Lessons from John Rockefeller: How to become a billionaire from scratch - ForumDaily
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Lessons from John Rockefeller: How to become a billionaire from scratch

How important it is to consider finance, attract professionals and fulfill obligations. And also about why you should not be greedy and afraid of loans, writes Life hacker.

John D. Rockefeller is the world's first dollar billionaire. In the starting capital of his first business, Rockefeller contributed 2 000 dollars. Of these, 1 200 dollars he borrowed from his father. And in the 1937 year, when Rockefeller was gone, his capital was estimated at 1,4 billion dollars. In today's prices it is 318 billion. For comparison, the state of the world's richest man - Amazon founder Jeff Bezos - is estimated at 149,8 billion.

He began the journey in the oil business, in which Rockefeller made the main capital, with a small company that sold kerosene in bulk. And when Rockefeller retired in 55 years, the Standard Oil Company owned by him controlled up to 95% of the US oil industry, 70% of the world's explored oil deposits and the entire industrial chain - from oil production to delivery of kerosene to retail customers - almost worldwide.

Let's figure out what helped Rockefeller to make billions.

1 lesson. Follow the movement of money

At seven years old, Rockefeller made his first money on a farm from a neighbor, whom he helped to collect potatoes and raise rabbits. Then, on the advice of his mother, he made the first entry in the account book, where he reflected to the last cent, how much and for what he received and for what he spent. These analogs of the modern cash flow statement (DDS), one of the tools that are used to account for business finance, he led until his death, and he lived 97 years.

Rockefeller biographers love to mention that he grew up in a poor family. The information on how much his father earned could not be found. It is precisely known: the dad of the future billionaire was a traveling salesman, he traveled a lot around the country. And while the head of the family was absent, Rockefeller's mom had to save. Hence the habit of counting every cent that she instilled in children.

Since childhood, John has seen money accounting help them grow. Parents wanted him to go to university, but Rockefeller preferred a commercial college and accountancy courses. And when, after studying, he got a job as an assistant accountant, his love of numbers was quickly noticed and appreciated by his superiors. None of Rockefeller's colleagues liked to tinker with regard to completed periods and projects. And his eyes were burning from such tasks.

Rockefeller starting salary - 17 dollars per month. From the second month - already 25 dollars. A year later, he was a manager with a salary of 800 dollars a year.

The tradition from early childhood to take into account every cent Rockefeller’s heirs are still kept today. Rockefeller taught this to his own children, those to his own, and so on.

I also have a home version of DDS, but already in the form of an electronic tablet. He began to lead in 40 with more than, in childhood there was no one to tell. But better late than never. This is a routine, but really helps to manage money wisely.

2 lesson. Do not be afraid to borrow

Entrepreneurs treat borrowed money as evil, from which it is better to stay away. The Rockefeller example shows - in vain.

Do not take Rockefeller to the amount missing in the business of the father - most likely, it would have worked all his life for hire.

Borrowed funds were Rockefeller’s constant business satellite. He preferred to sell shares to another investor, even when his own funds were enough. He also invested his money, but also kept it as a reserve. And even if investors were not, he took the financing of the next project entirely on himself.

Rockefeller’s first business was a small logistics company. Rockefeller in the first year scored orders for 0,5 million dollars. The money to provide them soon became missed. Having already owed a lot of money to his father, who gave not just a loan, but under 10% per annum, Rockefeller borrowed the missing amount where he could. It was not easy, but he managed.

It is believed that only financially illiterate people are not afraid of loans. And then - before the first call from the collectors. The difference between them and Rockefeller is that he took loans wisely.

3 lesson. To fulfill obligations

Rockefeller has always been careful in the performance of obligations, including financial ones. No matter how difficult, and in the first years of business, these difficulties were permanent, he always found the required amount by the required date.

In his memoir, "How I Made 500 000 000 Dollars" Rockefeller recalls how his father came to his office for another loan payment at the most inopportune time and insisted that money is needed right now. Rockefeller himself finds it difficult to say, it happened by chance, or his father specifically podgadyal from educational considerations. In any case, each creditor, including his own father, received from him how much it should be and when it should be.

Over time, one word of Rockefeller bankers fearlessly shoveled for him the entire contents of safes. His reputation in financial matters was the best guarantee.

4 lesson. Know the price of each management decision

Fearlessly borrow and properly fulfill obligations Rockefeller succeeded because he did not act at random. Every decision meticulously counted ahead. If he borrowed money, then taking into account when and how much he will have to give, due to which he will be able to return it and how much he will earn on borrowed funds. If I invested my own money, I counted when and how much they would increase.

