{"id":3055,"date":"2021-10-23T16:12:58","date_gmt":"2021-10-23T16:12:58","guid":{"rendered":"https:\/\/www.africa-press.net\/rwanda\/all-news\/why-do-entrepreneurs-have-big-stories-and-inevitably-die-broke"},"modified":"2021-10-23T16:19:03","modified_gmt":"2021-10-23T16:19:03","slug":"why-do-entrepreneurs-have-big-stories-and-inevitably-die-broke","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/rwanda\/economy\/why-do-entrepreneurs-have-big-stories-and-inevitably-die-broke","title":{"rendered":"Why Do Entrepreneurs Have Big Stories, And Inevitably, Die Broke?"},"content":{"rendered":"

Africa-Press – Rwanda. <\/strong><\/span>Have you been in a conference room full men and women seemingly ambitious and aggressive? They tell big and seductive stories about business, taking risks, savings, pooling resources and suddenly later you hear they bowed out very broke.<\/p>\n

Nearly everyone would want to swim in riches and live a luxurious life but not everyone knows what it takes to reach that level. It should also be noticed that different societies or countries pursue different forms of economics and this will dictate the manner, style and routes of financial success.<\/p>\n

If we pick on advise from billionaire Warren Buffett, CEO and chairman of investment company Berkshire Hathaway, there are some rules one needs to adhere to in order to become a millionaire.<\/p>\n

Pay your savings first<\/b><\/p>\n

As Buffett has noted and demonstrated on multiple occasions, you should \u201cpay yourself first\u201d by putting a portion of your funds away first. Too many entrepreneurs go all in on the company they create and live for the promise of \u201cthe big exit.\u201d But then it goes wrong. Even worse, some founders have done this multiple times.<\/p>\n

An expert and friend who owned 29 companies before the pandemic made a funny statement: \u201cYou can always tell the entrepreneurs in a room. They have the biggest stories. And then, nearly inevitably, they die broke.\u201d<\/p>\n

Statistically, the people who are most financially secure are the ones you wouldn\u2019t expect. They are ordinary people who practiced financial discipline. They didn\u2019t wait to save and invest until \u201cwe can afford it\u201d (that would be never) or \u201cwhen we exit our company.\u201d<\/p>\n

With or without advisors, they calculated what they\u2019d need to retire and learned to put away savings first (sometimes in a hard-to-access CD or at a separate bank). Then they covered their needs.<\/p>\n

They used the smallest share of their funds to indulge in luxuries and high-risk investments. They simply practiced and taught financial discipline consistently and early.<\/p>\n

For example, the young teen daughter of one of my friends is working a part-time job not for the chance to indulge in movie dates or brand-name fashion, but to begin her own retirement fund. In a similar vein, I learned that an entrepreneur I\u2019ve known since childhood was homeless for an extended time as a teen.<\/p>\n

He worked multiple part-time jobs as a high school junior and senior while living at first in his car, then later acquiring a trailer. He was even severely hungry at times, but as he was paid, the first thing he bought (after braces) was gold coins, recalling the principles he\u2019d learned from his great grandfather as a boy.<\/p>\n

Today, in his early-mid 60s, he\u2019s been retired 14 years. He launched, owned and exited multiple companies but continued to save and invest in gold, stock, real estate and other assets throughout.<\/p>\n

Be careful about splurging on brands<\/b><\/p>\n

In the example of Buffett, consider buying your cars (luxury or not) lightly used. If you purchase a luxury home, choose a house and location that could allow it to resell easily or serve as a permanent or part-time rental for extra revenue and tax benefits.<\/p>\n

Or consider owning and living in a conservative home and occasionally renting a luxury home yourself from time to time for a family holiday or a vacation with friends.<\/p>\n

A wise advisor I know advises allocating only 20% of your income or investment revenue to \u201cthe three \u2018f\u2019s\u2019\u201d: food, fashion and fun. However, my own business partner, Lauren Solomon, a professional image advisor, is quick to remind clients that working remotely or living on a conservative income is never a justification to ignore \u201cthe business of being you.\u201d<\/p>\n

You shouldn\u2019t become so casual and lax that how you show up is a contradiction to the standard of quality you uphold. Even casual clothing can be used to create an aesthetically fitting result.<\/p>\n

As she often remarks, \u201cYou can\u2019t ask other people for money if you show up looking like you\u2019ve never had any money of your own.\u201d Here\u2019s a helpful way to think about luxury brands. When you do indulge, consider the purchase as a form of investment. Are the quality and style timeless and classic? Is it something you could adapt and continue to wear two or more decades from now?<\/p>\n

Be careful about taking out loans<\/b><\/p>\n

\u201cIf you buy things you don\u2019t need, you will soon sell things you need,\u201d Buffett has said on many occasions. Credit cards can be the highest potential waste of earnings and savings. If you follow the example of Buffett, you operate nearly entirely in cash.<\/p>\n

If you use cards, learn the systems that allow you to optimize your usage to keep your credit score high and stay eligible for maximum credit when needed while paying the minimum amount of interest (or none).<\/p>\n

Be even more careful about investing with borrowed money<\/b><\/p>\n

For the record, Buffett has cautioned against borrowing money to invest in securities many times. A possible exception to the avoidance of credit, however, is an interesting detail Buffett delivered to investment advisor Adiel Gorel in the form of a personal note.<\/p>\n

Gorel tells about hearing from Buffett following an MSNBC interview in 2012. Gorel noted on air Buffett\u2019s oft-stated opinion about the wisdom of purchasing or refinancing homes on the fixed-rate 30-year mortgages that are canonical in the U.S., but not so readily available in most other countries.<\/p>\n

A fixed-rate loan on a single-family home (as opposed to multi-tenant dwellings of any kind) carries the advantage of allowing inflation to make the payment and balance of your loan an increasingly good deal over time while also allowing the rent your tenant pays contribute to repayment of the loan principle each month.<\/p>\n

On the air, Gorel applauded Buffett for acknowledging single-family homes as an attractive investment, saying he (and Berkshire) would purchase many if they had the mechanism to do so.<\/p>\n

Afterward, he learned Buffett was watching. So he began a correspondence, offering the assistance of his company to facilitate the mass purchase. Buffett responded with a note that said, in part, \u201cto make it justified for Berkshire, we\u2019d need to invest about $10 billion.<\/p>\n

For More News And Analysis About Rwanda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Rwanda. Have you been in a conference room full men and women seemingly ambitious and aggressive? They tell big and seductive stories about business, taking risks, savings, pooling resources and suddenly later you hear they bowed out very broke. Nearly everyone would want to swim in riches and live a luxurious life but […]<\/p>\n","protected":false},"author":84,"featured_media":3054,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,15,761,29,28],"tags":[760,763,1797,2007,758],"class_list":["post-3055","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-files","category-head-lines","category-homepage-english","tag-africa-press","tag-africa-press-rwanda","tag-entrepreneurs","tag-inevitably","tag-rwanda"],"yoast_head":"\nWhy Do Entrepreneurs Have Big Stories, And Inevitably, Die Broke? - Rwanda<\/title>\n<meta name=\"description\" content=\"Have you been in a conference room full men and women seemingly ambitious and aggressive? 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