The thought of becoming a millionaire has crossed the minds of many. Plenty have failed in their attempts whilst some have succeeded. Some suggest various methods or key steps that can propel you to becoming a millionaire. There is, however, more than one way to get you to such a financial situation (The National Lottery is such a full proof plan!).
Now trying to be a millionaire is hard enough so to even consider becoming a billionaire seems near on impossible, however this is a title that many of the world’s business tycoons are fortunate enough to hold.
Forbes this week announced their 2015 Rich List with Bill Gates retaining his position as the world’s richest individual. This is the 16th time during the 21 year history of the list that Mr Gates has been named the world’s richest. This is quite a remarkable position to hold for a man who was also declared “the most philanthropic American”, having donated $2.65bn to charity.
How do I join the club?
Now the question arises: how would one get to such a position? If we look at the last 10 years, the position of the world’s richest was shared predominantly by Bill Gates and Carlos Slim (CEO of Grupo Carso).
Figure One- Forbes Rich List 2005-2015
Apart from 2008, the rich list has been dominated by two individuals who have made their fortunes from building companies based around technological products and services. If we use this as the foundation for attempting to become a billionaire then the answer seems pretty straightforward.
But which industry should I focus on?
The table above considers the individuals who have taken the position of world’s richest in the past 10 years; however there are plenty of other billionaires in the world (1,826 according to the latest figures released by Forbes). If we analyse the top 10 billionaires in the last 10 years, as well as which industry had the most billionaires in each respective year within the top 10, then the results say something else.
Figure Two- Billionaire Industry Performance 2005-2015
For 8 of the last 10 years, there were more billionaires in the Forbes top 10 rich list that made their fortune from the retail industry compared to any other. This was either as an outright top performer or joint with either computing or multi industry (billionaires who acquired their fortune by focusing their business endeavours across a variety of industries). Multi industry billionaires were a close 2nd, with having the most billionaires 6 out of the 10 years. Of these 6 years, 4 were shared with the retail industry. If we go by these stats alone then for anyone who had ambitions for breaking into the Forbes rich list, there may be two ways to look at this.
The retail industry is vast and encompasses many different types of services, from department stores to supermarkets to suppliers of packaged furniture. Many of the retail billionaires above made their fortune across these different services (Jim Walton with Wal-Mart to Ingvar Kamprad with IKEA). With this level of variety and there being more retail billionaires across the last 10 years in comparison to other industries, one conclusion we can make is that this may be the most favourable industry to focus on if you want to become a billionaire, due to the variety and performance. Conversely the opposite could be argued. As there are already many retail billionaires dominating the Forbes rich list, the industry may be too difficult to crack into for any new budding entrepreneurs, as a particular service or offering within the industry may already be covered.
Now this observes the retail billionaires by Forbes performance only. What happens though when we compare the average net worth of these billionaires to their closest industry performers (multi industry)?
Figure Three- Average Net Worth- Retail vs. Multi Industry
Although the retail industry had the highest number of billionaires 8 out of the last 10 years, the average net worth of billionaires who operated in multiple industries was greater than their retail counterparts across the four years in which they were tied. If the objective was to understand which business avenue could generate the most return whilst making you a billionaire, then operating across multiple industries appears to be the best bet.
There is clearly no one way to become a billionaire. If the quest is to become the richest individual in the world, then following the lead of Bill Gates and Carlos Slim into technological products/services could be the best choice. We here at Figure it Out have tamer ambitions so will try to understand the best way to become just a billionaire!
Observing the trend presented in the Forbes rich list over the last 10 years, the retail industry could both be the best place or worst place to develop a business. Although more money can be generated via other industries, the retail industry accounted for more billionaires in the last 10 years compared to other business areas; however this could also be an indication that the industry may be difficult for any new business owners to make inroads in.
Now we aren’t suggesting everyone rush out and re-evaluate their decision to open a shop or not! There are so many factors which need to be considered before such an endeavour is undertaken. However, if the ambition is to become a billionaire, it may be safer first to observe industry performance rather than analyse the performance of individuals.
For the time being, the Figure it Out team will stick with the lotto!