off to make their vision come true.
And, like billionaires, they get a team to support them all the way through.
Contact me and tell me your story – I would love to know more about you and see how I can help you achieve your potential.