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How the Rich Make Money

golden_eggs.jpgThe Federal Reserve recently published some new wealth data [PDF]. They looked at levels of net worth and the income associated with each. They defined net worth as total assets (including a primary residence) minus any money owed.

You need a net worth of over $8 million to make the top 1%, $2 million gets you in the top 5% and it takes about $900,000 to place yourself in the top 10%.

So those are your targets if life on your own terms means being in the top 10% or above.

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Making more doesn’t mean having more

This report also looked at share of total wealth. As it turns out, the richest of the rich – the top 1% – didn’t get richer. They still held approximately one-third of the country’s total wealth in 2007, the same as 1995.

However, their share of income was up significantly – from 17% in 1997 to 22% in 2007.

The wealthiest people in our country saw a bigg increase in share of income, but their share of net worth didn’t go up. Does that mean rich people got caught up in the “spend, spend, spend” economy? Possibly.

We often think, “If I could just make a little more money.” This study offers further proof that making more doesn’t necessarily translate into having more – even for the richest among us!

Make do, then make more

The crucial thing – the starting point – is to figure out how to make do with what we already have. Then when we make more, we’ll have more because we manage it all better.

We can enjoy some of it now and invest the rest for our future – for the life we dream of living.

How the rich make money

As might be expected, the average person gets most of their income from salaries and wages. As we move to the top 5%, we see that a larger share of income comes from business ownership and investment real estate.

It really kicks in for the top 1%. Plus they have built up enough assets to get a significant boost from selling those assets for a profit. It’s Economics 101 – buy low and sell high.

But it’s no panacea

We’ve recently seen people losing money in business and real estate. Like most things, it’s no panacea. It’s risky. But if you aren’t trying to get rich quick, you can greatly improve your odds.

The best advice

We also found it revealing that this study showed that the bottom 50% lost money holding assets and from the ownership of businesses and real estate.

The rich made a lot. The bottom half lost money. What do the rich know?

Before you jump into investing in a business or real estate, educate yourself. Get advice from someone who’s actually succeeded at it. If they’ll mentor you, that’s great. If they charge you for it, it will be worth every penny.

You’ll get where you want to be faster by learning from people who have done it rather than trying to learn it on your own.

So if life on your own terms means building wealth, get started creating multiple streams of income today – even if it’s just part-time!

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Please join us next time when we ask, “Are you talking to the right person?”

Thanks for reading our post today. Until next time, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
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The Entrepreneurial Roller Coaster Ride

When you own your own business, you have your highs and you have your lows. And it seems like you rarely have any in-betweens.

George said  …
I never talked about this for years. I thought it was just me. Then I got up the nerve and mentioned it to my sister, who also owns businesses.

She said she knew exactly what I was talking about! So that encouraged me to ask other business owners about it. So far, every single person I’ve ever talked to about this knows exactly what it means. You can see it on their face as soon as you bring it up.

But it’s something I think a lot of entrepreneurs don’t talk about.

Mary-Lynn added  …
With Bigg Success, I’m experiencing business ownership for the first time. And I feel like I’m on a roller coaster. There are days where I feel exhilaration from the ride and there are days when I feel sheer terror and want to get off the ride.

Entrepreneurial terror

If you’ve never experienced it, count yourself lucky, but most people in business have.

You can feel terrified at times even with a job. You may fear you’re going to lose yours when you see other people’s jobs getting cut. But it’s still different for business owners.

George …
I remember one of the guest speakers for my class who talked about the number of mouths he had to feed now. A lot of the most successful business owners I know take personal responsibility for their people. They don’t look at just putting bread on their table; they worry about their employees as well.

That can keep you up at night!

Inc. published an article (way back in February 1987) called Entrepreneurial Terror. A portion of it has been republished on Wachovia’s Small Business site.

It was written by Wilson Harrell, a serial entrepreneur and author of For Entrepreneurs Only. He said:

“… the ability to handle terror, and to live with it, is the single most important
– and, yes, necessary – ingredient of entrepreneurial success.”

This company doesn’t love misery

He says that you shouldn’t share your lows with your friends and loved ones, because you’ll just pass the worry on to them. Unless they’re your partner in business.

He adds that you should always share your highs, though.

How highs turn to lows

The way you spend your time and money when you’re on a high often has a lot to do with how low you go. Let’s look at two examples:

  • Too busy for marketing
    When you’re so busy, you may even be running at capacity, and you know your business couldn’t crank out any more volume no matter how much you wanted to. So you slow down – or even stop – your marketing efforts.

    George …
    I’ve done this! It’s easy to do – there’s no time! But that insures the next down cycle because you’re not doing those things that you did to get to the up cycle.

  • Being careless with money
    A lot of times cash flow is at its peak during an up cycle. That’s part of the reason you’re on an emotional high. So you make that major expenditure. Or you add to your overhead. The next thing you know you’re on a low because business and cash flow have slowed down and you have little or no cash reserves.

You may not be able to avoid the highs and lows. What you can do is conduct business so that your lows are higher … and your highs are higher!

It may not feel any different, but you know it is. You’re reaching ever higher levels of success! Now that’s bigg success!

 

 

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Women Entrepreneurs Build Value by Staying True to Their Values

By Bigg Success Staff
05-07-08

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Studies show that more and more women are starting their own businesses. They’re jumping off the corporate ladder into their own business.

They want to build a company of which they can be proud. So says Margaret Heffernan, who has run five businesses herself, in her book How She Does It: How Women Entrepreneurs are Changing the Rules of Business.

These women entrepreneurs place values before anything else. In many cases, they may not even have an idea for a business, but they know how they want it to be run! They start with their values and the culture implied by it. Then they seek the right business opportunity.

