After a prolonged wait, we are back with an exclusively informative book summary. Before starting we would apologize for the wait, but we are sure, you would not regret the wait. So, hold back your patience as it’s going to be a long post.
Today we would summarize, RICH DAD’S BEFORE YOU QUIT YOUR JOB book by Robert T. Kiyosaki with Sharon L Lechter. So, without much delay, LETS BEGIN! ENJOY READING!
The first day of the author, as an entrepreneur was not off to a very good start. There were no steady paychecks, no insurance and plans. Income was low and expenses were soaring up. He realized that employees cost far more than the number of dollars reflected in their paychecks. He understood a difference between employees and entrepreneurs is that entrepreneurs need to know how to spend money, even if they have no money. But these cumbersome days paid him off well.
Rich Dad explains that people are not born entrepreneurs, “People are trainable. They can be trained to be either employees or entrepreneurs. The reason there are more employees than entrepreneurs is simply that our schools train young people to become employees. That is why so many parents say to their child, ‘Go to school so you can get a good job.’ I have yet to hear any parent say, ‘Go to school to become an entrepreneur.’”
We all know that a caterpillar spins a cocoon and one day emerges as butterfly. It is a change so profound, it is known as a metamorphosis. One of the definitions of metamorphosis is a striking alteration in character. This book is about a similar metamorphosis. This book is about the changes a person goes through, when transitioning from employee to entrepreneur. While many people dream of quitting their job and starting their own business, only a few actually do it
The following diagram explains that, the E stands for Employee, the S stands for Self-employed, small business, or specialist, the B stands for Big business owner (five hundred employees or more), the I stands for Investor. One of the reasons so many entrepreneurs are in the S quadrant rather than the B quadrant is that they are overly specialized. For example, medical doctors in private practice are technically entrepreneurs but may find it hard to migrate from the S quadrant to the B quadrant because their training is too specialized—their cup is full. For a person to move from S to B, he or she will need more generalized training—and must always have an empty cup.
Before quitting the jobs, people need to decide if they want to make the transition from employee to entrepreneur. The transition or metamorphosis requires a change to some of the following traits.
1. Ability to change philosophy from security to freedom
2. Ability to operate without money
3. Ability to operate without security
4. Ability to focus on opportunity rather than resources
5. Having different management styles to manage different people
6. Ability to manage people and resources they do not control
7. Team and value oriented rather than pay or promotion oriented
8. Active learner—no graduation day
9. Generalized education rather than specialized
10. The courage to be responsible for the entire business
As per the author, the biggest difference between an entrepreneur and an employee is found in the differences between the desire for security and the desire for freedom. Rich dad said, “If you become a successful entrepreneur, you will come to know a freedom very few people will ever know. It is not simply a matter of having a lot of money or free time. It is the freedom from the fear of fear itself.”
When we look under the covers of the word security, we find fear hiding there. This is the reason most people find comfort going to school, getting good grades, and getting a good paid job. Even parents and teachers motivates children to do the same. The employee works harder out of fear, the fear of not putting food on the table, the fear of not having money to make the mortgage payments. But this don’t solve the problem, it just throws blanket over the fear.
Rich Dad’s Entrepreneurial Lesson #1
A Successful Business Is Created Before There Is a Business.
Rich Dad says, “Employees look for a job after the business is built. An entrepreneur’s work begins before there is a business.” He said, “Some entrepreneurs win by creating. Other entrepreneurs win by copying and competing.” He also said, “The riskiest of all types of entrepreneur is the creative entrepreneur, also known as an innovator, because being creative means you are often a pioneer. It is easy to copy a successful and proven product. It is also less risky. If you learn to innovate, create, or invent your way to success, you are an entrepreneur creating new value rather than an entrepreneur who wins by copying.”
Anyone with a little initiative can be an entrepreneur. So don’t think entrepreneurs are special or better than other people. Our job is to decide which entrepreneur we most want to be like—the babysitter or Henry Ford? They both provide a valuable product or service. Both are important to their customers. Yet they operate in very different spectrums, different bandwidths of entrepreneurship. They both play the same game, but are not at the same level. So, a better question to be asked in designing a business is, “At what level of play do you want to play the game?”
And that is rich dad’s entrepreneurial lesson #1: “A successful business is created before there is a business.” The most important job of an entrepreneur is to design the business before there is a business
Unfortunately, many people focus on the product or opportunity rather than invest the time designing the business around the product or opportunity. Before quitting your job, it might be a good idea to study the lives of entrepreneurs and the different types of businesses they created. Also you might want to find a mentor who has been an entrepreneur. All too often, people ask business advice from people who have business experience as an employee but not as an entrepreneur.
Also, it is recommended keeping your daytime job while starting a part-time business—not for the money but for the experience. That means, even if your part-time business does not make any money, you are gaining something far more important than money—real life experience. Not only will you learn about business, you will learn a lot about yourself.
According to Sharon, there is a big difference between being an entrepreneur who creates and builds a business and buying a business. There is nothing wrong with buying a business. However, it is CREATION that energizes an entrepreneur. To build a business from nothing that is successful, creates value, and is sustainable is the true goal of an entrepreneur. One advantage of a franchise business is that it has immediate credibility because the systems have already been tested and proven to work by the franchisor.
