Riverside CA News

Business Consultant /Franchise Owner of Sylvan Learning Center of Murrieta, CA.

Father carrying son (3-5) onto plane, smiling


Generational wealth is any assets — bonds, stocks, cash, real estate — passed down from one generation to the next. For the recipients of generational wealth, it helps remove many burdens and keeps them from worrying about financial constraints or how to make ends meet. 

It is worthy to note that almost all great innovations are backed by costly research and investments in order to ramp up advertisement and production. To this end, it is not uncommon to see many entrepreneurs with great ideas fail in their fields due to a lack of initial funding. In fact, the reasons stated below are some of the most common reasons I have seen entrepreneurs without an initial source of wealth fail. 

Limited access to funding: While everyone loves a great start-from-scratch success story, not many of those actually make it to the finish line. In fact, 50% of startups fail within their first five years. And only a third of business owners polled said they started with less than $5,000. 

Small social circle: Growing up without money also tends to limit the type of connections formed and the social capital accessible. It is also evident when making business decisions. For instance, I have seen how a money-conscious entrepreneur will hire for immediate gains to the company while a more financially stable entrepreneur will hire assets considered important in the long term. 

Mindset: Entrepreneurs coming from a low-income background tend to have a different mindset from their wealthier counterparts. The psychological effect of growing up poor may affect decision-making and risk-taking abilities, and it is no secret that a huge part of a successful business is a willingness to take calculated risks. 

Of course, an entrepreneur still has to put in the work even if they are recipients of generational wealth. Big names like Bill Gates, Mark Zuckerberg and even Jeff Bezos worked hard to be where they are today, but they still got some kind of soft landing while starting out. For example, Bill Gates’s mom helped introduce him to executives at IBM, which helped propel his business. As it is commonly known, Elon Musk was born into a wealthy, South African family. Jeff Bezos’s parents were one of the investors in Amazon. Mark Zuckerberg reportedly got a loan of as much as $100,000 from his father while starting Facebook. 

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To put this all in perspective, below are some reasons why generational wealth is an important factor for you to consider:

It removes the financial pressure that comes with starting a business.

While starting a business, one of the most important things to get right is money. Many motivational speakers will not disclose how hard it can be to get adequate funding for your startup. This is something to recognize and overcome when starting your own business. Having realistic expectations and an understanding of how many other businesses become successful can help you start your own enterprise. 

It helps to break through barriers to entry.

No matter the passion or drive possessed by an entrepreneur, it is extremely difficult to break even at first without financial backing. Something to note is that many small business owners do not pay themselves in the beginning. 

And while passion can make many things doable and you can find funding in the form of loans, venture capital and so on, it is often easier said than done. Many great ideas never leave the startup stage or fail to get adequate funding simply because the idea seems too risky and abstract for investors. If you are not privileged to have a nest egg, you may have to alter your business plan or company priorities when starting off in order to attract capital. 

Funding for market research is more feasible with generational wealth.

Before any successful business can kick-start, adequate research is required. If a product is being developed, research has to be made on the possible success of the product and the developments and adjustments that should be made before final production. All of these are expensive to set up and accomplish, especially because they are not generating immediate funds for the new business. At this point, many investors will not even commit as the product is not a reality yet, and there is no guarantee of success. 

Without funding, businesses unable to utilize market research are taking bigger risks and may have to make changes later in the process. Your research may have to be more limited or small-scale. 

In Conclusion

Starting a business from scratch is tedious if there is no support system in place to help with the early stages. This is not to say that there are not many entrepreneurs who started out with nothing. However, the burden of having to scrape enough money together and the anxiety that revolves around funding for new businesses put entrepreneurs who come from money at an advantage. Once the funding for a new business is secure, you can begin to worry about other important things.

If you are an entrepreneur who does not come from generational wealth, it is perfectly normal to feel like the deck is stacked against you. You may also fear that your lack of family money will keep you out of the game for good. Tony Robbins has some advice on how entrepreneurs can get ahead when they do not have a trust fund at their disposal. He says instead of focusing on what is missing in life or blaming others, start by asking yourself, “What do I want?” Then take massive action and make sure every step moves you closer to achieving this goal. Find ways to build wealth and start a nest egg.

Overall, I hope this list was helpful for you as a way to become more knowledgeable and aware when navigating the startup world and the realities of funding. 

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