The driving force behind this is the inspirational dissatisfaction derived from their experiences. They’re tired of the culture in which they’ve spent most of their careers. They relish the thought of creating a business that offers the environment and the opportunities that they see lacking in the corporate world.

Here’s the lesson for all of us – these women are building successful businesses because people are attracted to their culture. It turns out that people respond well to companies that put people first!

In the coming years, attracting and retaining quality people will be one of the biggest challenges faced by all companies. Women entrepreneurs have figured that out and are winning the game of employee recruitment and retention.

They’re in it for the long haul. They put less emphasis on this quarter’s earnings or building up a company quickly so it can be sold off. Instead, they’re focusing on building long-term value and a company with which people are proud to be associated.

Find out when we post new articles. Subscribe to the Bigg Success Weekly.

Hear today's lesson and laugh on The Bigg Success Show. 

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Teacher Turns $3,000 into a $700 Million Business

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Find Your Fortune Through Promiscuity

Don’t be alarmed – we just thought it was a catchy title. Nothing explicit here!

A lot of very successful entrepreneurs have multiple businesses. So today, we’ll look at starting the “other” business!

Benefits of the other business

#1 – Your Compensation
You have one business now. So you can draw one salary. When you have two businesses, you get two salaries!

Your current business pays for your company car. Why not have two businesses so you can have two cars? And two expense accounts. Two planes! You get the idea!

There may be better ways to do this, but that’s beyond the scope of today’s blog.

# 2 — Diversification
Basic financial theory says you should diversify – don’t put all of your eggs in one basket!

If you have one business, you’re completely subject to the ups and downs of that one business. With two businesses, one may pull the other one up during times of adversity and vice versa.

#3 – Your Wealth
Entrepreneurs have most of their wealth tied up in a single asset, but they typically have more wealth than the average homeowner. So owning a business is a great way to build wealth. Why not double the pleasure and own two?

One reason not to do it
Obviously, there are many reasons NOT to do this, but space doesn’t allow a full discussion. Let’s look at one – how to maximize your opportunity while minimizing your complications.

Ask yourself this question – how much can you grow your existing business? If it’s still significant, stick with what you have. Growth consumes money, so keep it in your existing business to maximize that opportunity.

Why take on the complication of the other business if what you have now is satisfying you?

Borrow a page from bigg business – feed what’s growing. It’s evolutionary. But as its growth winds down, get revolutionary – find the other business!

How to know you’re ready
Let’s assume that you’ve taken your business as far as you can. It’s still a good business, but it’s hit a plateau. There are two sides to knowing if it’s time for you to move on:

  • Your head – Is your baby ready for you to leave?
  • Your heart – Are you ready to leave your baby?

Here’s a great technique to listen to your head and your heart – take an extended vacation!

For you workaholics, this may require baby steps. If you haven’t been on a vacation for awhile, take an extended weekend. Then get away for a week. After that, make it two. Work yourself up to at least a month away.

You’ll find out if you’re emotionally ready to leave. You’ll also learn how your business functions without you. Who calls? Why? What are the problems?

If no one calls, you’re probably ready to go for it. The worst case scenario is that you’ll come back with the knowledge you need to get ready.

If you’re interested in pursuing a second business, get our FREE special report, Don’t Make These Mistakes When You Start Your Second Business.

You’ll learn important lessons that often trip up second-time entrepreneurs, even those who have succeeded wildly the first time out.

Just e-mail us: bigginfo@biggsuccess.com
Type “2nd business report” in the subject line.

Our bigg quote today is by Michael Gerber, the great author and entrepreneurial guru.

“The entrepreneur is our visionary, the creator in each of us. We're born with that quality and it defines our lives as we respond to what we see, hear, feel, and experience. It is developed, nurtured, and given space to flourish or is squelched, thwarted, without air or stimulation, and dies.”

So if you’re getting the itch, it may be time to pursue the “other” business.

Next time, we’ll discuss why women can’t win. Things could get heated on the show! Until then, here’s to your bigg success!

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How To Buy A Franchise

By Bigg Success Staff
December 14, 2007

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Buying a franchise is a great way to get started in your own business. The best franchises provide an established brand, proven procedures, market-tested advertising, and ample training. It’s a business-in-a-box – just add money and open. And they may even help you find some of the money!

The International Franchise Association, the leading organization for franchisors and franchisees, has published an exhaustive, free, downloadable document called
An Introduction to Franchising. Here’s the outline of this amazing resource:

Chapter 1 – An Introduction to Franchising

  • What is a franchise?
  • What are the alternatives to franchising?
  • What are the advantages and disadvantages of owning a franchise?
  • What are the legal issues of franchising?

Chapter 2 – Beginning Your Search

  • What are your options when you begin your business?
  • How do you investigate your options?
  • How do you investigate a franchise?
  • What are your criteria for selecting a franchise?

Chapter 3

  • Navigating the Paper Trail
  • What are the key subjects in the franchise agreement?
  • What are the key items in the disclosure document (UFOC)?
  • What do you have to know about financial statements?
  • Where can you get help?

Chapter 4 – Evaluating a Franchise: Interviewing Both Sides

  • What should I ask the franchisor?
  • What should I ask the franchisees?
  • What questions should you ask yourself before buying a franchise?
  • What are the keys to franchise success?

Chapter 5 – Writing a Business Plan

  • What is it?
  • Why should you do one?
  • What should it look like?
  • How do you write one? Where should you begin?

Frankly, we were surprised at how much great information is included in this paper. Even if you don’t end up buying a franchise, you’ll get some valuable advice for any business you start. We’re happy to recommend it to you!

Hear today's lesson and laugh on The Bigg Success Show. 

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