5 Tips the Wealthy Know and You Don’t
Unless your surname is Walton, Koch or Mars, you probably haven’t learned any wealth-building skills beyond “a penny saved is a penny earned”. Don’t fault your parents. No one taught them, so they can’t be expected to teach you.
The Waltons, Mars and Kochs were not always family names associated with wealth. Someone in the family must figure it out and then pass the knowledge along.
Samuel Walton, whose parents were farmers, caught the retail bug during an 18 month stint with J. C. Penney as a management trainee. He left Penney’s for military service at the inception of WWII. Upon his return to civilian life, he bought a Ben Franklin franchise store with the $5,000 he saved during his time in the military. Then he purchased another and another, until he owned fifteen Ben Franklin franchises by 1962, at which point he opened his first Wal-Mart and, the rest (1,960 stores at the time of his death in 1992) is history.
If you’ve ever enjoyed a Milky Way, M&M, Twix or Snickers, you owe the experience to Frank C. Mars who started the company in his Tacoma, Washington kitchen circa 1911. Mars, Incorporated is now in the hands of his grandchildren and has become the sixth largest privately held company in the U.S. with annual sales of $33 billion.
Fred Chase Koch was the son of a Dutch immigrant. He graduated from MIT in 1922 with a degree in chemical engineering. In 1927, Koch developed an innovative thermal process for cracking crude oil. This process removed the stranglehold big oil had on the refining industry. Koch leveraged his technology into what is now known as Koch Industries. After his death in 1967, his heirs, sons David and Charles Koch, built upon the modest success of their father’s company, growing it into the second largest privately held business in the United States behind Cargill. Koch Industries employs 100,000 and enjoys annual sales revenues of $115 billion.
The founders of these fortunes were not born to wealth. These founders were innovators who worked tirelessly to achieve their success.
5 Keys to Wealth
- Innovation—this does not mean you necessarily need to invent something. Frequently, improving on an existing product, process, or technology can be a path to success. Samuel Walton and Fred Chase Koch are excellent examples of this. Frank Mars did not invent candy, but he made improvements.
- Patience—Samuel Walton spent 27 years of his life as a franchisee, mot opening his first Wal-Mart until 1962. Walton patiently gained experience in retailing, slowly amassing his capital resources before throwing off the franchise yoke and opening his own chain of retail stores.
- Persistence—in the beginning, Fred Chase Koch was the target of multiple lawsuits by big oil. Big oil couldn’t compete and elected to use disruption as a tool to regain its former supremacy in the refining market. Koch countered by marketing his cracking process overseas. Koch eventually won all 44 lawsuits against his firm, enabling his company’s return to the domestic market. Lesser men would have caved under the pressure. Koch’s willingness to persevere against overwhelming odds allowed his company to prevail in the end.
- Evolve—that is to say, be flexible. Just as airline pilots make course corrections to avoid major storms, the path to wealth also requires course corrections from time-to-time. If you are unwilling or unable to evolve in order to meet shifting conditions, your chances of success are materially diminished.
- Do not fear failure—because fear results in paralysis. If you are paralyzed by fear, you will be unable to accomplish anything in your life. In failing to act, you have already lost.
Of course, not all of us aspire to be business magnates. However, we too can benefit from these lessons in our daily lives. For example, we might innovate in our personal life by biking to work instead of driving. We might be patient, putting off minor purchases until we can afford to pay for them in cash. We can demonstrate persistence by adhering to our savings or investment goals. We can be flexible with our budgets to meet changing financial circumstances and we can stop fearing the future, secure in the knowledge that we have the opportunity to learn from any mistakes made. Success in life comes in many guises but, all success relies on these 5 tenets.
What About You?
Have you had personal experiences which support this view of wealth building? Do you know successful individuals that do not exhibit these characteristics?