Becoming an entrepreneur and starting your own business is the best way to get rich. Take a look at the 10 richest people in the world.
Jeff Bezos started Amazon.Bill Gates started Microsoft. Mark Zuckerberg started Facebook. Bernard Arnault oversees more than 60 businesses such as brands like Louis Vuitton. Mukesh Ambani is the head of Reliance Industries, the largest oil refinery in the world. Steve Ballmer was one of the first Microsoft employees (and later CEO) and owns the Los Angeles Clippers. Warren Buffet took over Berkshire Hathaway and is also an investor. Larry Page was a co-founder of Google. Elon Musk started Tesla and SpaceX .Sergey Brin was a co-founder of Google.
So of the 10 richest people in the world, they all either started a business or were the head of a business at one point.
Further, a scientific study done in 2012 surveyed 472 millionaires. 2.4% of the millionaires said they became rich through the stock market, 10% became rich through real estate, while most said they became rich through entrepreneurship.
So it seems that the richest people get their money through entrepreneurial endeavours. But why is being an entrepreneur the best way to get rich?
You can do what you want
Many people become entrepreneurs because they want to be their own boss and not make money by working for someone else. As an entrepreneur, the only person you have to answer to is yourself. You are your own boss. You set your own schedule, you make money how you want, and you get to choose who you work with.
A lot of entrepreneurs also want to do something they truly enjoy to earn a living. It is important to make sure you enjoy what you are doing as an entrepreneur because it will keep you motivated and inspired when times get tough. For example, I love personal finance, and I would enjoy writing about it even if it did not make me any money.
Writing articles and working on my blog is something I like, and rarely does it feel like work. Find something you are really fond of and learn how to make money from it. That might mean starting a blog on a topic you are passionate about. It might mean starting a lawn care business if you enjoy being outside. Or maybe it means selling crafts you put together. The possibilities are truly endless!
You can make more money
Successful entrepreneurs have the highest ceiling of money-making potential out of everyone in the world. Just take a look at the list above of the world’s ten richest people! If you still don’t believe me, think about some of the most popular ways people make money.
The company you work for has one goal: to maximise profit. Therefore, from a purely financial perspective, if they can reduce the amount they pay you and other employees, it will help them reach their bottom-line goal.
Your amount of wage income is limited by the company’s incentive to reduce costs. Therefore, most companies aim to pay their employees just enough to keep them from leaving their job.
On another note, it is impossible to quickly increase your wage income. Your salary is set in stone (unless you’re in a commission-based job), and if you’re lucky you’ll get a 3% raise each year and maybe a promotion every now and again that comes with a bigger pay raise. It normally takes years of hard work and climbing the company ladder to get to where you want to be, and even then it doesn’t always work out.
Throughout history, the stock market has an average return of about 10%. If you have a diversified portfolio of stocks, you can expect to earn a similar return in the long-run. Of course, you could be extremely risky and bank all your money on one or two stocks hoping you bought the next Amazon or Apple, but the chances of that are slim to none.
You can make money from real estate a few ways, with the most common being appreciation (the price of your property increasing) or rental income. Appreciation varies by property type and location, but typically, appreciation is around 3% a year. Rental properties usually earn about 10% each year, with really good properties making around 20%.
Start a business
However, a business has an unlimited amount of money-making potential. If you start a business and it becomes successful, how much money can you make? An extra $1,000 a month? $10,000 a month? Maybe even $100,000 a month?! The potential profit is unlimited because there is no telling how successful your business will be. But how do you maximise profit as an entrepreneur? The below two traits are all it takes to be successful:
Provide a product or service that is in demand
It really is that simple. If you work hard to provide something people want, the sky’s the limit for your business.
You can make money quickly
No other investment allows you to start making a lot of money quickly like starting your own business. Have you heard the phrase, “it takes money to make money”? For nearly all other investments, in order to make significant amounts of money quickly, you need to start with a lot of money.
Take a look at the stock example above. On average, you will make 10% a year in the stock market. So if you invest $1,000 into the stock market, and the stock market provides its average return of 10%, in one year you will make $100. If your goal was to make $50,000 a year in income from the stock market, you would need to invest a whopping $500,000!
But if you instead took that $1,000 and started your own business, how much would you have in a year? Depending on how quickly your business became successful, you would have the potential to make much more than a measly $100. Starting you own business provides you with the opportunity to make significant money quickly, while other investments require you to slowly make money over time.
Hopefully you now know why becoming an entrepreneur is the best way to get rich. But starting your own business is by no means easy. It takes a lot of work, and depending on the business, it might take some money to get started (although there are a number of low-cost businesses). Many people also think that starting a business is super risky because they read statistics like “45% of new businesses fail within the first five years.” But it does not have to be super risky if you start your business as a side hustle!
Don’t quit your job and drop everything to try and launch a business. Work on your business in the evenings and on the weekends, and once your business starts generating enough income to support your lifestyle, then you can quit your job.
It might require some late nights to get your business up and going, but starting your business as a side hustle gives you peace of mind and takes away a lot of the risk that comes with starting a business. If your business doesn’t work out, you still have your job to fall back on. And if your first business does fail, so what! Pick yourself up and try again. Learn from your failed business so the next side hustle you start will be much improved and more likely to succeed.