The Millionaire Next Door - Chapter 8

Okay, final chapter, the millionaire next door. Was I just sitting here doom scrolling for the last ten minutes? Yeah, I was. And then I realized no, baby's sleeping. I need to get this episode done and move on with my day. and be productive. Okay, so jobs, millionaires versus heirs.

Who are the affluent? By now you probably can predict the answer. Most of the affluent in America are business owners, including self-employed professionals. Twenty percent of the affluent households in America are held by retirees. Of the remaining eighty percent, more than two thirds are held by self employed employ owners of businesses.

In America, fewer than one in five households or about eighteen percent is held by a self employed business owner and professional. But these self employed people are four times more likely to be millionaires than those who work for others.

So they said like there's a reporter that asked them some questions. So here are the questions. What types of businesses do millionaires own? Our answer was the same one we give everyone. You can't predict if someone is a millionaire by the type of business he's in. Okay, uh skipping a whole bunch of stuff. So only change is predictable. Things do change even in so-called owner-manager business environments.

So I would say that one thing that they did not expect here in nineteen ninety six when this book came out is the change of social media. and the internet craze and like all of the things that came around that, I how could have anybody have predicted in nineteen ninety six influencers? I would venture to guess that they did not um have any idea that that was coming. Many people ask us, should I go into business for myself?

Most people have no business ever working for themselves. The average net income for more than fifteen million sole proprietors in America is six thousand two hundred dollars. About twenty five percent of sole proprietors proprietorships do not make one cent of profit during a typical year. It's even worse for partnerships.

Forty two percent on average make no profit in a year. What about corporations? Only fifty five percent have a tax ab any taxable income during a typical twelve month period. Self employee professionals versus other business owners.

Mm. Fewer than one in five millionaire millionaire business owners turns his business over to his children to own and operate. They know the odds of succeeding in business. They understand that most businesses are highly susceptible to co competition, counter

consumer trends, a high overhead, and other uncontrollable variables. So what do these millionaires advise their children to do? They encourage their children to become self-employed professionals such as physicians, attorneys, engineers, architects, accountants, and dentists. As stated earlier, millionaire couples with children are five times more likely to send their children to medical school than other parents in America, and four times more likely to send them to law school.

The affulant know the risk and the odds of succeeding or failing in business. They also seem to understand that only a small minority of self employed professionals fail to make a profit in any given year, and that the profitability of most professional services service firms is sustainably

Mm whatever that word is again that I really can't I'm I'm gonna I'm going to Google it after this. Higher than the average of the small businesses in general. Alright, so they're basically saying that these self employed millionaires

that have created their wealth s um, they do not also they do not encourage their children to go into these businesses, which does kind of go against what they had were saying earlier about the affluent creating businesses for their children and another in a previous chapter, I think it was like chapter four or five that these affluent parents give their children businesses to stay on their to stand on their own.

We once asked an affluent business owner who had fled Europe because of the Holocaust why his adult children were self employed professionals. His response They can take your business, but they can't take your intellect. What does this mean? A government and or creditor can compensate a business composed of land, machinery, coal pits, buildings and so on. It can't compensate your compensate your intellects.

Physicians, for example, can take their intellect anywhere in America. Their resources are quite portable. The same is true for dentists, attorneys, accountants, engineers, architects, veterinarians, and chiropractors. These are the occupations held by a disproportionate number of sons and daughters of affluent couples thro with throughout America. So this just gives me more credibility and justification of why my continuing education is such a high Um

list on my priorities is because I can I can do so much more when I have the knowledge and I that is something that can never be taken from me. I always have more underneath my belt. I'm always going to be resourceful because I have education And when people look at my master's degree in legal studies and they're like, Well, do you regret doing that? Hmm, maybe. Um, but also that's something that I have in my back pocket and I will always have and that's something that can't be taken from me. So

The first generation affulent are typically entrepreneurs. They beat their odds, their businesses succeed and they become affluent. Much of their success depends on their living a frugal existence through while building their businesses. Work is often evolved.

and most who succeed understand their circumstances could have gone against them. Their children will have it better, they will not have to take sac significant risk. They will be well educated. They will become physicians, attorneys, and accountants, Their capital is their intellect. But unlike their parents, they will postpone earning mm sorry, entering the job market until they are in their late twenties or even their early thirties. And most likely

they will adopt an upper middle class lifestyle as soon as they start working, a much different lifestyle than their frugal pa frugal parents had when they started their business. Hold on, let me mute you'cause I need to clear my throat. Okay, hopefully that's better. Not really. Often our children are not frugal.

