What sets entrepreneurs apart from the rest? It's not their creativity, imagination, or ability to spot trends and believe in their own ideas, according to a recent article in Quartz. Rather, it's the financial capital they were born with. The article cites a range of research that shows the most common trait among entrepreneurs is access to money. A study conducted in Israel found that even those who scored lower on mathematical achievement tests but who came from a family with higher income and wealth were more likely to become entrepreneurs.
There are many entrepreneurs who have created incredible businesses, saved very little along the way, and then collected a fortune. If you are a doctor, employee, or successful salaried worker, then the concepts discussed in this article may not be as relevant to you. While you can certainly invest and divide your assets into three equal groups - cash, stocks, and real estate - the reason for an entrepreneur to have a third of their cash wealth is very different from that of a traditional non-businessman investor. As an entrepreneur, you need to stop thinking of yourself as the creator and owner of a business and start thinking of yourself as a creator of business wealth.
A common objection I hear from entrepreneurs is that they are too busy building their business to bother learning and investing in real estate. Fubu is an excellent example of what can happen when entrepreneurs don't fit perfectly into the mold of Silicon Valley. If you think that won't affect your chances of success, ask the non-white businessmen (not men and not young people) who have been there. Many people think that it was easier to accumulate wealth as a self-made entrepreneur in the past and that most wealthy people today inherited their wealth.
In my book, I suggest an alternative option to owning real estate: owning a REIT (real estate investment trust). Although a REIT is an excellent investment vehicle, it is not good enough for entrepreneurs who are in control, type A personalities who are in control. That's why I argue that if you want to create wealth and learn how to get rich as an entrepreneur, it's not enough just to rely on your business to make a fortune. You need to think outside the box and invest outside your business as well.
Most of the people in the annual Forbes 400 ranking of the richest Americans are also self-made entrepreneurs. I have had several conversations with entrepreneurs over the past few months who just realized that they should have spent more time investing outside of their business. If you're an entrepreneur who wants to create wealth and learn how to get rich, then it's not enough just to rely on your business to make a fortune. You need to think outside the box and invest outside your business as well.