Are the wealthy and successful really that much different from the rest of us? Well, yes and no. The successful and wealthy definitely have more similarities to the average person than differences. But even though the differences are small, their effects are enormous. Fortunately for us, there has been a lot of research into this issue and we now know that the biggest differences between the wealthy and the rest of us lies in our mindsets. I say that this is fortunate because we know what these differences are and for most people, developing a wealthy entrepreneur mindset can be learned.
What is a Mindset?
There are several definitions for what a mindset is, but for our purposes:
“Mind-sets are those collection of beliefs and thoughts that make up the mental attitude, inclination, habit or disposition that predetermines a person’s interpretations and responses to events, circumstances and situations.” (Source: What is Mindset?)
As you can see, a mindset is closely related to a world view. In other words, the lens that we perceive the world through determines our thoughts and actions. The trick to developing a wealthy mindset is to adjust the lens so that we see more opportunities than problems.
We’ve all heard the saying that “The rich get richer and the poor get poorer”. This is an absolutely true statement, however not for the reasons that most people think. Both financial success and failure tend to build on themselves. In other words, if things aren’t going so well and you’re having trouble paying the rent. It very possible that when your car breaks down, you’ll need to use some rent money to fix the car. This puts you behind in rent, causes late fees to be added on to the overdue rent putting you deeper in the hole. So, you skip your credit card payment to make up for the back rent. This not only adds late and other fees to your credit card balance but lowers your credit rating so the next time you get a loan it will be at a higher interest rate.
Conversely, if you are doing well at your job, it’s likely that you will be promoted and get a raise. It’s also likely that others in the industry will hear about your success. When people hear about success, they will bring you other opportunities that can mean more success.
In both cases, your trajectory builds on itself like a snowball rolling downhill. The key is to make sure that you are on a trajectory of success. This is where developing a wealthy entrepreneur mindset becomes valuable.
Below are some examples of a wealthy vs poor mindset.
Poor VS. Wealthy Mindset: 5 Examples
1. Poor Mindset: Life is what happens to me – This is a common belief that serves as a convenient way to avoid responsibility. It’s not your fault that you’re overweight, poor, or unhealthy. Those are just the cards you’ve been dealt. Believing that you have little or no control over what happens to you is just setting yourself up for failure. While it’s true that you have no control over the circumstances that you were born into. Your gender, race, inborn talents and even the norms of the society are all out of your control. The decision to let those circumstances dictate your future is up to you.
Wealthy Entrepreneur Mindset: I create my own life – Believing that you control your own life, is key to developing a successful mindset. But it takes more than just a belief. Successful people take actions that back up that belief. If I am at “A” and I want to get to “D”. I need to do “B & C” in order to get there. If I’m not willing to do B&C, then I am just wishing that “D” will somehow fall into my lap. You might as well buy a lottery ticket.
The reality is that everyone has their fair share of bad breaks, but if you proactively control of your life instead of responding reactively, the bad breaks won’t break you. The very first step in any journey of self-improvement is to admit to yourself that you can makes things better and are responsible for doing so.
2. Poor Mindset: Buying expenses – I once had a roommate who worked at a fast-food restaurant. With his first paycheck he went and bought a $200 pair of shoes. With his next paycheck he bought a couple of expensive shirts. It wasn’t long until he traded in his old clunker for a nicer car. Then he had his eye on a wave runner. He viewed these things proof that he was moving up in the world. I viewed it as something different.
Wealthy Entrepreneur Mindset: Buying income – Wealthy people don’t spend money on fancy things until they become wealthy. When you buy things like cars, motorcycles, boats, etc. what you are really doing is buying expenses. All of these things come with a cost of ownership. You need to pay for gas, insurance, storage, and maintenance. All of these things add up and worse, they depreciate in value over time. Wealthy people don’t buy extra expenses, they buy income.
