19 Jul Unique profiles, anecdotes increase Millionaire Women’s net worth
Editors note: Teresa Esser will be joining WTN as a weekly columnist. Her column, The Venture Café, will feature profiles, interviews, book reviews and opinion articles related to entrepreneurship and venture capital. Particular emphasis will be given to the psychology of entrepreneurship and the lifestyle issues associated with running one’s own business.
Unlike his previous book “The Millionaire Next Door,” which focused on rich men who may or may not have received some financial assistance from their extremely frugal wives, Dr. Thomas J. Stanley’s latest release, “Millionaire Women Next Door: The Many Journeys of Successful American Businesswomen,” profiles women who became wealthy through their own efforts.
Stanley describes millionaire teachers, car saleswomen, human resources specialists and bookkeepers, among others. The main thing Stanley’s millionaire women have in common is their frugality relative to the amount of money they have available. Instead of spending money on huge houses, expensive cars and dream vacations, Stanley’s millionaires tend to put their profits back into their own businesses.
One particularly enjoyable section described a millionaire bookkeeper who never bothered to tell her friends she was loaded. “Like most of her cohorts, she derived much happiness from activities that are inexpensive yet enjoyable,” Stanley writes. “She was active in various groups at her church and, like the majority of millionaires, enjoyed gardening. She also took pleasure in walking and sewing. It was often difficult for her to find clothing that perfectly fit her under-five-foot frame, but she had no difficulty tailoring the off-the-rack clothing she purchased.”
Reading “Millionaire Women” leads one to believe that the goal of making money is not to impress one’s neighbors, but rather to build financial security over the long term. To this end, Stanley describes an elderly farm couple that lives in a simple farmhouse and drives a rusty, 20-year-old pickup. Although the couple have never paid themselves more than $70,000 in any given year, their apple farm is worth more than $4 million.
It was exciting to read profiles of individual human beings, and to imagine quiet, unassuming millionaires who do not brag about their successes. But it was boring to read statistical profiles of anonymous high-net-worth individuals. Having spent the past 31 years studying affluent individuals and having written several previous books about their habits, Stanley has clearly accumulated a lot of data. Unfortunately, most of this data is boring.
Stanley’s chapters are filled with numbers, but the only numbers that intrigued me were the ones that described the types of small businesses that were most likely to turn a profit. “Those who are millionaires, often multi-millionaires, are much more likely to be involved in industries other than retailing,” Stanley writes. Women who want to increase their chances of running a profitable business should consider starting a management services firm, a consultancy, a nursing business, a counseling firm, a real estate brokerage, a property management company, a medical or dental lab or a child day care center. These types of businesses have average profit margins of between 32.8 and 54.7 percent, and more than 75 percent of them make money. If, on the other hand, a woman wants to lose money, she should open an antiques store. The average annual net income generated by antiques stores is only $1,162.
Although Stanley’s individual stories were interesting, and the information about profitable versus non-profitable business sectors was useful, Stanley lost my interest when he lapsed into jargon. He annoyed me when he used phrases like “balance sheet affluent” and “income statement affluent” to distinguish between true “prodigious accumulators of wealth” and the lesser mortals who spend every penny they earn. A better writer would have cut the self-referential jargon and packed his pages with more profiles.
I’ll never understand why Stanley divided his anonymous subjects into “alpha” and “beta” categories to describe how much their parents encouraged them. Instead of boring readers with talk of balance-sheet affluent women from the beta group who managed to accumulate net worths in excess of $2 million, I wish Stanley had taken more time to describe actual people.
Another weakness involves the extremely surprising chapter on millionaire educators. It’s hard to imagine how poorly paid teachers could build vast fortunes by simply living frugally, and Stanley sheds very little light on the subject. Instead of claiming that teachers do not experience any peer pressure to spend money on expensive cars and exotic vacations, it would have been nice if Stanley had profiled an actual millionaire teacher who scrimped and saved over a 30-year period.
After finishing “Millionaire Women,” the reader is left with more questions than answers. Do millionaire educators ever dine in restaurants, or do they cook rice and beans every night? Do millionaire teachers ever take vacations, or do they entertain themselves exclusively with games of Scrabble and Parcheesi? Stanley insists that it is possible to accumulate an estate in excess of one million dollars while living on an educator’s salary, but he fails to provide practical advice about how this is done.
It’s a safe bet that many readers would like to duplicate the millionaire educators’ successes by living frugally on their own salaries. More explicit instructions on how to turn a modest paycheck into a million bucks would be greatly appreciated.
“Millionaire Women Next Door: The Many Journeys of Successful American Businesswomen” is written by Thomas J. Stanley and published by Andrews McMeel Publishing, 2004.
Teresa Esser is a contributing columnist for the Wisconsin Technology Network and author of the book, The Venture Café. She can be reached at email@example.com.