For most people, when they hear financial security, they think about paying their bills on time and having enough savings for any emergencies. However, it is more than that.
It is about planning your family’s future, including effective debt management, retirement money, and laying a foundation for children’s future.
That’s exactly why you need to build generational wealth. So, you can build a strong foundation for your child’s financial success. Something they can also keep on building for future generations.
Consider this, our time here is finite unless we find a way to stay immortal in the next 50 years or so. But, we are not sure if we are there or not or if it is even possible. Then, why not focus on creating a legacy that can live on, whether you are alive or not.
Yes, we are talking about multiplying wealth. When you focus on creating generational wealth, you build assets that can outlive you, your child, and even your grandchild. The ultimate gift you can ever give to your family.
We went through various business owners who have frequently talked in interviews, podcasts, and blog posts about how they beat all odds and became who they are today. In this post, we will uncover effective wealth-building strategies that can help you take your business idea to create an incredible empire.
Understanding Generational Wealth
As we explained above, generational wealth is commonly known as family wealth, which we repeatedly pass down to the next generations.
How does it work? Suppose you and your spouse generate valuable assets, including your business, and pass them down to your child. Your child then grows those assets and passes them down to her child. In short, your family wealth keeps on expanding as this pattern continues.
You can consider this famous example of how our parents – the first generation seeded a plant and nourished it to grow into a tree, which ultimately gave us – the second generation its fruits and shade.
The second generation has two options:
- Cut down the tree, which is not all recommended for wealth building.
- Sell some of the family apples for profit. And use that profit to plant more trees, which then supply more fruits.
The third generation nourishes every family tree, converts those fruit with cash, and uses that money to purchase new trees again, thus creating more profit and more trees to manage for the fourth generation.
Regardless, none of this would have happened unless you, the first generation, planted that one seed.
The Importance of Generational Wealth
Consider the richest families you know; famous names include Ambani, the Walmart family – Walton, royal families like Al Saud, the Johnson family, and several others deserving individual posts of their own (3). But that’s not the point. We are talking about the importance of generational wealth.
It is no secret that people with generational wealth have access to the best healthcare facilities. It translates to better health, longer life, and more years to grow their wealth.
They also sleep in the best neighborhoods while eating more healthier food than most of us. Moreover, generationally wealthy families can also afford top-notch education.
All in all, as you may have already noticed, generational wealthy individuals don’t have “many” obstacles in their path to success.
On the other hand, general people have to handle multiple inconveniences. Most of us struggle to pay for proper health insurance – no, your company’s insurance doesn’t count, and many even skip doctor visits because of the expensive medical care.
Many of us also live in crime-ridden areas, eating unhealthy, cheap food. And if some of us are lucky enough to afford a good university, we graduate with a frightening amount of debt.
As we mentioned in our previous story, Ways for Business to Capitalize on Millenial Spending Habits, most millennials spend a considerable amount of their income on paying education, mortgage, and other debts.
In short, with so many distractions, it comes as no surprise that most can’t focus on building generational wealth. Most people are more focused on fulfilling their immediate requirements, like putting good food on their tables.
In contrast, people with generational wealth can solely concentrate on growing further since they already have a lucrative present and, of course, past.
In other words, when you have generational wealth, your mind is free to explore ways to expand your current wealth instead of being preoccupied with making a living. Now, we know rich people keep getting richer while most struggle to pay their bills and get groceries. Writing this portion keeps reminding us of this book, Rich Dad Vs. Poor Dad, you should read it to understand this concept better if you have not already (4).
Worry not; whether you are already running a business, a budding entrepreneur, or an employee working for someone else, we have discovered ways you can also build generational wealth.
Ways to Build All Odds and Build Generational Wealth – For Entrepreneurs and Business Owners
Analyzing the Market and Learning from Others
Once you have your perfect business idea, you can start gaining key insights for your relevant market, from industry experts, communities, forums, interviews, reports, research, and of course, TimesNext.
You can also track down and study each existing business similar to yours in the US, Europe, India, or any other country. Tip: Consider setting a Google alert for terms related to your industry to stay on top of any new developments (5).
While you can learn from their experiences, and the entire market, the amount of research you will have to do will give you a fair idea about the direction you wish to go with your business idea.
Stand Out with Immersive Consumer Experience
Now, this is not a discussion about the latest AR/VR, metaverse technologies. Sure, you can adopt them if you want to. However, we are talking about the experience your customers will have while interacting with your business.
You can stand out from your competition; you have to ensure that each stage your customer has to go through favors a human connection, even if you have to sacrifice efficiency.
For instance, if you are selling any equipment, DIY kits, or any product that needs demonstration, consider giving your customers a live briefing besides video tutorials that allow your employees to engage with your consumers emotionally (6, 7).
It will also help you decide whether your customers are only looking to have some fun or working through something.
Create Multiple Revenue Streams
- Consider putting a base fee, including your product, a live demonstration, and some video tutorials.
- Upsells: Now, this is important. People often pay extra for those special “add-ons.” Be careful about not overdoing it, though, or it can backfire.
- Subscription and Licensing: While most of your customers may only look for a one-time purchase, there are often individuals who would like to opt for a long-term subscription or other businesses looking to license your product.
Are you looking for more information on a subscription business model? We have dived deeper into it in our previous post, Here is What You Need to Do Before Switching to Subscription-Based Business Model.
You can also combine these elements to make different offerings. And once you have enough consumer base and repeat orders, you can also offer loyalty programs and discounts on add-ons, subsequent subscriptions, etc.