But how does that work? Instead of buying things that essentially have no value after the initial purchase (shoes, clothes) or things that created more expenses (cars, wave runners). The wealthy spend money on income producing assets. Things like stocks, mutual funds, real estate, a side gig, or business. All of these things are assets that either produce income or have historically gained value over time.
3. Poor Mindset: Immediate gratification – My buddy was stuck in this way of thinking. He only saw the immediate gratification he would get from the new shoes, clothes, and wave runner. Asking him to forgo those things now for more/better things later would have been asking too much.
Wealthy Entrepreneur Mindset: Delayed gratification -I don’t want to give the impression that you should never buy nice things. Just be smart about it. If my buddy had bought income producing stocks, started a side gig or saved up for a down payment on an income producing property, he could have used that income to buy the car. In that case he would have both the car he wanted and an income producing asset. The problem is it will take some time and work before that asset generates enough income for the purchase. That is why the delayed part of this gratification is emphasized.
4. Poor Mindset: Comparing yourself to others – This so common as to be ubiquitous in our society today. It is not only always a losing proposition, but it’s also dangerous. Why?Because we are always comparing ourselves to those who have more than we do, no one ever compares themselves to people who have less!
The trouble with that is, you will always come up short. Think about it, there will always be someone who has more. It’s dangerous because it leads to “Keeping up with the Joneses syndrome”. This is when a neighbor or friend buys something new like a car, boat, vacation home etc… These things can raise a person’s social status. It can trigger our natural human instinct to be competitive, leading us to go out and make purchases that will increase our perceived social status. Unfortunately, it is much too easy to go into debt trying to keep this up than it’s worth.
Wealthy Entrepreneur Mindset: Comparing our current-selves to our past-selves – Not comparing ourselves to others is difficult. But developing a healthy, wealthy entrepreneur mindset demands that we focus on ourselves, our goals, and our accomplishments without being distracted by other people. As long as you set appropriate goals with appropriate milestones that you accomplish. You are moving in the right direction. Don’t let other distract you!!
5. Poor Mindset: Life is unfair – The odds are stacked against me. I’m disabled, a different color, race, religion. I’m a teacher, artist, the rich get richer and the poor get poorer. I play the lottery because it’s the only realistic way that I’ll ever have any money.
Wealthy Entrepreneur Mindset: Life is unfair -A wealthy mindset doesn’t require that you ignore the unfairness of life. It just means that you recognize that life is unfair to EVERYONE. No one is immune to that inherent aspect of life. History is full of highly successful people who dealt with the unfairness of life. Bethany Hamilton at 13 she lost her left arm in a shark attack, today she is a professional surfer. Richard Branson founder of Virgin Group is the 12th wealthiest person in the U.K. He is dyslexic and as a child was a poor student. Rapper Jay-Z couldn’t get signed to a record deal, so he started his own record label Roc-A-Fella Records. Forbes currently estimates his wealth at $500 million. Even the great Bill Gates first business Traf-O-Data was a complete failure. There is nothing wrong with wanting to make the world fairer, but if you are waiting for the world to change, you’ll be waiting for a long time. NO EXCUSES!
Developing a Wealthy Entrepreneur Mindset: Tips from a Serial Entrepreneur
- Frame and focus your thoughts – This isn’t something that is taught very much (if at all). But the way we think and frame our thoughts is crucial to a successful mindset. I used to ride motorcycles, and when I was learning, my instructor explained that the motorcycle would go to the exact place that I was focusing on. In other words, if I were focused on the road ahead of me, the motorcycle would stay on the road. But if I took my focus off the road and on to the cliff up ahead, I was going on a very unpleasant ride. So, how does that translate to a successful mindset? First of all, stay focused on the road ahead of you and don’t get distracted by things that could steer you off course. But more importantly, frame your thoughts on what you want, not what you don’t want. For example, your goal may be to get promoted in a job. Stay focused on the promotion instead of being focused on just keeping the job you have. Where you are focused determines where you will end up.
