Why Ex-Bankers Make the Best Entrepreneurs
When a banker resigns from the banking job to go into entrepreneurship, they are not changing careers. They have just decided to continue playing the same game from a different angle. The fact that they were bankers gives them a unique advantage over any other kind of entrepreneurs if they paid attention to what matters while they were working in the bank. At least, it won’t be the first time dealing with huge amounts of money. And you can be sure they will take advantage of every banking rule that favors entrepreneurs which most people are not aware of (at least, initially). Entrepreneurship and banking are two sides of the same coin.
- Business is a game of unfair advantages
- The cheat of banking operations
- The best money teacher
- The access leverage
- Banking and entrepreneurship
Business Is a Game of Unfair Advantages
Smart entrepreneurs know that the goal of business is not to be unfair. Rather, the goal is not to play stupid. To play stupid is to assume that everyone cares about your interests and want to see you succeed. The reality is a bit different.
It is not that other people want you to fail. Rather, it is that other people are looking out for their own interests. If their interest coincides with yours, they will support you. But the day there is a divergence, they will watch out for themselves first. This is generally fair but it may not be fair to you. And that is why business is a game of unfair advantages.
Smart people get into business with every “unfair” advantage they can get
When entrepreneurs have an advantage like that and they don’t use it, they end up regretting not using it. If a person is starting an engineering firm, you would think the skills the person needs the most are engineering skills. But that is not true. Smart engineers can always be hired.
Yes, an accountant deals with money issues. However, a business that relies on the accountant to bring in money or to make wise choices of where to spend money is setting itself up for bankruptcy. The accountant records, but the entrepreneur should make the decisions. And the entrepreneur should be skilled enough to make those decisions.
Those money decisions, especially about where to get money, is a breeze for an ex-banker.
The Cheat of Banking Operations
Here is an interesting definition of banking:
Banking is an illegal operation legalized for banks
Only financially naive people think that a bank is a place where people keep their money. A bank is a place where banking is done. And banking does not involve keeping money. If anyone else does what banks do, they would be arrested. That is because it is illegal.
Banking is the process of using people’s money to give loans to other people and giving those with money little or no profit from the interest from the loans. Now with central banking, it has gotten more interesting. The banks don’t necessarily need people’s money anymore. Banks create money with the extension of credit. The central bank can also create money.
If there is someone without any money who writes a check, it will be a criminal offense when the check bounces. But that is banking. The only difference is that the central bank’s check doesn’t bounce. This is not all there is to banking. There is a lot more which most people don’t know. But bankers do know.
They get to see it firsthand. In some cases, they are directly involved in some of those processes. And so the game of money gets crystal clear to them.
The Best Money Teacher
The best way to learn about money is to watch the flow of money. If you are trying to do business and earn money and you don’t know how money moves, you are at a disadvantage. This is because you won’t know when you are swimming along with the tide and swimming against it.
Follow the money. The money never lies. How does the money move around? Most successful entrepreneurs eventually figure out how money works. But they do at a great cost. Bankers learn it as a byproduct of their careers.
Just because someone is a banker doesn’t mean they understand money. It is not about what they are taught in school about banking. It is about what they learn while working as a banker. A person could work as a banker and not pay attention to those things. But any intelligent person would.
When the intelligent person is someone with (at least) an ounce of entrepreneurship in them, they start plotting their way into the robust side of the money game.
Moving from a banker to an entrepreneur is just like changing players in the same game. This is why ex-bankers are more likely to succeed as entrepreneurs. They know the game very well already.
It is like a poker dealer who decides to be a player.
The Access Leverage
Bankers also get to see who the big players are in business. And the smart thing is to have the big players as allies. It might be illegal for a banker to share confidential information about someone (or a business) with outsiders. But they can use it to process information in their own heads. They know who the big clients are.
Some bankers even have the privilege of relating to big clients. Some use their position to build relationships that end up being a foundation for the business they will eventually create.
Every client might look the same to an outsider. But the banker can tell the difference. Even if the client doesn’t use their particular bank, they can tell by certain parameters how big they are. It is their job. They know those who are really big and those who are faking it.
Entrepreneurs without leverage in accessing people are flying blind. Just because they don’t have that doesn’t mean other people won’t.
Banking And Entrepreneurship
It is rare to find an ex-banker turned entrepreneur that is struggling in business. Yes, they can go out of business later. But they usually thrive initially. Many go out of business later because they get complacent or get involved in something really illegal as a result of looking for an unfair advantage.
Does this mean everyone should go become a banker before getting into entrepreneurship? No, it doesn’t have to be that way. Most bankers don’t even like entrepreneurship. This is because they have a closer view of what it is really like financially. But those with entrepreneurial flair will jump out at any amazing opportunity. And there are other qualities that make them excel as entrepreneurs.
We can’t all be bankers but we can all understand money. Going into entrepreneurship, without a sound understanding of how money works, is like trying to win a game of bridge without knowing how the bridge game works. It is like trying to win a game of monopoly without understanding how the monopoly game works.
Ex-bankers make the best entrepreneurs because they get to understand how money works before jumping into entrepreneurship.
Anyone, who understands how money works, has an unfair business advantage would make an excellent entrepreneur.
I rest my case.