As a senior business analyst, I am afforded the opportunity to meet a wide variety of intelligent entrepreneurs. I work with the craftsman who has spent a lifetime honing his skill set, a true expert in his field. I work with the individual that has decided he or she can run a better business than their previous employer and thus ventured out on their own. And occasionally, I work with the inventor or innovator who has created a market shift within their area of expertise.
The commonality these individuals share is their desire to completely control their own destiny. Many of these entrepreneurs are the “millionaires next door.” Their lifestyles do not differ greatly from their neighbors. They get up and go to work every day just as the rest of us do. They enjoy a few modest vacations a year and may drive a pickup truck. What sets them apart is their willingness to learn and their desire to better their lives and the lives of their families.
In the past, the wealthiest people in the world were typically aristocrats. Today, however, the richest people in advanced countries are not aristocrats, but entrepreneurs. Take for instance Bill Gates, Steve Jobs or Mark Zuckerberg. Not only are these individuals rich, but they also have a great deal of influence as their inventions change lives. Rich people may affect the rest of us by the trickle-down effect of their purchases, but rich entrepreneurs affect us in the same way that they became rich in the first place —they did something extraordinary. Some inherit their money, but most build a better mouse trap, finance some else’s better mouse trap or streamline a process.
So, how much money must a person have in order to be considered rich? There are basically two schools of thought on the quantifying criteria. Fist, there is the million-dollar threshold. If an individual has a total net worth in excess of a million dollars, they are considered a millionaire. Secondly, there is the more stringent qualification that a person must have a liquid or investable million dollars to be considered for this group. Credit Suisse estimates that there were 24.2 million global millionaires in mid-2010. About one half, or one percent, of the adult population.
By this measure, millionaires control $69.2 trillion in global assets, more than a third of the global total. Of these millionaires, 41 percent, or about 9.9 million, live in the United States. The majority of these people became rich through their own efforts, as only 16 percent of high net worth individuals inherited their money, while 47 percent of the world’s wealthy people are entrepreneurs. In their book “The Millionaire Next Door,” Thomas Stanley and William Danko observed that a typical American millionaire has spent his or her life saving and reinvesting their money back into their respective entrepreneurial ventures. Another 23 percent of the world’s millionaires got rich through paid work. These are chief executives, CFOs and other skilled professionals or managers.
Even within the rich, there is a wide disparity between millionaires and the super rich. To get on Forbes Magazine’s list of the 400 richest Americans in 1995, you needed $418 million. Currently, it takes a billion dollars. Of the 24.2 million global millionaires, only 2,800 have more than $500 million. Some 30,000 have more than $100 million and only 81,000, or 24.2 million, have assets in excess of $50 million. This leaves 24.1 million global millionaires between $1 million and $50 million in assets.
Education not only plays a critical role in earning power, but, more importantly, in public perception. The general public is less likely to criticize an individual if they are perceived as having earned their wealth. Steve Jobs is a billionaire because people love Apple products. J.K. Rowling has made millions from her Harry Potter books.
All kinds of skills and talents are rewarded, but most think of athletes like Peyton Manning who just became the highest paid professional football player in history. However, the number of people who get rich by singing or playing sports is small compared to the number of people who become wealthy through brain power.
As technology advances, the rewards to cleverness increase. Computers have increased the availability of information, raising demand for those who have the ability to make sense of it. Cognitive skills are at a premium. In today’s world of instant access to even the most specialized businesses, anyone with the drive, desire and aptitude can become a virtual expert in practically any field in a short period of time. Those who embrace learning, growing and applying new information and technology to their businesses will be the ones to begin to separate themselves from the competition.
Those entrepreneurs who dare to blaze new trails for the future will be tomorrow’s wealthiest segment of the population. Not just the richest, but those who enjoy a higher quality of life. They will learn to make their businesses easier to run, more profitable and thus become frontrunners in their respective fields. These are the entrepreneurs everyone else will have to compete with.
Which one are you?