What Robert Kiyosaki Told Me About Being a Business Owner

I had an interest in money from an early age — mainly because, when I was growing up, we didn’t have much of it.

One of the first books about personal finance that I ever read was Rich Dad Poor Dad by Robert Kiyosaki.

The book has something of a cult following.

In it, Kiyosaki frames four approaches to building wealth. Yet only two can help you to break free of the day-to-day grind.

He explains that each of us falls into one of the following quadrants:

EMPLOYEE — THE E QUADRANT
Your income is derived via a salary which you cannot control. No matter how hard you work, your income will always be capped.

SELF-EMPLOYED — THE S QUADRANT
This describes the majority of people who call themselves ‘business owners’ — even those with a number of employees. In this quadrant, the company is entirely dependent on the owner’s time.
If he or she stops working, their income stops as well.

BUSINESS OWNER — THE B QUADRANT
This is the realm of entrepreneurs, people who design systems — machines comprised of people and processes to generate a profit.

INVESTOR — THE I QUADRANT
Investors use money to create more money. They don’t have to work because their money is working for them.

Unless one is a child prodigy entrepreneur, all of us started in the E Quadrant; we were employees once upon a time.

Then we created our own business. And bought into a misconception.

We thought we were heading straight to Business Owner (the B Quadrant).

But what typically happens is that we shift from Employee to Self-Employed. Rather than owning a business, we own a job.

Let that sink in.

And I’m not just talking about solopreneurs here — the freelance graphic designer working from a home office, for example.

You can be in the S Quadrant and have a dozen employees in a fancy office space downtown.

You may own the company, but the company owns you, too.

Believe me, I know. I was in the same situation. When I first started my business, I was so proud of the leap I’d made. I felt like I was in complete control of my destiny.

But, as my business grew, I was working more and more hours.

Sure, I had employees, but they needed me to stand over their shoulder. My clients needed me, too. My company was completely dependent upon my time. And, thus, so was my income. I bought into a lie.

3 years later my business is still reliant on me to get shit done, but 80% of my time is leading at the helm of the ship, not in the engine room.

As a founder and CEO - that’s exactly where you need to be spending your time.

The Cashflow Quadrant is a useful model that helped me frame what it means to be a business owner.

Maybe it’s of use to you too.