Rockefeller has invested millions of dollars in his businesses. If the investment showed an increase in production and / or a reduction in costs, which was converted into profit growth, Rockefeller did not skimp.

The first in the USA, Rockefeller stopped transporting oil in wooden barrels on horseback and began carriage in tanks by rail, driving whole trains across the country. He was the first to stop saving on the safety of oil refineries when he estimated the damage that permanent fires cause. And the first American oil plants were literally sheds. The oilmen considered that oil was a profitable business, but soon it would be pumped out all over. And therefore did not see the point of investing in infrastructure.

When Rockefeller began to send oil for export, devices were needed for its rapid transfer from tanks to tankers. Rockefeller at their own expense equipped them with the necessary railway stations. At first glance - gave the railroad. But this, in addition to the volume of traffic, became an argument for reducing the tariff and allowed Rockefeller to carry oil on rails three times cheaper than competitors.

Rockefeller also owned several iron mines. When he realized that it was more profitable to transport ore to blast furnaces and ports on ships than to trains, he built his own fleet from scratch.

Rockefeller's partners considered his regular innovations too risky and did not want to invest in them. He said in such cases:

“Okay! I will invest money alone, but all the profits will be mine. "

After that, the partners immediately became accommodating. Everyone knew - once Rockefeller is ready to invest one, the profit will definitely be.

5 lesson. Attract professionals

In life and business, Rockefeller helped him to fiddle with numbers. But you can not love - nothing terrible. It is enough to attract a person who loves to a team or to an outsource.

British millionaire Richard Branson loved what is commonly called HYIP today, but he hated numbers. But in his youth, he had a business partner who loved to tinker with numbers. By the time Branson’s business had grown enough, the owner, realizing the importance of management accounting, remembered a former partner and instructed him to take the numbers on himself.

The founder of the empire McDonald's Ray Kroc all his life engaged in sales and understood only them. This allowed him to see in a small roadside diner a promising product in the form of a franchise and make this product a symbol of America. But a man from his team, who was fiddling with finances, saw and prompted him another promising direction: not to sell the naked franchise, but to rent first and subsequently buy out land with premises for a restaurant and lease them to the franchisee. This decision simultaneously increased the revenue, profit and capitalization of McDonald's several times. In 1974, Krok himself said at a meeting with students:

“My business is not hamburgers. My business is real estate. ”

Rockefeller himself preferred not to delve into what he did not understand, but to listen to the professionals. Sometimes this approach failed. So it was with the shares of iron mines, which he bought at the beginning of 1890's: the experts promised a gold mine, and the mines were unprofitable and were on the verge of bankruptcy.

To find out what was going wrong, Rockefeller found a specialist who knew about finance. His name was Frederick Gats. Gats presented the reports, due to which Rockefeller understood what was going on and how to save the situation. He also instructed Gats to put things in order at the mines, and soon they began to make a profit. Later, Gats became Rockefeller's right hand.

When Rockefeller decided to build his own fleet, he turned for help to the owner of the shipping company. He drove the ore himself and was not interested in helping a competitor. Rockefeller's speech sounded like this:

"I understand you. But I will carry ore only on my own ships. I will build them anyway, you will not earn anything by transporting my ore. But I suggest you earn commissions for the fact that the courts for me will be built under your control. I turned to you because you are a professional and honest person. And I won't be short on commissions. ”

The shipowner left the Rockefeller’s house with a contract for 3 million dollars.

6 lesson. Do not be afraid of negative reports

When Rockefeller was still working as an accountant, he somehow went into the office of his boss's business partner. And that just brought a huge bill from a supplier with a variety of positions. The boss's partner looked at the columns of numbers with anguish and doomedly threw the paper to the accountant: "Pay."

“And I would say to the accountant:“ Check and tell me if everything is all right, and only then pay, ”“ Rockefeller decided.

In his memoirs, Rockefeller is surprised that American businessmen, intelligent and sensible people, were afraid to look into reporting once again. Entrepreneurs experienced a particularly panicky fear when businesses had problems. Rockefeller thought: when there is something wrong in business, reporting should be studied even more closely.

7 lesson. Don't be greedy

Rockefeller did not spare the money not only on investment. His company Standard Oil paid dividends four times a year. Their total amount was 40 million dollars - exactly 40% of the share capital of the company. Rockefeller got the 3 million from this money.

Rockefeller offered the owners of the oil companies that he bought to pay in part or in full. With the consent of the workers gave them shares salary. Shares of the company received all investors. Stable and high income to its shareholders was guaranteed.

Here is a set of rules, following which Rockefeller achieved success. As it is easy to see, there is nothing supernatural in them.

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