4 Universal Habits Of The World's Wealthiest CEOs
If you're like most entrepreneurs, you've invested everything you have into your business. And that's a huge mistake. If you want to establish yourself on the Forbes List of the World's Richest, you must adopt the habits of those already on there.
In a recent survey by the American College, about three-quarters of entrepreneurs admitted they didn’t have a formal written retirement plan. Shocked? Don’t be. The dominant entrepreneurial mindset goes like this:
Take care of the business today, and it will take care of you down the line. Don’t lose focus.
Many entrepreneurs become so passionate about what they’ve built and where it’s headed that the thought of thinking a bit more about their own well-being - taking a bigger salary, for instance, or selling some equity or stock options to redeploy in personal accounts - seems at odds with their goals for building the business.
That’s precisely the thinking that can bring on huge risks to business owners and their families and heirs. The problem with all that passion, focus, and confidence is that it makes a lot of brilliant business minds either oblivious to or dismissive of the single most important factor that will guarantee - yes, guarantee - lasting wealth: diversification.
It’s no less vital for every entrepreneur, including Facebook’s new millionaires. I’d bet good money that your personal finances are lacking in the diversification department. If you think I’m wrong, here’s a checklist of investment strategies to think about. See how you measure up.
1. Save, Save, Save
This sounds stupidly obvious--and yet only a fourth of the entrepreneur population follows through. If you don’t already save you money, start now... regardless of how much you make. Make sure to fund it to the maximum amount possible. If that means pulling more salary from your baby, so be it. I hope your business remains so successful that what you end up socking away in savings accounts becomes a superfluous footnote on your net worth years from now.
But in the meantime, this account is insurance against any number of possible outcomes that don't follow your script. If you end up left with nothing, as long as you save, you will have the seed money necessary to bounce back on your feet with another venture.
2. Don’t Put All Your Eggs In One Basket
Simply put, you cannot rely on your ownership (part or full) of one single venture. The reward is not enough to take you to very top, but the risk and worst case scenario are enough to leave you with nothing. Relying on your ownership of a pet project start-up to retire off of is a death sentence. This is where your overconfidence and passion can kill you.
You need to invest outside of your business, and you need to invest outside your circle of competency. Sound crazy? What I see all too often are successful entrepreneurs whose idea of diversification is to buy stock or invest in start-ups that are all in the same industry. That’s like suggesting a wine cellar is well stocked because it has 100 cases--of the same wine and vintage.
3. Sell some equity; diversify; repeat
If you are a young aspiring and ambitious entrepreneur, chances are you are strapped for cash. Whatever costs and overhead your pursuit of success entails, you can lower the hurt on the wallet by exercise some other options. Pay necessities off by giving out equity (or a combination of equity and cash).
Or, sell some equity in your start-up because you can’t tell me (or, more important, yourself) that you know with 100% certainty that your business will never suffer a setback. Not to mention, when someone has a financial tie to your venture, they will do a lot more to help you.
Besides, diversify now, and you’ll never find yourself having to sell under pressure in the event you need to raise some cash when you can’t extract maximum value from your options or equity.
4. Find A Mentor Or Adviser You Can Count On
The person or team helping you run your business is not the ideal tax adviser for your personal wealth. It is easy to forget that their goal is not to make you rich, it is to make themselves rich. You want a pro who has experience — both failures and success — in entrepreneurship. Task number 1 is to figure out what you want in life and set and reach goals to get there.
You need a mentor who has already attained a life and success that is similar to what your goals are. His advice and wealth of expertise will be what you can count on since he has no anterior motives. Unlike your team, his goal is to make you rich. Without a mentor, you are only utilizing 50% of your potential.