Last week, I concluded the article on wealth myth with the need to focus on value generation, because your ability to accumulate wealth depends on your capacity to generate value. I later realized that the topic will not be complete without discussing the various means of creating Value. Consequently, I am going to discuss the various means of creating value this week.
When you are looking at this topic, people can be categorized into two broad categories. The first category consists of those who employ what I call “Bodily Technique” while the second category consists of those who employ “Systematic Technique”. It is very important to note that the technique you adopt determines your capacity to create values which automatically affect your capacity to create wealth. Let us look at each of these techniques one by one to increase our understanding of this topic.
This involves the use of your body as the main wealth generation device. Here, people rely solely on self to create value. If you employ this technique, you must always be physically present or involved to create value and earn money. It is basically what I call “work and eat” approach to wealth creation. Your capacity to create value and earn money at the initial stage when you are very young and agile rises and reach its peak at a point, after which it begins to dwindle as you become older. Another major issue with this approach is that your capacity to create value and consequently wealth is very limited. For example as an employee, except on very few circumstances, you have only one customer (employer) you can render your personal services to per time. Some of the employers will even make you sign undertaking that you will not be involved in any other business. The danger of adopting this technique is that money stops flowing once you stop working. The standard of living plummets immediately the person is not able to perform the job again, either as a result of retirement, redundancy or disability. In this category you will find majorly people who are daily paid casual labourers, full-time employees as well as most of the self-employed do it yourself business owners.
- Daily paid casual Labourer: This is at the extreme of this technique. He works very hard and the income is not commensurate with the energy he expends. He works harder than everybody else but earns much less than everybody.
- Full time employees: They have little control over their time. As an employee, you can be the president or janitor of a company. It is not so much what you do, but the contractual agreement you sign with the person or the organization that hires you will always contain restrictions which fundamentally limit your ability to generate wealth. As long as you are an employee, either as the CEO, GM or a cleaner, you all have something in common – you have only one customer who can fire you anytime. The business owner can fire you anytime he feels you are no longer relevant to his business.
- Self employed do it yourself business owners: These set of people are motivated by the freedom to do things their own ways. Their business is entirely built around them; nothing gets done if they are not around. In the real sense of it, they are not business owners, they are actually job owners. As a “do it yourself business owner” the business requires your attention 24 – 7 and everything comes to a complete standstill once you are not present.
This is a systematically organized structure consisting of human, process, material resources as well as intellectual and material assets which is set up to generate values. This is typical of big corporations and businesses. Such businesses function perfectly well with or without the business owners. If you employ this technique you don’t have to work to earn money once the system is up and running. This technique empowers you to offer your services to several customers without your physical presence. If one of the customers fires you, you still have several others who are still very loyal to you. You have unlimited capacity to generate wealth both during and after your lifetime. Though it is not easy to build a system like this, the benefits worth the hard work and the headache involved. Apart from owing a big corporation, you can also build a system of investment portfolios that generate huge amount of passive income to accumulate great wealth. Thank you for reading. Have a great week!
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