What kind of reaction do you have when you hear about a business that was acquired for hundreds of millions?
What's going on?
Why do most people only get paid a salaried wage? How can some people get so rich?
Maybe there is something the rest of us aren't being told about entrepreneurship.
Turns out, there is.
The book, "Millionaire Fastlane", educated me on these 5 truths about entrepreneurship:
- Working a job has limits since wealth is predicated on how much we earn, hours worked, and market appreciations (7-10% on avg). The average worker can become more qualified or work more hours in a day for marginal gains.
- Entrepreneurship has no upper limit on wealth since wealth is predicated on net profits and asset value. They can increase units sold or unit profit for unbelievable gains.
- The asset value of a business is made up of net profit times the industry multiplier. That means if a business makes an extra dollar and the industry multiplier is 4, there is a 400% gain in the value of the business when it makes an extra dollar in profit.
- The kind of returns you see on value you produce in the economy in the form of sales (several hundred %) versus money invested in a market (7-10%) is no comparison.
- Entrepreneurs are simultaneously making money, building asset value, and learning the invaluable skill of building a business.
I now see entrepreneurship differently.
Entrepreneurs operate in an entirely different financial universe than the rest of us.