Archive for the 'Entrepreneurship' Category

The three roads to wealth

I once met a man who was not interested in obtaining wealth. Then he heard about the lottery. I once knew a woman who did not want a raise. Then she discovered they were paid in dollars.

Ninety-nine out of a hundred of us want to increase our wealth. It appears we all were made for a mansion built in heaven. Generally speaking, wealth builds in one of three ways.

1. Professional

The professional road to wealth travels through formal education and licensing. Doctors, lawyers, engineers, accountants, etc. spend many years in institutional environments preparing for standardized tests. In the end, professionals have something that’s rare because most people don’t like to read and study.

Like a rare diamond, degrees and licenses are highly valued in the marketplace. That’s why attorneys can make more in an hour than others can make in a week. Physicians can make more in a surgery than others can make in a year.

(They can also spend it faster than others. I once knew a surgeon whose annual income was greater than his net worth. That’s not easy to do.)

A professional’s earning power stems from his or her knowledge. It’s true: Knowledge is (earning) power.

2. Corporate

The industrial revolution welcomed corporations into the economy and we have not turned back. Corporations create mega wealth for those willing to endure their bureaucracy.

A friend of mine wants to quit his corporate job every other week because of the politics and the personalities involved. He longs for a tractor, a spread of land and the independence such a work life provides. But that work life pays in corn, not Chuck E. Cheese tokens. And his kids really like Chuck E. Cheese.

Corporate employees often trade freedom and adventure for the dollars they make. They make get an 18% bonus but they also may work in a prison-like compound. The whims of managers up the ladder can bring sudden location and position changes. But if employees are willing to make the moves, the corporate ladder leads to wealth.

Corporate economies of scale produce vast resources. When every Dairy Queen from Texarkana to El Paso sends you a cut of their Blizzard sales, a flurry of financial gain blows to the franchisors. But let’s not forget the franchisees. They represent the third road to wealth: entrepreneurship.

3. Entrepreneurship

As a banker of entrepreneurs, I see the wealth that self-employment creates. It’s not guaranteed, of course. A lot of ventures don’t work. But when they do, it can be big. Remember: High risk, high reward.

When someone creates a new product or service that solves a problem or saves time or money, people will pay for it. Most people have ideas that would make the world a better place. Entrepreneurs actually execute on those ideas. And there’s often as much creativity in the execution as there is in the idea itself.

Of the three roads to wealth, entrepreneurship can be the most lucrative. The wealthiest people in America invented things and started businesses.

But if you don’t have the stomach for owning your own business, you might try the bar examination. If not that, perhaps you have the patience to endure Dilbert in the next cubicle over. Wealth is available down all three roads.

Kevin Thompson is a columnist for The Boerne Star in the Texas hill country. Follow him at http://www.kwt.info.

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The high cost of entrepreneurship

It was the week before Christmas and I was on vacation two states away. My customer called me from outside his company holiday party. I could tell he was pacing apprehensively.

Even in the bright lights of the season, he was enduring a dark night of the soul, the latest in a lengthening string.

He described a haunting reality. His busy season hadn’t produced enough nuts for the winter. Bills were mounting while billings fell. Checks were set to bounce. Lives were about to change. His company teetered on the edge of collapse.

He called as much for support as for money. His left brain knew I had no more money to lend. His right brain still held out hope – hope that something could be created from nothing. He is, after all, an entrepreneur.

Doubt deepened within him. Yet, inside the party, he had to maintain a sense of normalcy and control, as if the year could not have gone better and the future never looked brighter.

For entrepreneurs, perception is often reality. They specialize in impression management. It’s not that they’re fake. They can be as authentic as apple pie. They just have faith.

They believe they can move mountains. And often they do, dirt contractors and landscapers, in particular.

But the pressure of entrepreneurship can take a toll. On one hand, a self-employed entrepreneur diversifies her risk by serving a plethora of customers, not just one employer.

On the other hand, an entrepreneur’s risk is concentrated in himself. He is a “key man.” Only the key can unlock success’ door. Therein lies the burden and the root of emotional disorder.

In an award-winning 2013 Inc. Magazine article entitled “The Psychological Price of Entrepreneurship,” Jessica Bruder quotes Dr. Michael Freeman, a psychiatrist who has studied the mental health effects of entrepreneurship.

Freeman notes that “people who are on the energetic, motivated and creative side are both more likely to be entrepreneurial and more likely to have strong emotional states” (e.g., depression, despair, hopelessness, worthlessness, loss of motivation and suicidal thinking).

In other words, the chemistry that takes you to the top can also bring you down.

Psychologist John Gartner takes the biology a step further. He claims that because the United States was founded and populated by daring, “self-selecting” people (i.e., immigrants and their children), many of us have “hypomanic” traits in our DNA. We are driven and inventive but also depressive and instable.

Combine genetics with the financial and management strains that come at the top of the organizational chart and you get a roller coaster worthy of Fiesta Texas.

But Bruder describes the increasing willingness of entrepreneurs to open up. Obviously, no leader is going to spill the red ink on the annual report, but showing some emotions at work can make a leader seem more human and trustworthy. It can also provide much needed ventilation.

Other recommendations for business folks in the crucible include staying close with friends and family, taking care of oneself (sleep, diet, exercise) and building an identity outside of one’s work.

As a small business banker, it’s a high honor to venture vicariously through my entrepreneurial customers. Though their risks are high, I often pray their rewards are higher, and not just in monetary terms.

Kevin Thompson writes weekly for The Boerne Star in the Texas Hill Country. Follow him at http://www.kwt.info.


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