Why Business Owners are Primed for Wealth and SuccessThere are endless blog entries, white papers, and articles devoted to the tactics and techniques that generate wealth and success—but all the tips and hints in the world will amount to very little if they are not accompanied by the proper mindset. Indeed, this may be the thing that most clearly separates the upper echelon of entrepreneurs from those who struggle just to tread water. For those who wish to know the proper attitudes to have toward generating wealth and success, a great starting point is to consider the insights of business guru and popular author (Rich Dad, Poor Dad) Robert Kiyosaki.
The video embedded herein is sort of a “greatest hits” anthology of some of Kiyosaki’s teachings—a sampler of just a few of his most seminal views. What he teaches here has the potential to totally transform your paradigm regarding entrepreneurship and small business ownership.
Introducing the Cash Flow Quadrant
The first thing you’ll see in the video is a chart, divided into four quadrants; this is what Kiyosaki refers to as the “Cash Flow Quadrant,” and it offers brief characterizations of the four kinds of people you meet in this world:
- The first quadrant, labeled with an “E,” represents employees—i.e., those who work for other people.
- Beneath that is the “S,” which refers to someone who is effectively self-employed through work as a doctor, lawyer, or other qualified professional.
- On the other side of the chart we find “B,” which represents business owners.
- Finally, there is “I,” which represents investors.
Perspectives on Wealth
Kiyosaki’s question is a simple one: Which one of these four quadrants represents the best way to get rich and successful? The answer is certainly not to become an employee, because employees face the least favorable tax laws, they can be fired any time, and, in the end, all of their hard work is really benefitting the employer, not providing them with anything lasting.
Some might view the self-employed professionals—the doctors and lawyers—as the smartest folks on the chart, and in some ways they are—but maybe that’s a problem, Kiyosaki tells us. To become successful as a doctor or a lawyer, you need to perform well in school, and for many of us, that’s a mightily tall order!
It’s in the other half of the quadrant—the business owners and the investors—that true prosperity is found. Employees—and to some extent self-employed professionals—are really just working for security. They are fighting to stay afloat and to keep their jobs even when they know they could get fired at any time, and when they face some bleak tax laws. Those who find themselves in the other two categories, meanwhile, are working to build something that will last a lifetime—something they can pass down to subsequent generations, and which is more about freedom than mere job security.
The Importance of Cash Flow
We already noted that these four characterizations are part of the “Cash Flow Quadrant,” and certainly, Kiyosaki affirms that cash flow is the most importance term in any truly successful person’s vocabulary. A rich person is someone who controls cash flow, and who has more assets than he or she has liabilities:
- An asset is something that makes you money—whether you are working or not.
- A liability is something that just takes money out of your pocket.
- If you quit working right now, would your assets amount to more than your liabilities? This, we are told, is the true gauge of success.
Building Assets Through Entrepreneurship
To bring this discussion full-circle, consider the folks in the Cash Flow Quadrants. Those who are employees, or self-employed, are not truly building assets. If they quit their jobs, their liabilities will persist, but they’ll have no money coming into their pockets—a dangerous scenario, to say the least!
Those who are in the other quadrants, though—they are building assets. By cultivating a successful business, you’re doing more than just keeping the liabilities at bay. You’re actually building something that will generate money in the long term, even if you one day decide to step back and transfer direct management of the company. That’s an enviable position to be in, and one that any entrepreneur is ultimately aiming for!
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