This article is written by Ramanuj Mukherjee, CEO, iPleaders.
Who makes the most money when there is an economic boom?
I wrote yesterday about how India is on the cusp of one of the best growth phases in history, and that the economy is expected to boom. I got several emails asking what would be the best way to capitalize on such an insight.
Who makes the most money when there is an economic boom?
The basic and million dollar question. Let me repeat it.
If I told you that the economy is growing and will grow 3 fold in the next 10 years, what can you do to make the most of that?
To be honest, experts also believe that the world may soon experience an impending global slow down in the short term, the first signs of which may be felt at the beginning of 2019. However, short-term distractions notwithstanding, India economy is set for a massive growth over the next 5-10 years,
We cannot possibly time it exactly, but experts agree that it’s due.
If we agree on that, the next question is how we can take advantage of this growth.
That brings us to today’s topic. Who makes the most money from such an economic boom?
Investors.
It’s always the investors. Investors who made sound investments in strategic assets and have the patience to see it to fruition, tend to get rich from such growth runs. Bear markets don’t affect them.
Those who want quick money though, rarely succeed. Long-term mindset and willingness to hold the investment through ups and downs is critical.
Are you an investor?
Surely, one obvious thing you can do, if you have the money, is to buy stocks of promising companies that would benefit from this kind of a growth. If you have a lot of money to invest, this can be great. Your wealth will probably grow multiple times.
What if you don’t have a lot of money to invest? No worries. You can still be an investor.
Another way to invest is to become an entrepreneur. Financial investors only put in money, but the entrepreneur puts in everything he or she has got, to make the business work. That’s a very critical type of investment.
You could start a business that is focussed on the consumption sector or financial sector because those are expected to grow the most.
If you are great at something, if you have tremendous insights into some industry, if you have discovered a deep customer insight that can lead to a great business model – starting up is a terrific idea. This is a good time to start businesses in India, as you have the tailwind in your favour, pushing your business forward faster thanks to an overall positive economic environment.
Economic boom does not guarantee that any business you start will succeed. However, it can make it smoother and increase the chances in your favour. Finding investors, customers and financiers can be especially easy in such a phase.
However, not everyone should startup. Not everyone is even ready. The only thing worse than not being enterprising is being naive and playing business-business when you really do not have the right knowledge, insights, resources or team.
You will sometimes come across some pretend entrepreneurs – who do not really have a business but would try to look the part by having the bells and whistles. Such charade can’t long last.
Before you start up, there is work to be put in.
And that is an investment in yourself.
By the way, even if you don’t start up or invest financially, you can still make a lot of money from the coming economic boom. You can do so by having well-paid jobs, by doing consulting, by partnering with people who need your knowledge or skills, by being amazing at whatever you do.
In a gold rush, you need not necessarily find a gold mine to get rich. The people who sell shovels and pickaxes also get very rich, really!
Sure, it’s sexy to find a gold mine. However, it’s hard and very unlikely. Not everyone can do it! Just like financial investment and starting up, it’s not for everyone.
However, it always makes sense to invest in yourself. Take a long-term view of your career, and develop the skills you will need to get ahead 1 year, 3 years or 5 years down the line.
Let me give you an example of how this is done in real life by top lawyers.
A friend of mine became a partner in a law firm sometime back. I asked him about what he is planning, given the direction the economy is taking.
He is a deal lawyer, having started his career doing investment and acquisition deals for startups and technology companies. I thought he will say he is looking forward to expand his team to take on more deals. However, he said he wants to develop a competition law practice.
I was taken aback. Competition law in Bangalore? And it’s so far from your area of practice, you have no exposure to it at all!
“Ramanuj, I worked with small startups and small funds in 2015. I made a small fee. Now 20% of those companies have been raising follow-on rounds or getting acquired. I had to develop a bigger team and deeper expertise to ensure they hire me again and not go to a bigger firm or more experienced lawyer as stakes get higher. I know that many of the companies raising money today will be big enough in 2020 that they will get into big-ticket M&As and competition law thresholds will be triggered,” He patiently explained, “And I know this will happen, so I want to be ready by 2016 to start building that practice such that in 2020, they have no hesitation to give me their competition law business.”
You can’t play football if you try to reach where the ball is, because, by the time you get there, the ball will move on. You learn to run towards the place where the ball is going.
You have to do that with your career too. And that running to meet the ball, that is your investment.
You don’t need money, you don’t need tremendous intelligence or secret information, you don’t need a pedigree to win in a market like this. But you certainly need the initiative before it even begins.
That’s your investment. That will give you the first mover advantage.
People who work for the long term, always win.
What investments are you making? What investments did you make in the last couple of weeks? What investments did you make in the last 1 year?
If you haven’t started, start now. What will you invest in and how?
Hit reply and let me know.
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