- Stand on the shoulders of giants – Sure you are brilliant and all, but there’s really no need to reinvent the wheel. Find a mentor and learn from their mistakes so you don’t have to make the same ones. In business, mistakes will happen, and they will be costly. Learning from others who have already walked the path you are on is always a smart move. There’s an old saying, “If you want to be successful, you have to do the things that successful people do”. There is nothing wrong with copying others to make your own success.
- Get out of your own way – Distractions are the number one way that entrepreneurs fail to reach their goals, and ego is the number one distraction. When someone turns us down or says “no”, it can bruise our ego. It then becomes tempting to cop the attitude “Well, I’ll show them”, or “They will be sorry”. Fight this temptation, recognize it as the distraction that it is. If you can manage to keep your eye on your goal and move past the bruised ego then, as the old saying goes, “Living well is the best revenge”.
- Recognize and celebrate small successes – A wealthy entrepreneur mindset is a motivated mindset. Every successful person has thought about quitting at one time or another. You are sure to run into obstacles that will seem insurmountable. But, by recognizing and celebrating even small successes it shows that you are making progress towards your goals. Remember, there is no such thing as a “small success”.
- Don’t look to friends and family for support – Look, your friends and family love you and only want to best for you, but they aren’t going to be your biggest supporters (at first). Remember that these people have known you a long time, they remember the person who snuck out at night taking the family car for a joy ride. Or the kid who got suspended from high school. You know, all the embarrassing dumb stuff we all do as kids. It’s hard for them to see that person succeeding. You are much better off spending your time and energy with a mentor or other successful people in the industry. Besides, if you want to be successful, you need to associate with successful people.
- Embrace being uncomfortable – As humans, we are creatures of habit. Habits turn into routines and become comfortable. The problem is that the same old routine will get you the same old results. If you want different (more, better) results, you need to change your routines. True growth and change are always uncomfortable. The wealthy entrepreneur mindset requires that you become okay stepping outside of your comfort zone. The only way to truly achieve exceptional results is with exceptional effort.
- Focus on the value you bring to the table – This may seem obvious, but it really isn’t. Too many times new entrepreneurs focus on how much revenue their product or service brings in and not enough on the amount of value it brings to the customer. Try to reverse this paradigm by focusing on the value you bring to the customer. After all, from the customer’s point of view it’s a remarkably simple equation whether to purchase or not. If the perceived value 0f the product or service being offered is greater than the cost, then the customer will make a purchase (V (P/S) > C = purchase). If the perceived value of the product or service exceeded the cost, then they won’t buy (V (P/S) < C = no sale). Stay focused on the value you are bringing to the customer and the revenue side will follow.
- Stop telling yourself negative stories about who you are – Everyone has that little voice in their head that is both annoying and critical. That voice is literally limiting your success. While you may never get rid of that voice completely, you don’t have to pay attention to it. When it’s telling you that you can’t do something, use that as motivation to get it done. Another technique is to replace that negative thought with a positive one. Instead of “I’ll never make it to the top of the hill, it’s just too high”. Replace it with “It’s a big hill, but I can definitely make it 1/4 of the way and once there, I can easily do another 1/4” and so on. You have not only replaced that negative thought with a positive one, you have also come up with a plan for success by breaking the problem down into manageable goals. Silence your inner critic and refuse to hold on to your limiting beliefs. Strive to become the best version of yourself by envisioning and embodying who you want to be.
Developing a Wealthy Entrepreneur Mindset: Conclusion
Yes, the wealthy really do think different from the average person. But the good news is that we know and have identified what these differences are. And the even better news is that a wealthy entrepreneurial mindset can be adopted by almost anyone. It’s not easy, changing a lifetime of thoughts and habits never is, but it is definitely worth it. If you or anyone you know has quit smoking, they will tell you that it’s one of the hardest they ever did. And just like smoking, developing a wealthy entrepreneur mindset will take a lot of work. But I’ve never had anyone tell me that they regretted quitting smoking or regretted developing a wealthy mindset.
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