What’s the connection between entrepreneurship and wealth creation? If you want to be rich, do you need to start your own business?
According to self-made millionaire and entrepreneur Felix Dennis, entrepreneurship and wealth creation go hand in hand. In How to Get Rich, he explores the mindset, skills, and strategies needed to build a successful business empire.
Read more to explore Dennis’s perspective on the path to financial success.
Entrepreneurship and Wealth Creation
Dennis links entrepreneurship and wealth creation, contending that the only way to earn the kind of money he talks about is to become an entrepreneur. He argues that you’ll never get rich working for someone else because most of a company’s profits go to its owner and executives, not to its regular employees.
(Shortform note: While Dennis says that you’ll never get rich working for someone else, entrepreneurship isn’t the only viable option for building your wealth. If you’re earning enough money to do so, consistent and prudent investing can be another effective strategy. By regularly investing a portion of your income into the stock market or high-interest accounts, you can take advantage of compound interest and market growth to earn ever-increasing returns. In contrast to the high-risk, high-reward nature of entrepreneurship, this method offers a safer (albeit slower) route to wealth. As an additional benefit, investment requires less effort on your part than business ownership does.)
Finding Your Market
To start a new business, Dennis says that you’ll need to identify your greatest talents and interests. Naturally, leveraging those will give you the best chance of building a successful business. For this step, the author suggests seeking honest feedback from mentors or trusted advisers—though he also acknowledges that you’ll probably go through a good deal of trial and error while finding your niche.
As well as considering your own skills and interests, think about what markets you’ll have the best chance of getting into. While highly profitable sectors like real estate may be appealing, they’re often overcrowded. Instead, he recommends that you look for up-and-coming industries. Examples are green energy or industries with relatively low start-up costs such as consulting or bookkeeping services.
| Counterpoint: A Strong Purpose Leads to Strong Profits Dennis says you should base business decisions on what’s most likely to make you rich, such as what you’re good at doing and which markets you’ll face the least competition in. However, not everyone agrees with this approach. In Start With Why, leadership consultant Simon Sinek says any successful business must start with a strong, clear, and inspiring vision. This core purpose should guide every business decision, ensuring the company’s actions align with and support its fundamental reason for existing. He adds that the company’s mission should articulate how you hope to improve people’s lives or contribute positively to the world—“get rich” doesn’t qualify. Sinek argues that mere profit is an uninspiring and therefore unsustainable goal for a business; it won’t motivate your employees to work hard, nor will it motivate customers to buy from you. Instead, he views financial success as one result of effectively pursuing a meaningful purpose, rather than as the purpose itself. |
Creating Wealth
Now that you’ve got the right mindset and the groundwork for a new business, let’s discuss how you can use that business to get rich.
Dennis reiterates the importance of staying focused on the primary goal of getting rich and cautions against becoming overly attached to any particular industry or business. Instead, be ready to recognize and seize opportunities when they arise, regardless of whether they relate to your area of expertise.
Remember: Your mission isn’t to make one specific business successful; it’s to become wealthy however you can.
However, Dennis adds that, whatever you’re doing, you should make sure to do it well. A good reputation in your chosen field attracts talented workers and makes investors more likely to work with you; a bad reputation will do the opposite. Therefore, striving to be the best in your industry should be a point of pride as well as a source of financial gain for you.
Along with those overarching principles of flexibility and excellence, Dennis focuses on two crucial skills that you’ll need in order to get rich: negotiation and delegation.
He suggests that, prior to even beginning negotiations, you set firm limits on what you’re willing to accept or pay during this deal. Your opponent will try to sway you, but stick to those limits no matter what they say. Dennis says each side’s respective weaknesses are the critical factors in most negotiations. Whoever is able to find and exploit the other side’s weakness will get the better end of the deal. Therefore, before entering any negotiation, it’s crucial to research your opponent and create your plan of attack. Also, identify your own weaknesses and hide them from the other party.
The second entrepreneurial skill Dennis discusses is delegation. Dennis stresses that proper delegation means identifying talented individuals and providing them with opportunities to use their talents. In fact, Dennis writes that many entrepreneurs only stay minimally involved in their companies long-term. He recommends getting your business to a point where your managers can handle daily operations without you, but also establishing clear guidelines for which decisions need your personal approval.
Looking for More Opportunities
Once you become wealthy enough, it’s easy to stop working and simply live off of passive income. However, Dennis suggests that you avoid retiring and instead keep looking for interesting new ventures to pursue. He explains that most entrepreneurs find retirement unfulfilling—without work to occupy them, they become bored and lose their sense of purpose in life. You’re likely to find this is true for you as well.
Instead of retiring, many rich people become “professional entrepreneurs,” repeatedly founding new companies, growing those businesses until they’re profitable, then selling them. When they start losing their passion for one of their businesses, they sell it and focus on a new project. This is an effective way to keep growing your wealth and simultaneously make sure you stay happy and fulfilled throughout your life.
Exercise: Plan How You’ll Create Wealth
Think about how you could apply Dennis’s principles and start your own journey to becoming a wealthy entrepreneur.
- What reasons have you given for why it’s not the right time to start a business and get rich? As Dennis would say, what excuses have you told yourself?
- What type of business or industry would give you the best chance of getting rich? Remember to consider your talents and interests, as well as which markets you’ll be able to find a niche in (meaning they’re not already overcrowded).
- How will you get starting capital for your business? For example, who specifically could you ask to invest in your idea, or would it be feasible to start a crowdfunding campaign?
- What do you plan to do after getting rich? For instance, how will you spend or invest your money, and what kind of lifestyle do you plan to lead?
