How to Build a Billion (or Multi-Million) Dollar Empire



After spending hours listening to the story of Reginald F Lewis and watching lots of interviews about the American pioneer, I thought it was imperative to take notes and summarize my findings. To provide a background on who Reginald Lewis was before his death on January 13, 1993, he was the first African American to build a billion-dollar company called TLC Beatrice International Holdings. Reginal Lewis was also a freedom fighter who used his personal wealth to fund various political campaigns that stood for justice and true impactful meaning. Reginald wrote the book called "Why should white guys have all the fun?" You can purchase the book on Amazon if interested - it was a good read. Here are my takeaways from the life of Reginald Lewis on how to build a billion-dollar empire:

1. Determination and Hardwork: 

“Keep going, no matter what.” Reginald Lewis was known for these words. He was a tenacious individual who always strived to do his best when it came to his passions in both his business career and social movement support. Nothing beats hard work when it comes to success. The popular quote “Hard work beats talent when talent fails to work hard” has a resounding meaning and is probably true. Working hard coupled with natural talent will take you far, beyond your imagination.


2. Leverage:

Reginal Lewis was able to acquire the international food company (Beatrice Co) using a leveraged buyout. His plan was to reduce the amount needed to finance the leveraged buyout by selling some of the division's assets. The transaction was the largest leveraged buyout of a company outside the US at that time valued at $985 million. Before Lewis could have the opportunity to make such a large acquisition, he made a smaller but more important acquisition which gave him the credibility needed to acquire Beatrice Co. Lewis acquired McCall Pattern Co for $25 million ($1 million cash and $24 million debt). He ended up selling the company in 3 years for $95 million in cash and debt. This deal propelled Lewis' wealth to great heights because of the intelligent use of leverage. Leverage can be an accelerator of wealth if used properly and carefully. Within real estate, leverage is commonly used. In fact, any person with a mortgage who collects income on that property is using leverage to some extent. Typically, most banks prefer at most an 80% LTV (loan-to-value) and anything above that requires a premium paid for the additional risk. Leverage typically boosts returns if the execution of a project performs similarly to how it was initially underwritten without any major challenges. 


3. Intelligence/Master of your craft: 

Reginald Lewis' leverage buyout plan was to purchase companies with stable cash flows so he could use the cash flow to pay down the debt once the deal was done. After that, he could re-invent that company and streamline operations to the profitable parts of the business. This was no small feat but with a solid understanding of the business model and operations, he was able to execute on this strategy and proved it worked.



Building your Empire


Offer What People Want
Deciding which product you want to introduce to the market is one of the main steps that should be studied before starting.

Believing in a specific product is great, but it is not enough. Selecting a product that you admire, or one that you have a good feeling about it is not a guarantee that it will make a profit.

Studying the market and positioning your product in the correct place is crucial before selecting a product. Customizing a product based on the market’s needs is more efficient than following the trend. While the trend may bring you immediate success, a product built based on a strategy will have more success and stability in the long run. Furthermore, the process of choosing a product to sell or create should be as specific as possible, especially when you are starting.

Focusing on, not just one product, but also a specific niche of a product, makes the process well-defined and measurable. This makes it easier to point out the weaknesses and modify the process accordingly, in addition to limiting any financial loss.

Believe in the Product
Here we are still talking about the importance of designing a unique product.

Each one of these inspirational names had a one-of-a-kind product which later became a necessity. They observed the market and saw something that most people do not. They saw something that the market was lacking; something extra which only they could provide.

They all believed in their products and how revolutionary it would be if they introduced their concepts to the world. They were right. Believing in your product stems from deep analysis and investigation. None of them started looking for a product that could make them billionaires overnight.

Yet, money came knocking on their doors. The point is: to build an empire, you should be looking for a product to believe in, not one of those how-to-make-money-while-you-are-sleeping products. Yes, you can make money online, or while you are sleeping, but this will not be a business empire one day.

Learn and Earn
Another relevant step that should be prior to launching a product is learning. Learning involves studying everything related to the industry: the production process, the financial aspect, the consumer behavior, and all other tiny details.

Research
To build an empire around a product or a service, it immediately puts you in the position of “the expert.” Therefore, you should be well informed about the industry to look credible.

Also, the more you know, the easier it is to avoid being misled or falling victim to fraud due to inexperience. It is wise to spend enough time learning and researching, knowing that this time is not wasted. The time you spend learning will be translated into money you will be earning later.

Keep Costs Low
Of course, you build an empire for the future.it won’t start out as one. Almost everyone starts with a tight budget either to minimize risk or due to a lack of resources.

When it comes to office space, marketing, and infrastructure, you should avoid retail as much as possible. There are more options than we typically anticipate. Office space, furniture and filing systems, phones, inventory, office accessories, and advertising are all items that have many alternatives. “Especially in this economic environment, where credit is at a premium, vendors are more willing than ever to find creative ways to finance transactions, and that is a trend will likely continue over time.”

Remember that if your expenses are high, even making a huge revenue would not shield your empire. So, do your best to discover the best deals, this will have a positive impact on your business.

Overestimate Expenses and Underestimate Revenues
A golden rule for whenever you are setting up a strategy, a budget, or any project plan: expect the least income and the maximum expenses.

This is not about having a pessimist perspective at all. To build an empire, you have to be careful with money matters because it is sensitive when a business is still in its initial phase. Building your basic budget based on the worst-case scenario is about preparing ahead for any challenge your company may face.

As time passes, you will have a clearer vision of your estimated income and expenses, and planning will be much easier.

Sales and Marketing
Many of those build an empire start by focusing on building a brand image and spend much money with this goal in mind. Of course, building a strong brand image is a must for any great business.

However, it is not something that one should start with. Building a brand comes after establishing the business to firm ground. Sales and marketing for your newborn business empire should have one goal: getting leads. All your efforts, financial or not, should be concerned with buying you, customers. Create a marketing and sales funnel system that you can work, test, and measure. That way, you stabilize your business with enough cash flow, and then build your brand image as one which is already reputable.






Financial Savant was born in 2018 and has received a really good reception so far. This blog serves as a resource to help spur open discussions on generating income, saving, investing, and overall wealth management.

Every article written on Financial Savant is based on first-hand experience and pertain to ongoing current events within the financial and economic-sphere.


For a detailed discussion of my favorite financial tools which I typically use weekly, you can visit the sidebar on the homepage. I have thoroughly researched all the products and use them personally. I have cut through the clutter so you do not have to. Financial Savant is glad to be a part of the #FIRE movement as we strive to achieve financial independence opening up a world of possibilities while creating generational wealth.

Financial Savant recommends investing in real estate through a hands-off approach using Fundrise and managing your finances using Personal Capital.













Comments

Recent Posts