who wants to be a millionaire? Welp..Don’t follow your passion (at least that’s what the research says)…

What do millionaires do differently?

Are they harder workers? Do they have brains that can bend spoons? Do they exhibit Bond Villain levels of cunning?

For their books The Millionaire Next Door and The Millionaire Mind the authors surveyed over 700 millionaires to find out.

Eighty percent were self-made, accruing all their wealth in one generation. And they were doing a number of things you and I probably aren’t.

Here are a few patterns the researchers saw:

1. Most millionaires are self-employed

Got a great idea for a business? Make sure the profits are going in your pocket, not your boss’.

Via The Millionaire Next Door:

Twenty percent of the affluent households in America are headed by retirees. Of the remaining 80 percent, more than two-thirds are headed by self-employed owners of businesses. In America, fewer than one in five households, or about 18 percent, is headed by a self-employed business owner or professional. But these self-employed people are four times more likely to be millionaires than those who work for others.

Sound risky? It is. Less than a third of new companies survive 10 years.

Via The Illusions of Entrepreneurship:

…no matter how you measure new firms, and no matter which developed country you look at, it appears that only half of new firms started remain in business for five years, and less than one-third last 10 years.

But millionaires have a different perspective. They think it’s risky to work for someone else. You could get laid off. Your boss could make a bad decision.

They want to be in control of their own destiny and yes — they’re quite confident. And research shows confidence boosts your income.

But not only is entrepreneurship risky, it’s also hard work.

In only two countries out of all the ones surveyed did the self-employed not work harder than salaried employees:


(Courtesy Barking Up The Wrong Tree)

Why do something so risky and difficult? Research shows one of the main things that makes us love our work is autonomy.

And this is definitely true here. You’d need to earn 2.5 times as much money to be as happy as someone who is self-employed.

Via The Illusions of Entrepreneurship:

These studies have found that people are more satisfied with their jobs when they are working for themselves than when they are working for others. In fact, the studies show that to be as satisfied when he is working for others as he is when he is working for himself, the average person needs to earn two-and-a-half times as much money!

So these aren’t salaried employees. But how do they decide what kind of companies to start?

2. Millionaires choose their careers strategically

They don’t start a business they’re necessarily passionate about. They don’t even do something they necessarily understand or have experience in.

They start a business that they think is going to make money. They look for areas of big demand and small supply.

Some of you are saying, “Duh. Of course that’s how you should pick a business.” Yeah, but that’s not what the vast majority of people do.

Via The Illusions of Entrepreneurship:

…there is no evidence that entrepreneurs select industries in which profits, profit margins, or revenues are higher.

Sixty-three percent of new business owners admit their venture doesn’t have a competitive advantage. Only a third say they really did a search for good business ideas.

And the industry you start a business in is very important: Some industries are over 600 times more likely to be successful than others.

Via The Illusions of Entrepreneurship:

…between 1982 and 2002, start-ups in the software industry were 608 times more likely than start-ups in the restaurant industry to become one of the 500 fastest growing private companies in the United States — 608 times more likely!

One of the authors of The Millionaire Mind is a business school professor. Every year he asks his students what the most profitable businesses are.

And every year the students can’t even name one correct answer. If smart, educated business students don’t know, why would the average person?

But millionaires pride themselves on thinking differently and looking for underserved markets and hidden opportunities.

And, frankly, the companies they start usually aren’t sexy. They fall into the category of “dull-normal.” But they make bank.

Via The Millionaire Next Door:

Many of the types of businesses we are in could be classified as dull-normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.

Despite thinking differently and doing things their own way, they’re not jerks. Ninety-four percent of millionaires said “getting along with people” was key.

(For more on how not following your passion can be the smartest career strategy, click here.)

So they run their own shop and choose wisely what type of business to be in. But to make it a success don’t they have to be brilliant? Nope.

3. They’re not geniuses but they have a strong work ethic

We’ve all heard the old saying, “If you’re so smart, why aren’t you rich?” What was the average college GPA of an American millionaire?

2.9 out of 4.0.

(Not a lot of Phi Beta Kappa keys jangling around here, folks.)

Few were ever called intellectually gifted and many were explicitly told they didn’t have what it takes for medical school, law school or MBA school.

But what most people don’t know is that GPA is a very poor predictor of success. read more..

theweek.com

bakadesuyo.com (barking up the wrong tree)

 

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