Another year, another 210 billionaires.
That’s according to Forbes. The magazine’s 27th annual list of the world’s wealthiest individuals is out, and a total of 1,426 persons are believed to be in the ranks of the mega-wealthy ($1 billion and above). That’s up from 1,216 the previous year.
Mexican telecom titan and real estate developer Carlos Slim tops the list, with a fortune believed to approach $73 billion…but it’s a race. Microsoft co-founder Bill Gates is holding down the number 2 spot, at $67 billion.
The United States leads the list with 442 individuals making the cut. The Asia-Pacific region is second (386). Europe (366), the Americas, which includes Canada and South America combined (129), and the Middle East and Africa (103) round out the list.
Overall, the combined net worth of the billionaire club ratcheted up to $5.4 trillion, up from $4.6 trillion, a 17% increase from last time around. Forbes attributes much of the increase in hyper-wealth to appreciation in the value of hard assets, including oil, minerals, timber and other commodities.
But enough with the numbers…
How to Be a Billionaire
A year ago, when Forbes released its 2012 list, MP Star Financial marked the occasion with a blog post titled, How to be a Billionaire: Advice on Building Ten-Figure Wealth.
Based on our traffic reports, the post – which actually was a sort of summary or review of How to Be a Billionaire, Martin Fridson’s classic book on growing a successful business – was very popular with visitors to the MP Star Financial site.
True confession time: It is not known for certain if any MP Star Financial blog readers have actually leveraged those 900 or so words into astounding fortunes over the last 12 months. (No one’s called to tell us about it, anyway.) But some of the lessons touched on, like holding onto your equity, investing in the power of ideas, and the prudent use of financial leverage, are relevant to business owners at almost any stage of a company’s development.
But there are always more questions. For example:
- How crucial is luck?
- Is there a fast-track or shortcut to ten-figure wealth?
- And what if – darn it! –you’re stuck in the wrong industry?
Good questions, all. In terms of the answers, well, opinions will always differ, but here are some notions to get your own thought process started.
The Role of Luck
Luck. It’s a four-letter word, right?
In his 2008 bestseller, Outliers: The Story of Success, Malcolm Gladwell devotes most of the book’s first 120 pages to the notion of “opportunity.” Gladwell’s never gone out of his way to say so, but it sure looks like he’s careful not to use the word, “luck.”
Certainly, at first glance, a lot of good outcomes seem tied purely to luck.
For instance, many large fortunes were built in the two post-war economies, as entrepreneurs scurried to meet the pent-up demands for housing, consumer durables and the other desires of the new – and booming – middle class.
Seems like a case of “right place, right time.”
And yes, Gladwell himself points to the case of a young Bill Gates, whose father was a high profile Seattle attorney, able to access unlimited IBM mainframe computer time at the University of Washington for his precocious son. This was prohibitively expensive and virtually unheard of in the late 1960s, but it let Bill develop an almost uncanny knack for computer coding and programming.
Right place, right time. Again.
But to put too much stock in the “luck” that goes with these kind of stories is to ignore that any of those 20th century entrepreneurs could have played it really safe and not extended themselves in pursuit of middle America’s growing appetites, or that young Gates could have spent his adolescence in front of the television instead of nurturing his curiosity about computers.
The lesson? Luck is winning the lottery. Building a fortune is more related to accessing and exploiting opportunities.
Reality check: Are the stars aligning perfectly for your billion-dollar opportunity? Maybe not. But your job – your mission, if you will – is to recognize whatever’s unique about your situation and its attendant opportunities. That might be timing, contacts, access to special information or technology, or physical location. Then you need to make it all work to your company’s best advantage.
That’s not luck. That’s just leveraging opportunity. And that’s no four-letter word.
Consolidation – A Fast Track Approach?
Short of a stupefying inheritance, there really aren’t any shortcuts to stupefying wealth…but an intelligent, well executed plan to consolidate an industry, or at least your part of it, comes close.
A series of good mergers can help your company reach revenue and profitability levels that might have otherwise taken years to achieve.
Advantages of consolidation include:
- Application of your prior knowledge of the business and industry to a bigger platform
- Acquisition of new customers with minimal effort
- Volume discounts for materials and supplies
- Economies of scale pertaining to sales, marketing, operations and support functions
Consolidation worked for Andrew Carnegie, John Rockefeller, Sam Walton and Ted Turner, and it can work in your industry, too.
Tip: A quality merger can take months to pull off. Make sure you have the advice of competent banking and legal counsel every step of the way.
Choosing the Right Industry
To deny that playing in the right industry is relevant to acquiring a significant fortune is to deny reality. Saturated markets, competition, government regulations, and numerous other factors can make it tough to grow a mega-fortune in a mature industry.
On the other hand, a quick look at a few demographic factors leads you to believe that there are still huge piles of money to be made in energy, infrastructure (especially in developing countries), communications (ditto), and some healthcare sectors.
Okay. But what if you’re established in an industry that is not poised for hyper-growth? What then?
The dream isn’t necessarily over. Remember the “picks and shovels” lesson. Not everyone who headed west for the California gold rush hit it big, but the people who sold those 49ers their picks and shovels made out just fine, thank you very much. Every single prospector needed picks and shovels, right?
Think about hitching your company’s wagon to promising players in industries poised for big time growth. Elbow you way in, if necessary.
Do you run a commercial cleaning or janitorial service company? Maybe you should create a division catering to the special needs of pharmaceutical and biotech firms.
Do you provide professional security services? Perhaps there are special requirements you can fill for oil rigs or nuclear power facilities.
No matter what products or services your company provides, there’s likely a way to connect to a high-growth opportunity. This is where your ingenuity and creativity come in to play.
If your company’s cash flow management concerns are putting your growth plans on hold, consider an invoice factoring program with MP Star Financial. Call for more information. (800) 833-3765, extension 150.