Archive for June, 2008:
How to make a million dollars? Leverage your social capital to make your first million.
In my last post, i shared some information that i have collected from my interviews of 50 over millionaires. I shared on the ways that these average joes, who were like you and me, were able to make a million dollars. Many of them made their first million dollars through investment in real estate and the stock market. They were also many of them who were able to make one million dollars by starting a business.
In this post, i would like to share on what is one of the key common factor that have led to each of their success in making their first one million dollars. In my selection of potential millionaires for interview, i have chosen only millionaires who started with minimal tangible resources and made their one million dollars from scratch.
When you look at this data, you will probably think that the information is as expected. But take a moment to consider the starting profiles of these millionaires, they did not attend Ivy League colleges nor did they have rich uncles who own large silicon valley companies or long-distance god mothers who left them an inheritance. These are guys and girls who started from file and rank and broke free from the daily grind.
Why did they all say that knowing someone with the correct connections or knowledge was one of their key success factors? This was what i was interested to find out. As i delve deeper, each of them revealed that they were able to start a business with help from friends that they knew or invested in the right stock or real estate with advice from trusted professionals.
Before each one of these millionaires started their venture, they mapped out their connections to friends and professionals that they know. Not all of them may have mapped out their web of friends and professionals deliberately, but each have taken time to consider their network. I would suggest doing an exercise to mind-map your million dollar network, which is your social capital to make your one million dollars. I use a free software called freemind. You can download it here. It is a free and easy to use software for mind mapping. Below is an example. The names are changed for privacy considerations.
After mapping your million dollar network, you will be able to pinpoint where are your greatest leverages in your social network. You will be able to instantly identify where to get help when you need it. You will also understand where you could strengthen or build up so as to increase the effectiveness of your network. Raju Sykam created a local courier service in his city for businesses that needs to send documents and parcels within the city. He was able to use his million dollar network build up from his days working as a door to door salesman for office supplies. Now Raju is a millionaire boss who has more than 100 couriers working for him daily.
How to make a million dollars is not a difficult question to ask nor a difficult venture to start. To many of us, it is the tapping into our social network that will be the most difficult step of all. Some of us will feel that we are acknowledging that we are in need of help or that we are not successful yet and needs favors to get there. While some will feel that leveraging into our social capital is equivalent to making use of your friends. I say this to those of you who feel this way, the breaking of this barrier will be the most critical step towards making your first one million dollars and the sooner you step out of your comfort zone to reach out into your million dollar network, the sooner you will become a millionaire.
Note: Sorry about the pictures..you may want to click and view them in a new window for better resolution 
How To Make A Million Dollars? How Others Did It?
More than 300,000 people became millionaires each year. Why aren’t you one of them? Perhaps they were lucky and strike the lottery, or perhaps they inherited the money from a dead relative. Or perhaps they rob a bank. Ok I am pretty sure that the last example was not counted into the statistics but 300,000 is still a pretty large number and what is their secret to achieving a million dollars to be entitled to be called a millionaire? How did they make their million dollars? Where are all the opportunities that were available to them? Is it possible for me to also take advantage of their opportunities?
We have all heard of the guy who made his fortune on the stock market and of the neighbour who sold his investment property and made one million dollars of the sale. I interviewed a Dave Sheldon, from Los Angeles, whom I met during an investment seminar late last year. He works in a training consultancy firm that develops training systems for companies, and he has joined the ranks of the millionaire when he sold his investment property in LA two years ago. Dave was an average guy drawing a four figure salary from his daily grind but invested in the real estate market ten years ago. When he finally cash in on his property, his profits was more than a million dollars and was more than sufficient to allow Dave to live the life that he has been dreaming of. Nowadays, he fetches his kids to school and is currently attending college again, to pick up a few more languages. By the way, Dave is only 35 this year. Is it possible for all of us to be like Dave? Join the millionaire club before 40 and escape the daily grind?
Where did all these millionaires make their millions? Are there many secrets that we are not aware of and need to attend $3,000 seminars to learn from? After speaking to more than 50 millionaires, I have compiled a simple statistic of where did these average guys and girls make their million dollars and how we can follow their example. Note that these are people whom I have met over a period of 3 months and have no relationship with each other whatsoever.
From my interviews and research, I could see that most of millionaires that I have met made their first million dollars from starting a business or investment in real estate or the stock market. This is not surprising since the last few years before 2007 were economically strong years. Significantly less folks saved a million dollars from paid employment or just spending less. What does this data tell us? Quit our jobs today and start a business in investment into real estate. LOL.
It does tell us that it is becoming difficult to become a millionaire by simply working hard on your job and hoping that your 401(k) plan will grow into a million dollars. At least it is not a popular method to becoming rich. Why so? The median income in US is $21,587, which does not leave much on the table for savings after you deduct expenses and taxes. Yes, taxes. To really jump onboard the million dollar club, most of us will need drastic actions and this path is likely the entrepreneurial route, where we can start a business which we are passionate about.
Starting a business is not for everyone. The financial risk that comes along with the business can be quite foreboding but if one take careful steps in managing the risk, the rewards can be extremely gratifying financially and emotionally. I will talk about starting a business in another post next time.
