Posted by: Mike in Entrepreneurship on Jun 06, 2008
Today it seems most don’t quite understand the process of creating wealth. Seeing the glitz and glamor of the wealthy individuals we see on the television everyday could lead us to believe wealth just happens. There is no secret to creating wealth, and no set way to become wealthy. However one constant present in any company or person creating wealth is they have a business system that efficiently generates income for the entrepreneur. The business system does one of the following.
Ultimately people’s time is the only real currency. Typically it is through a company creating or providing something people want in combination with others willing to build your business for a certain salary or hourly rate that will make you wealthy. It is your business itself that is actual "Wealth" not the money it generates but the value it is capable of providing to others. The more efficient and just as importantly, scalable, your business system is, the better you can translate the total labor invested into profits. By solving problems, saving people time,money or satisfying a need/want creates value. This is what makes people willing to trade their time (that they cannot get back) the one thing that universally has value in itself, for your product or service.
Money, is only a means by which people trade their time. People give their time performing a function in a business system, such as working at McDonalds, Walmart or your company. In return the owner pays the employee for that labor or skill. In turn they then use the funds to purchase the things they want, completing the indirect trade of their time for the products and services they want to purchase. In a large productive economy many people are trading their time creating various products and services and in essence trading them for the products and services others are creating in that economy. With the invention of the internet and much better communication, we have moved from localized economies to national economies to the global economy we have today.
In a society company owners and entrepreneur simply act as the middle men or women who help people facilitate the trade of their time for the particular products or services they wish to purchase. The more efficiently your business system can match products and services to the masses of people who need or want those products and services the more profitable you will become and the more wealth you will build. Technology and Intellectual Capital (Training, education & Innovation) can also take the place of labor hours as well, a good entrepreneur will leverage all resources available to make the business system more efficient at translating input (Capital, Labor, Raw resources(land), Technology, Intellectual resources) into more valuable outputs (Products & Services).
It happens every time you buy something from a grocery store or use a service. Creating wealth is nothing more than creating a business system that EFFICIENTLY solves problems, provides value or saves time and money. Where the secret does lay,is weather you know how to position yourself between what the masses are willing to pay for, and what your willing and capable of providing.
And of coarse, if you have the tenacity to step off the mouse wheel of conventionalism, 9-5 work days, safety and security. And instead step into the world of risk, which as we have learned, the other side of that coin is REWARD! And the most risky part of this formula, is making sure you understand what does and does not have value, what people will and will not pay for. But you don't have to re-invent the wheel, anywhere you've ever spent money is a business system that has proven it works!
You might also want to consider some of these fundamental aspects before deciding on what venture to get into:
Additionally you may want to conduct a quick SWOT Analysis. Where you asses Strengths, Weaknesses, Opportunities and Threats both internally and externally.
Its also very prudent to take advantage of market research before setting out. This alone will help eliminate a large part of the risk. Market research will help you determine your target buyers or prospects so you know just how to match them with your products or services. Research also gives you an idea if your product or service is marketable and how much profit and demand you may be able to generate.
Most of us starting a venture for the first time may not have a good idea just how much value a product or service offers. We may over or under estimate the value we are providing due to personal bias. So it’s good to get an objective and realistic assessment of your product or services. Market data and research reports can help you gain that perspective. Also simply asking lots of people how much they would be willing to pay for your service and getting their opinions can prove very valuable as well. In the end, it may cost you for a good market report, but it would cost you much more if you go into business, lease a building, hire help, get incorporated, begin advertising AND THEN determine there just wasn't all that big a need or demand for your product or service.
Below are some of the major market Research and Statistic sites you may want to visit to get you started: