Friday, March 29, 2024

Wealth lessons from billionaires who lost and recovered riches

Billionaires in the World: You can learn alot from these business magnates who fell from grace but lived to recover their billionaire status

Persistence and tenacity: Steve Jobs was at the top of his game after co-founding Apple. By age 23, he was worth millions. Then it all came crashing down. He hired a CEO from Fortune 500 who three years later fired him from Apple following internal competition, disappointing sales and complaints from workers. Not one to give up, Jobs started his second company called NeXT, which was later acquired by Apple. This made him CEO of Apple again. “He persisted, and had incredible tenacity. After his humiliating defeat, he held on and came back with triumph, creating Apple into one of the greatest corporate successes,” says Alan Deutschman, the author of The Second Coming of Steve Jobs.

Lean spending: As your income grows, you might be tempted to over-spend. This is the trap that Dorothy Hamill, a former Olympic Gold medalist and millionaire television personality fell into. With an annual income of over Sh. 300 million, she went on a spending spree which included expensive jewelry and a series of bad investment decisions. With loads of debt, she was declared bankrupt in 1996. Towards 1998, she started professional ice-skating tours and television shows, and embarked on lean spending. By the end of 1998, she paid her debts. In 2007, she launched her autobiography which made her a New York Times bestseller.

Negotiating skills: In cutting deals, negotiating for better loan interests, better wholesale prices, profitable contracts, or getting more customers, proper and convincing negotiating skills will always come in handy. This is what worked for Thor Bjorglfsson, whose net worth is currently valued at Sh. 186 billion. He had sold his beer brand to Heineken in 2002. However, during the 2008 global financial crisis, his attempt to help his native Iceland out of the financial meltdown backfired. His bank was taken over by the government, and his investments declared worthless as Iceland neared bankruptcy. His companies were left owing Sh. 1 trillion to creditors, of which he had personally guaranteed Sh. 103 billion. His net worth fell from Sh. 361 billion to zero. To get out of the mud, Thor negotiated an agreement with his creditors that allowed him to hold on to his falling investments. As the global turnaround began, so did his recovery. From zero, he has been able to rake in a net worth of Sh. 186 billion with investments in start-ups in Chile and the US.

Quick takeaway

Economic circumstances: At certain times, the success of your business will depend on the general performance of the country’s economy. In fact, economic circumstances beyond your control may end up pulling your business either downwards or upwards. Take Aliko Dangote who is billed as Africa’s richest individual. In 2016, Dangote lost 35 per cent of his wealth equal to Ksh. 556 billion. This was caused by a massive devaluation of the Nigerian currency and a slump in commodities. By the end of 2016, his wealth had fallen by 62 per cent over a two-year period to Sh. 1.09 trillion. Nonetheless, the businessman is on recovery, with his wealth currently quoted at Sh. 1.4 trillion. He now plans to increase the capacity of his main company Dangote Cement from the current production of 44 million metric tons annually to 75 million metric tons in the next three years.

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