If you’re like most business owners, you want to use it to achieve three key goals, according to research I’ve done with Russ Alan Prince, the founder of market research and consulting firm R.A. Prince & Associates.
1. Take care of loved ones. Ninety-four percent of business owners say that becoming wealthier means they’ll be able to take care of their loved ones financially. Chances are, you share this goal with your clients.
2. Support important causes. More than 70% are dedicated to charity. Indeed, many advisers in our coaching programs are involved in charities and nonprofits. By amassing greater wealth, they are able to do more.
3. Change the world. About one in eight say they would like to change the world in a positive way. These may be audacious goals that only extreme wealth can address, such as ensuring clean water in certain regions or curing fatal diseases.
FOLLOW THE RULES
It takes discipline and focus to become seriously wealthy. Fortunately, there are some dominant, and persistent patterns — rules, if you will — that most successful business owners follow.
These seven money rules encapsulate the key mindsets, strategies and tactics that can potentially make you seriously wealthy. What’s more, they can also help your clients.
1. Commit to extreme wealth. Many advisers and their clients would like to be wealthier but haven’t committed the time or effort needed. After all, doing so can come at the expense of something else important. Following this rule means having a clear sense that money is a critical objective.
Achieving tremendous wealth often means habitually prioritizing work and business dealings above personal and family concerns. If that’s something you’re not willing to do, that’s OK. But what it means is that you will need to arrive at a lower number — leaving you with less wealth, but more time and more of the life balance you seek.
2. Engage in enlightened self-interest. This takes many forms. For advisers, it could mean making a strategic decision about what kinds of clients to serve. Before deciding, advisers should run the numbers, i.e., quantify the revenue opportunities for each niche they would consider serving, and quantify the cost involved of serving each niche.
Skilled negotiation is another element of successful economic endeavors. Successful people always define their own line in the sand when negotiating, and try to assess the other person’s line. They also seek to learn the other party’s weaknesses that may be exploited. While a win-win is desirable, an “I win, you … whatever” result is acceptable.
3. Put yourself in the line of money. Simply put, some endeavors are more fruitful and rewarding than others. For instance, positioning yourself to serve successful entrepreneurs is more likely to generate significant wealth for you than trying to work with inheritors, who tend to be less loyal to their advisers over time.
Following this rule means pursuing the fields and initiatives that have the utmost potential for outsize returns. This might mean focusing on a highly profitable niche market of affluent investors, such as owners of privately held businesses, family-owned operations and firms owned by accountants, attorneys and other highly compensated professionals.
Consider that one-third of U.S. households with investable assets of between $1 million and $5 million are business owners, according to research by my firm, CEG Worldwide, and Wealth Engines. Fully three-quarters of people in the $5 million to $25 million range own businesses. And among the truly wealthy — those with $25 million or more — nine out of 10 are business owners.
4. Pay everyone involved. The exceedingly wealthy never assume people are willing to work solely for satisfaction or fulfillment. Instead, they rely on generous compensation such as cash or equity to motivate those who help them advance their long-term goals. In an advisory practice, that means taking care of key employees. Give them a career track and a path to grow as your business expands. It could also mean offering an equity stake in your company to those who are instrumental in helping you drive success.
5. Connect for profit and results. Highly successful advisers think about networking as a means to an end — finding resources that get them one step closer to their personal and professional objectives. Following this rule means maintaining a small but deep network of relationships that can lead power and influence, as well as friendship.
This form of nodal networking is characterized by a few, very powerful, highly targeted relationships. For advisers, relationships with other professionals such as attorneys, accountants, insurance specialists as well as members of CEO groups and executive directors of associations can be hugely helpful in accelerating success. Networking efforts can be further amplified by joining high-end study groups, such as mastermind groups, consisting of other like-minded, success-driven advisers.
6. Use failure to improve and refocus. Failure is inevitable, Rather than obsessing about lost opportunities, study your failures and do all you can to prevent repeating missteps.
Perseverance is crucial. When confronted by personal or professional disasters, the self-made super-rich express a powerful determination to keep going. As an adviser, some of your growth initiatives will probably fall flat — but kernels of insight about what to do better next time can come from those failures. One way to manage failure positively is to have a strong foundation and then experiment with new ideas and strategies on the margins. As an adviser, that might mean devoting 80% to 90% of your business to an ideal, highly profitable niche market, then branching out a bit into other new or emerging client niches in your area.
7. Stay highly centered. The wealthiest recognize what they do exceptionally well. Being highly centered means sticking to your plan, concentrating your efforts on your areas of expertise, and delegate other tasks and activities.
As an adviser, be extremely clear on your role in your firm and where you add the most value. For many, that means staying engaged as the rainmaker who brings in new business. Any other functions (from marketing to back office duties) should be delegated or outsourced.
You may decide that adopting all these rules is just too much to take on.
That’s OK. Over time, you can incorporate the rules and practices that you expect will best accelerate your success.
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