If there is one sign that any entrepreneur has really ‘made it’, it is surely the Sunday Times Rich List. As ever, this year’s List offers some lessons of real interest for anyone in the early stages of a start-up. Perhaps the biggest trend from this year’s List is the continued rise of the self-made entrepreneur, as opposed to the heir or heiress. According to the Sunday Times, “just 5.7 percent of the year’s list represent wealth passed from one generation to the next”. The obvious example is this year’s List-topper, Jim Ratcliffe of Ineos, who was born to a joiner and office manager, and raised in a council house in Manchester. The ‘rags-to-riches’ success story is not just a television storyline, but the trend amongst the UK’s wealthiest residents.
That is certainly reflected in the clients who come to us seeking legal advice. Many have taken advantage of technology to turn their ideas into strong businesses, with little more backing than their own hard work, passion and time.
It is not unusual for us to meet people in their 20s or 30s who are looking for further opportunities after a successful early venture. We almost always find that this first taste of success only encourages their entrepreneurial spirit; settling down and stepping back is the last thing on their minds. Instead, they are looking to make the most of the opportunities to scale businesses quickly, efficiently, on a global scale and without significant initial investment.
Nevertheless, whether they are wealthy because of their brilliant enterprises or because of their family background, we always stress to our clients the importance of planning for the future – indeed, perhaps even more so when ongoing businesses are involved. In the early years of a venture, in particular, it can seem like the last thing on any entrepreneur’s mind. The time commitment required to be an entrepreneur rarely offers the opportunity to sit back and take stock of not just the interests of the business, but the person behind it and their family.
Even so, these entrepreneurs face questions that those with inherited wealth have grappled with for years. The most obvious is that of how to pass on wealth, including any businesses; it is rare for the next generation to match the passion and drive of the people who grew the business from day one.
But there are other important issues too, such as how the business will continue if its owner is temporarily out of action, or, more commonly, how to move onto a new venture while protecting the rewards that have come from past successes.
They key is to surround yourself with people who know when to move quickly and help you to grow your business. The best advisers are also able to think about the long-term, anticipate issues before they become problems, and guide you pragmatically through a world of complex law, tax and regulation which is not always well-built for a fast-moving business.
The top figures of this year’s Sunday Times Rich List are self-made, but have wisely built teams that work for them – with greater rewards than ever before.
This article first appeared on Startacus.net in May 2018