Can you get really rich and live an amazing life by being an Honest entrepreneur? Well some amazingly talented athletes (SRT, Virat Kohli) and actors (Amitabh, Deepika) get real rich with just their earnings. Some talented people also become good businessmen – like Shah Rukh Khan. However it is a rare first generation businessman who becomes amazingly rich and has a great life style. Remember even the Ambanis are second generation. Birla is 5th generation or is it 6th. Wealth creation takes a lot of time. Birla’s wealth has been created over 170 years! not 15 years.
If you start a business at age 25, you earn money, pay taxes, plough it back into the business, and SLOWLY get rich. It takes time. Compounding takes time. You know that, right?
Most successful entrepreneurs help their brothers, cousins, friends, – and do remember all this impacts their ability to create a lot of wealth! So ironical, right? So what to do?
A few things.
- Learn how to manage your money, and reduce risk (term insurance, index funds, etc.). Make sure that you understand concentration risk, advantages of diversification, insurance, etc. One very important thing is to get a good personal finance adviser – a full time entrepreneur will NOT be able to keep track of his portfolio. That means financial decisions you make — including those about your business — need to viewed through the lens of how those calculations will likely translate into greater personal wealth creation. It has to be good for your business as well as good for you, the entrepreneur. Make sure that you are good at thinking and consider the options properly. Weigh the advantages and the costs properly. Put another way, becoming wealthy is a factor that you should incorporate into all the actions that you take.
- Make sure that you work with the best team – CA, Lawyer, Financial Planner,…so that you do not end up doing something foolish.
- Make sure that you don’t risk all that you have (personal guarantee) to earn what you do not need. It is very common these days…
When we were younger and an entrepreneur came to me for making a loan application, we would be shit scared to allow too much of leverage. We would make sure that there were no bullet payments. Repayments were almost always by EMI. The second loan would happen ONLY when the first loan was over. An equity participant was told that he would get dividends, and a cup of coffee, nothing much more. Today with young businessmen leveraging – in a business which they are yet to learn, and taking private equity (it is just a form of loan), frankly it scares me. Why the HELL would you put ALL that you have at RISK to earn what you do not need? Damn it..use your F…. Brains.
I have no clue about what went wrong with VGS – remember he was not a small man. He started a business like CCD which was a big success. He had VC funding, and he was a listed company. He had a 20% stake in Mindtree which got sold to LnT – at a damn decent price. I can guess that there was no plan to create personal wealth. I mean there was no roadmap. So he borrowed far more than what he could have repaid. He must have been hoping to encash CCD…or something else…
Who knows? we can’t catch him now no?
Post Footer automatically generated by Add Post Footer Plugin for wordpress.