Question: What do I need to do to become wealthy in an ethical way?
My response: The greatest career ascension for wealth accumulation in business happens when you OWN something, and for that I mean EQUITY (ownership in a business). In the five factors of production, Knowledge is supreme since it influences the other core three of Capital, Entrepreneurial risk taker, and Labour.
(Land is largely irrelevant in this knowledge economy era and that means we need to update secondary economics textbooks where we remove land, and add knowledge, as the factors of production).
In those 4 factors, Labour is the least in all forms even though Labour is the factor that organizes and harmonizes the production process with people, processes and tools as pillars. Without Labour, nothing happens even though the technical capital and process may be there.
But here is the fact: it is impossible to use Labour to become super-wealthy because Labour has minimal leverage it can compound. A labourer cannot influence many things in the wealth chain. And when the labourer has a huge marginal cost, building super financial wealth becomes difficult.
For example, a medical doctor cannot be super-rich through a medical practice as the marginal cost positioning is terrible. In other words, it is one doctor and one patient at a time irrespective of the number of patients who need medical services! That means, the doctor cannot scale his product (i.e. the medical care) irrespective of demand.
Looking at everything, you need to build EQUITY if you want to be wealthy, and doing that typically will require certain things including pursuit and application of knowledge, personal accountability, and taking action where you can compound leverageable positions.
-Pursuit and application of knowledge: you need to have the capability to create something which people need to solve their problems. For that to happen, you need to have knowledge which is not common to make that product or service come into reality
-Personal accountability: count the number of people who left your village, did well in big cities and one day returned with a nylon bag. Most times, lack of personal accountability was the reason their emergent success consumed them. The same happens in business: have you stopped picking your customers’ calls because you have tons of money in the bank? Keep doing that, one day, it will be over because without those customers, the bank accounts will dry up.
-Action: wealthy people are action-oriented. Check, they keep building, scaling and learning. They never stop. Most commoners complain because the wealthy people are never tired of taking more in the market. Yes, action is in their DNA. But it goes beyond action, you must do the action to win leverage.
In Nigeria, most wealthy owners control vehicles which serve their empires. Looking deeper, wealthy people take actions to build leverages which as they compound over years, they become richer. For example, if you save 2% of revenue from a private company A via another subsidiary which you control, over years, you have saved tons of money.
Comment on Feed
Comment 1: The best way to become wealthy legitimacy is to build your competencies continually. To keep on acquiring more knowledge. We all know “knowledge is POWER”.
My Response: Sure, acquire knowledge and most importantly, APPLY it to solve a problem people have.
Comment 2: Ownership is the surest form of compounding value over time. Even as an employee, this applies if you take equity in the business. Some of the most successful and smartest athletes and celebrities who explored equity/ownership in brand deals are the richest as a result. They end up earning even more than their professional fees from the compounding values of their equity.
My Response: Equity is equity whether from work, investment, etc. So, if your job gives you equity, you are a shareholder and the same process applies.
Comment: That’s why doctors either specialise (like plastic surgeons, many of whom are wealthy) or have private labs/clinics/hospitals, to leverage on the labour of their staff. So the example of doctors applies to almost all professions and any one-person venture.
My Response: When they have private labs, the wealth is not coming via LABOUR as a medical doctor, but as a businesspeople leverageable the labour of others. Being a plastic surgeon specialist will not make you wealthy, but owning a place where they do that will do. There, it is capital that is compounding because labour has no means to compound. In short, as you become older, labour fades and that is why we retire. But your capital in a company does not retire!