They have a high status position that requires high levels of consumption and thus lower levels of investing. As a consequence, they may require economic outpatient care. In spite of earning high incomes as requirements. most professionals do, they're obligated to spend. Thus, because they are corresponding high levels of households spending require requirements, for many high income producing categories of business

is difficult to predict levels of wealth based on the income characteristics of various types of businesses. So, you know, you do often see that you have people who um, are the first generation entrepreneurs. They make a lot of money. They try to give it the family business to their adult children who either don't want it or go into something else. And then what does that do? That has the adult children

going into other careers and professionals that are such as attorneys and doctors and lawyer and uh attorneys, lawyers, and those individuals have to look the part, which means they have to spend the money. And that's what we just learned about in this book.

So risk or freedom. Why do people operate their own business? First, most successful business owners will tell you that they have tremendous freedom. They are their own bosses. Also, they will tell us that self-employment is less riskier than working for others. So what is risk? Risk is having

having one source of income. Employees are at risk. They have a single source of income. What about the entrepreneur who sells janitorial services to your employers? He has hundreds and hundreds of customers, hundreds and hundreds of sources of in of income. Actually There is considerable financial risk in being a business owner, but business owners have a set of beliefs that help them reduce their risk.

or at least their perceived risk. One, they're in control of their own destiny. Two, risk is working for a ruthless employer. Three, I can solve any problem. Four The only way to become a CEO is to own the company. Five, there are no limits of the amount of money I can make Six, I get stronger and wiser every day by facing risk and adversity. To be a business owner also requires that you have a di desire to be self

Employed. If you hate the thought of being outside the corporate environment, entrepreneurship may not be your calling. The most successful business owners have been have interviewed have one characteristic in common. They all enjoy what they do. They take pride in going it alone. And That looks like it's the end of this chapter. So really, really short and basically just the some synopsis of an entrepreneur.

And The one thing that they did say that I did not include um verbatim, but I wanted to kind of briefly touch upon, is that they said that there's a lot of fear in being an entrepreneur. Mm mm and being an entrepreneur myself and being in my own business and owning my own company, I will say that is a thousand percent true. Do you know the fear that I have having to pay employees and making sure that

we have enough jobs to sustain them, to keep going, to put myself out there, to all of the things that come around, all these things that people um are fearful fearful of. But I could be like other employees and just go work for somebody and be underneath somebody else's business. But what does that do? It still leaves me with fear, different fears, but I'm not conquering any of my fears.

o owning a business, being in business for myself, owning my own company, at least every single day I'm having to get up and face my fears and g overcome them. And when you overcome them, yes, a new set of fears comes into a place. But what it does is that it allows you to conquer your fear fears and to keep growing and getting bigger and bigger.

it there is risk. Obviously it's risky. But there's risk no matter what. And being an entrepreneur, I have a lot of freedom. I. e. it's ten o'clock on whatever day this is. I have no idea because what are days? And I can do whatever I want. I went for a walk with my dogs and my baby. After this I'm gonna get up and I don't know, maybe dance around my house, whatever I wanna do, because I don't work for anybody else. I work for myself. And having that freedom is an amazing, amazing feeling.

I'm knowing that the only limitation that I have on my income is set by myself. I can make however much I want by however hard I want to hustle. and however much I want to go after more clients, larger clients, bigger jobs, whatever the limitations of my own creativity are, that is the level of limit that I have for my income. Oh, I hate this book so much. But I love it. I mean there were some good points. I'm not gonna do any recap or

final touches on this. I'm done with this. I'm putting this on the chat um back on my bookshelf and I am closing the door and walking away and we are gonna get started in September's book. Hopefully here pretty soon. Um don't hold me to it. I don't know when it's gonna happen, but We will do it. I promise you, I promise you, in some form or fashion we will get to this next book. All right guys I'll