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From Mark Ford, founder, Palm Beach Research Group: What follows is only for some readers: those who want to become really, really rich. Billionaire rich.
Be forewarned. If you are in that category, you may be disappointed by what I’m about to say.
But read it with an open mind. Because it is the only possible way to increase your wealth in any serious way.
I’ve had the following conversation more times than I would care to remember:
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Aspiring Billionaire: I need you to help me. Me: What can I do? Aspiring Billionaire: I want to grow rich! Me: Okay. Have you read any of my books? Aspiring Billionaire: Yes, but they’re about becoming a millionaire. I want to become a billionaire! Me: You do? That’s too bad. Aspiring Billionaire: Why do you say that? Me: For one thing, it’s a very silly goal. Aspiring Billionaire: Anything the mind can conceive and believe, it can achieve! Me: I can conceive being an NBA player, but I know I can’t achieve it. Aspiring Billionaire: That’s because you don’t believe it! Me: You are such a dork. And would you stop ending your sentences with exclamation points? Aspiring Billionaire: You are making fun of me. Me: Yes. |
The truth is that even if I took these guys seriously, I couldn’t help them. You see, I don’t know how to make billions. I’m not sure anyone does.
Every year, we read stories about clever young people who create online businesses that they sell for a billion dollars or more. There aren’t many such stories, but they are so dramatic that they seem to be ubiquitous.
When I was starting out, my wealthy role models were people like John D. Rockefeller, Henry Ford, and Jean Paul Getty. These guys became very wealthy by working long and hard for decades, building huge companies that dominated their markets.
I consider myself fortunate to have had those people—not the Mark Cubans of today—as role models. Why? Because the chances of becoming a billionaire the “new” way are about the same as the chances of becoming a professional sports star. One in a million.
The truth is this: It takes a lot of effort to become rich. And it takes time.
It took me about four years of concentrated effort to become a millionaire… and another several years to acquire a net worth 10 times that.
But even then, I didn’t know how to make millions. I just knew how to make more money one decimal point at a time.
I worked my way through college by starting and running small service businesses. And almost all of them billed in increments of hundreds or thousands of dollars. As a result, I could only conceive of and believe in finding ways to add to my income a few thousand dollars at a time.
With, for example, my business constructing above-ground pools, I could (and did) develop an automated procedure for building such pools that any unskilled laborer could follow. This could (and did) allow me to increase the number of construction crews working for me. And it amounted to thousands of extra dollars in profits… not millions.
1983 was the year I decided to get rich. Having graduated from college and returned from a stint in Africa as a Peace Corps volunteer, I was working as an employee of a publishing company. As an employee, I could imagine getting big raises. But since my base salary was only $35,000, I couldn’t imagine how I could increase that sum by more than about 10% per year. Ten percent was $3,500. In other words, I still just knew how to increase my income by thousands of dollars at a time.
Then, after my big decision to become rich, I knew I would have to do something to increase my income by more than $1,000 at a time. I realized that I would have to change the way I worked for money. So I learned to write advertising copy, and I became my boss’s most valuable employee. Several months later, he gave me a 100%-plus raise.
I had learned to increase my income by $10,000 increments. What was the next step? To learn how to get richer, $100,000 at a time.
I achieved this by becoming a business owner—by inventing a new product and convincing my boss to give me a 25% stake in it. This new product made more than $200,000 in profits within months.
I spent the next 10 years learning how to build a serious business with the man who was now my partner. Our business went from $1 million to over $100 million in revenue… $1 million at a time.
Over the following 10 years, I started many other businesses and I invested in real estate. My wealth grew by tens of millions. But, for the most part, it was with a series of $1 million deals. And though the main business I worked with at the time grew in $10 million increments, my compensation was always a smaller portion of that. So I can’t say that my knowledge of getting rich has ever gone beyond earning $1 million at a time.
By diversifying, I was able to increase my overall income by $3 million-5 million per year. (Uncle Sam always took his 40%.) That was (and is) a lot of money. I realized that I was earning enough to fulfill any need I could possibly have. So I turned my attention from increasing my income to building sustainable wealth. Looking back, I know I made the right choice.
Getting rich $1 million at a time was and is enough for me. And it should be enough for anyone.
So even if you have the billionaire bug, you should follow the process I’ve been describing: getting rich one decimal point at a time. You should do that because it’s the only practical and reliable way of becoming wealthy.
You do it step by step—first getting richer by thousands, then by tens of thousands, then by hundreds of thousands, and then by millions.
The process might mean taking steps like these…
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If you are a salaried employee, you can increase your income by becoming the most valuable employee in your business. This will increase your wealth by tens or even hundreds of thousands of dollars at a time—though it may mean switching employers as you go.
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If you are a professional or small business owner earning six figures, you can increase your income in $100,000 increments by replicating your business.
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If you own a business that is making millions of dollars per year, you can keep growing your business and your revenues.
I go into detail on all of these in my books Automatic Wealth, The Reluctant Entrepreneur, and Ready, Fire, Aim. And I cover them further in other essays as well.
Meanwhile, there is one piece of advice that I have for everyone who wants to become rich—millionaire rich or billionaire rich: Develop a financially valuable skill.
A financially valuable skill is a skill that will help you climb the wealth ladder one step at a time. It is a skill that will put you in the mix whenever the opportunity to acquire wealth appears.
There are not many financially valuable skills. In fact, there are basically only four: marketing, selling, coming up with profitable ideas, and managing profits.
Learning how to sell is probably the most important of these skills, because it will allow you to sell your ideas, as well as the idea that your ideas are valuable. You will need this skill in just about every possible business situation.
Marketing is also a very important skill. It will allow you to sell your company’s products and services to an ever-expanding market. It will also allow you to generate more income from the customers you have.
Learning how to come up with profitable ideas is the most difficult skill to acquire. Many wealth builders never learn this skill. They simply use their sales and marketing skills to convince idea generators to sell them their ideas or work for them. If you don’t feel you have this skill, don’t worry. You can still become wealthy if you have some combination of the other three skills.
The final skill is managing profits. This is essential for building wealth. Many people develop businesses that bring in significant revenues. But because they lack the skill to create profits, they never get beyond earning a decent living. They never get rich.
The good news is that learning how to manage profits is the easiest skill to acquire. You simply must commit yourself to it and pay attention to your business. The opportunities to increase cash flow and cut costs are always present.
So there you have it: several more tools for becoming as rich as you possibly can. Learn one or several of these financially valuable skills and then learn from them how to increase your wealth one decimal point at a time.
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