A traveling salesman visited a small town, and sold Billy Bob Bright, the proprietor of a machine shop, a lathe. When the lathe was delivered, it was not as represented, so Billy Bob sent it back. But the lathe manufacturer, nevertheless, attempted to collect the bill, and drew a sight draft on Bright through the local bank. The bank returned the draft unhonored. The lathe manufacturer then wrote to the postmaster inquiring about Bright's financial condition. The postmaster replied laconically that it was "O.K." By return mail the lathe manufacturer requested the postmaster to "hand the enclosed account to the leading lawyer in the town for collection." This is the reply he received. "The undersigned is the machine shop owner on whom you attempted to palm off your worthless lathe. The undersigned is the president and owner of the bank to which you sent your sight draft. The undersigned is the postmaster to whom you wrote, and the undersigned is the lawyer whose services you sought to perpetrate your nefarious business on one of our citizens. If the undersigned were not also pastor of the church in this town, he'd be telling you to go to hell!" The seller underestimated the buyer. Because he was dealing with a small company in a small town, he assumed, incorrectly, that the customer had a small mind. Wrong! I have been in towns so small their picture postcards were blank. I have also been in towns that if they staged a boxing match, both boxers would have to sit in the same corner. I went to college in a small town where, when they wanted to paint a white line down the center of Main Street, they had to widen the street. I learned from personal experience that small town people who own small companies are among the smartest, most entrepreneurial, most independent, and most successful manufacturers in industry. In their book The Millionaire Next Door (1996, Longstreet Press), Thomas J. Stanley and William D. Danko, who have studied the habits and methods of American millionaires for twenty years, reveal some surprising facts about why and how millionaires accumulate their wealth--and hang on to it. The image of America's wealthy usually portrayed in the movies and on the boob tube is blatantly false. America's wealthy are rarely ostentatious or flamboyant. They are, instead, consistent, persistent, disciplined individuals running very ordinary businesses. Interviews and focus group meetings with more than 500 millionaires and survey questionnaires received from another 11,000 high-net-worth or high-income respondents led Stanley and Danko to these conclusions:
- The typical American millionaire is a 57-year old male, married to his first and only wife. They have three children.
- He has lived in the same town his entire life.
- One in five is retired. Two-thirds are self-employed. Three out of four describe themselves as entrepreneurs.
- Many of their businesses are dull-normal rather than exotic.
- They are typically manufacturers, contractors, farmers, dealers, and distributors.
- About half of their wives work outside the house. The primary occupation among them is teacher.
- Total annual taxable income averages $131,000.
- Their homes, on average, are valued at $320,000.
- They claim to have "go to hell" funds that would allow them to continue without working for 10 years or more.
- They are well-educated. Only one in five is not a college graduate. Many hold advanced degrees.
- On average, they invest 20% of their household incomes each year. While most use brokerage accounts, they make their own investment decisions.
- On average, 21% of their household wealth is in their private businesses. They describe themselves as tightwads. Frugality is their trademark. They consider it to be the major ingredient in wealth creation.