Hire for Retention and Attitude
You will never find the same types of customers in your business. Some of them will look for price over quality, some will ask for special customer service, while others want the best of everything, even at a premium price. And you will need special kinds of employees to handle every situation well (8, 9).
Consider hiring for attitude first, and then design compensation packages to retain your quality talent. For instance, besides paying our managers attractive salary packages, you can also consider giving them a profit share. You can also give the commission about 10% or more to your hourly employees if they successfully make any upsells.
Remember, if your business needs people, it is YOUR people who will make your business successful, and it is always recommended to share your profits with them.
Advance Plan for Scale
Once you reach the growing hit, you can start planning to spend the upcoming months experimenting with your marketing or business hours or any other strategy relevant to your industry to optimize your business (10). Again, research.
Then, you can consider opening to other locations, adding more businesses under your umbrella, offering new products, or even opting for franchising.
It is always recommended to start your plans sooner than later, whether it is about franchising or anything, so you understand what to expect.
Restructure Your Business to Accumulate Wealth
You are not guaranteed to be rich even if you build a big, famous brand.
With due diligence, you will know why your business may be uninvestable. For instance, if you stretch your business in several directions at once, you may make a lot of money but probably won’t be able to keep any.
The solution? Rebuilding your business from the ground up.
First, structure your assets.
Consider which businesses are generating your wealth; it can include real estate, your ventures, etc. Next comes listing all the businesses you have co-founded or invested in.
Now, make sure all your profits and costs are passed through a single entity.
Next, ensure that you keep your expenses within the range of what you are earning from your primary business. Viola! Now, you are playing the entire game for free.
As you keep on scaling, having big liquidity events and exits, you pump more money into your entire system and keep on living your extraordinary life for free.
Beat the Burnout
One of the most impressive business achievements you can make is effective time management.
Be radical when planning your schedule and split your days that include your work, fitness, sleep, and most importantly, family.
While people say how most successful people wake up before 5 am, we don’t know when Elon Musk gets up for sure. Regardless, there is one thing we understand that most successful people achieve long-term success because they are not addicted, or at least, no longer to any substance, be it alcohol or anything else (11).
Ways to Build All Odds and Build Generational Wealth – For Employees
No matter what those TikTok or YouTube self-proclaimed influencers tell you, you can build generational wealth even while doing a typical 9 to 5. If you love your job, let no one tell you otherwise.
Below are some strategies you can take to create a robust financial foundation for yourself, your future generations.
Teach Your Child Money As Early As Possible
One of the major challenges most people face regarding financial management is that you will have no control, limited if any, over how your child will manage those assets you will leave behind. It means the most important thing you can do is teach your child about finance and help them develop good money habits.
Even if you don’t have any assets, be sure to teach them about managing debts, budgeting, and saving money to have all the skills they need to make smart financial decisions.
Purchase a Home
Stop paying rent and purchase a house instead as a long-term investment. Remember, as you pay down your mortgage loans, the price of your house also increases. Your house can help you build the financial foundation you plan to leave for your family.
Start Funding Your Retirement, Again, As Soon As Possible
Investments are one the most excellent tools we have today to build generational wealth. When you make strategic investments, be it the stock market, SIP, crypto, or even NFTs, you can grow your money quickly and for the long term too.
You can also set up retirement accounts, which offer tax advantages and other benefits. For instance, your PF account makes investments simple, and your employer even matches your contributions. In addition, when you take adequate steps to fund your retirement well, you also reduce any potential burden on your child when you may need any assistance later in life.
In short, the goal is to offer your child more opportunities to build financial wealth in her lifetime.
Read Also: Top Investment Options in India for 2021
Invest in Your Child’s Education
Student loans are one of the most financial burdens for the younger population. However, if you invest in your child’s education and allow them to start their lives with little to no student debt, you help them start solid and allow them to start building their wealth sooner.
Get Life Cover or Insurance
You can ensure your family’s protection financially even if you pass away since it replaces your income when you have life insurance. Meaning, your child and your loved ones will continue to have the financial support they will need.
Ensure that these benefits are directly transferred to your beneficiaries, so there are no additional costs or any delays in receiving the financial benefit you have secured for your family.
Build a Family Business
A successful family business is another great asset you can pass on to your child to help offer a solid financial foundation. You can increase the likelihood that your child will take on the business by introducing her from a young age.
Consider offering them opportunities to learn the business as they grow, transfer responsibilities to them and reduce your involvement in the business.
Passing on Generational Wealth
Okay, so you have built wealth. Now, what? Well, you need to plan to ensure that the wealth you built will serve your family for generations.
Below are some essential steps you need to do to secure your family’s financial future:
Make a Will
Your Will will ensure that your assets are handled the way you choose even after you pass. Remember, even if you are young and have a modest estate, you should have a legally valid and up-to-date will.
Create a Succession Plan
If you are a business owner, it is essential to have a succession plan. It will help you ensure that your business is passed down smoothly.
In addition, you can ensure that the wealth you have built in your lifetime is also distributed in a way you want it, even in complicated situations like one child continuing with the family business with the other won’t.
In short, a succession plan will help you and your family avoid unnecessary taxes and fees and complete the transition in the most efficient way possible.
Review and Update Your Beneficiaries Regularly
It is essential to name beneficiaries for your assets, finances, and life insurance policies to correctly distribute benefits. Ensure that you review this information regularly and update it as necessary so that the wealth you have worked hard to build is allocated as per your goals.