What aspiring entrepreneurs can learn from the super-rich

Tony Featherstone

Lists that rank the super-rich always grab headlines. Which entrepreneur hasn’t dreamt about making the BRW Rich 200 List, where you needed a $286 million fortune in 2015 to come last?

Beneath the jaw-dropping wealth estimates, lists from BRW, Forbes and others provide insights into the traits of the super-rich – and great lessons for aspiring entrepreneurs.

Be a visionary

Yes, talk of business “vision” often sounds corny or clichéd. But great entrepreneurs think big. They use “big hairy audacious goals” to motivate themselves and their teams, crystallise the opportunity, and make the opportunity about more than money.

Think of Andrew Forrest’s goal to turn Fortescue Metals Group into the next great iron-ore producer, Gerry Harvey’s drive to change retailing, or the vision of Atlassian Technology’s Mike Cannon-Brookes and Scott Farquhar to build a globally significant Australian tech company.

Sir Richard Branson’s vision to make markets fairer through the Virgin Group is another great . The vision becomes the story, which in turn attracts customers, partners, investors, suppliers and distributors who believe in it.

Guard equity

The super-rich know real wealth comes from owning a chunk of shares in a business that gets larger by the day, not from dividends or other earnings along the way. So they keep as many shares – or as big a slice of the pie – as possible right from the get-go.

The super-rich know the best, safest return they will get on their wealth comes from keeping it in a business they control, or diversifying into ventures run by other successful entrepreneurs.

Compare that strategy with entrepreneurs who treat equity like confetti. Desperate to raise funds, they sell equity in the business to whoever will buy it, when it’s not worth much.

The super-rich know the best, safest return they will get on their wealth comes from keeping it in a business they control, or diversifying into ventures run by other successful entrepreneurs.

Strive to be ahead of trends

In the ’90s, property entrepreneurs dominated rich-list rankings. By the turn of the century, mining entrepreneurs dominated as the resource boom ran hot. Now tech entrepreneurs are climbing the ranks.

Here’s a tip: if you want to spot the next boom industry, keep an eye on where the super-rich invest. They’re usually a few steps ahead of everybody else, but big industry trends take years to play out.

Entrepreneurs such as Kerry Stokes and Gerry Harvey have been investing more in the agriculture industry, presumably to capitalise on Asian demand for Australian food and the so-called “dining boom”. Don’t be surprised if more agriculture entrepreneurs rise up the rankings in the coming decade.

Control risk

Super-rich entrepreneurs are often portrayed as wild risk takers or gamblers. Don’t believe the hype. The great entrepreneurs, those who keep their high rankings on rich lists year after year, are outstanding risk controllers, not risk takers.

Super-rich entrepreneurs are often portrayed as wild risk takers or gamblers. Don’t believe the hype.

They take well-calculated bets and know how to allocate capital to the best ideas, how to cut their losses, and when to let their profits run. In turn, their ability to control risk helps them take more risks and recover from setbacks.

It’s a great lesson for budding entrepreneurs: controlling risk helps you become more resilient, stay in the game for longer, and turn a small fortune into a vast one when the idea takes off.

Tony Featherstone

Tony Featherstone is a former managing editor of BRW and Shares magazines.

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