Rich dad has a rule of thumb about this distinction between a job and a business. If you can leave your business for a year and come back and find it stronger and bigger, you have created a big business, a B quadrant business. If you cannot, you may have created a job, or an S quadrant small business.
Before quitting your job, ask yourself the following questions:
1. Why do I want to own my own business?
2. How badly do I want to own my own business?
3. At what level of play do I want to play the game?
4. At what level of play am I willing to extend myself to play the game?
5. Am I willing to spend the time to learn about other successful entrepreneurs and their businesses?
6. Am I afraid to fail?
7. Can I turn my fear of failing into a strength that will help me drive the business?
8. Can I learn from my mistakes?
9. Can I build a team, or do I like to work by myself?
10. Am I willing to pay the price?
11. Am I willing to put in the time now to be rewarded later?
12. Am I willing to delay financial rewards until the business succeeds, or do I need a paycheck?
As you are answering these questions, if you are still determined to start a business, take it one step further and ask yourself the following questions:
1.What have been your greatest successes?
2.What have been your greatest failures?
3.How many times have you worked for free?
4.Would you work for this company even if you were not paid?
5.Are your family and friends emotionally supportive of your efforts in this venture?
6.Are you willing to educate yourself in all the areas of the B-I Triangle?
If after answering all of these questions you are still eager to become an entrepreneur, you may have just what it takes to be a very successful entrepreneur. Congratulations for seeking freedom!
Rich Dad’s Entrepreneurial Lesson #2
Learn How to Turn Bad Luck Into Good Luck.
The irony is that what makes people smart also makes them less smart—that is, they learn from their mistakes.
Failing in business early in life is a defining experience. It is instrumental in developing a success strategy for future. There are two primary reasons why entrepreneurs fail. One is that the would-be entrepreneur is so afraid of failing he or she freezes, and then does nothing. The second reason entrepreneurs fail is that they do not fail enough. Many small business owners and self-employed business owners succeed to a point and then stop growing. The business reaches a certain size and then fails to grow. Once again, the entrepreneur needs to risk failing before the business can begin growing. The fear of failing is the primary reason why so many people do not succeed in life or are not as successful as they would like to be. So the secret to your business success is being willing to make mistakes and then learning from them. The more mistakes you make, the smarter you become and hopefully the company grows and prospers from the lessons learned. Employees are hired to not make mistakes. An employee’s job is to follow the rules, do as they are told; do their job the right way. If employees want to do things their own way or they do not follow the rules, or make too many mistakes, they are fired because they are not doing the job they were hired to do. That difference is the key difference between an entrepreneur and an employee. Failing is not fun but it is necessary for progress.
Rich dad believed in learning from your mistakes. He did not view mistakes as bad but simply as opportunities to learn something about business and yourself. He said, “Mistakes are like stop signs. Mistakes say to you, ‘Hey, time to stop . . . take a moment . . . you don’t know something . . . It’s time to stop and think.’” Rich dad also said, “A mistake is a signal that it’s time to learn something new, something you did not know before.” Along that line of reasoning he also said, “Too many people are too lazy to think. Instead of learning something new, they think the same thoughts day in and day out. Thinking is hard work. When you are forced to think you expand your mental capacity. When you expand your mental capacity your wealth increases. So every time you make a mistake, stop, and take the opportunity to learn something new, something you obviously need to learn. When something does not go your way, or something goes wrong, or you fail, take the time to think. Once you find the hidden lesson you will be thankful for the mistake. If you are upset, angry, ashamed, blaming someone else for the mistake, or pretending you haven’t made a mistake, you haven’t been thinking hard enough. Your mental capacity hasn’t expanded enough. You haven’t learned the lesson. So keep thinking.” While poor dad on making a mistake, he often pretended he did not make one, denied making one, or blamed someone else for the mistake. He did not view making mistakes as an opportunity to learn and increase one’s intellectual capacity. He did his best to avoid making mistakes. He did not view making mistakes as a good thing, as rich dad did.
That is why this lesson on mistakes, bad luck, and being dumb and dumber yet getting richer and richer is so important.
In order to succeed, a new entrepreneur needs to be committed to going through these steps as quickly as possible.
1. Start the business.
2. Fail and learn.
3. Find a mentor.
4. Fail and learn.
5. Take some classes.
6. Keep failing and learning.
7. Stop when successful.
9. Count your money, the wins and the losses.
10. Repeat the process.
On an estimation, 90% of want-to-be entrepreneurs do not get to step one. They may have a plan, they may have created the perfect business in their head or on paper, but that dreaded disease known as Analysis Paralysis infects them. Instead of going forward, many want-to-be entrepreneurs design and redesign their plan. Or they find some excuse why the time or the plan is not right. Instead of taking action and failing, they work hard at trying not to fail. They enter the world of Analysis Paralysis. It is impossible to become an entrepreneur without starting a business
Rich dad said, “The main reason to start a business is to have a business to practice on. If you do not have a bicycle to practice on, how can you learn to ride a bike? If you do not have a business to practice on, how can you learn to be an entrepreneur?”
Rich dad taught that as humans we have four basic emotions. They are:
He also explained that there were many other emotions, but these were the basic ones. Many of the other emotions were combinations of two or more of these basic emotions. Often these emotions help us take actions, turn our bad luck into good luck and succeed in life. As rich dad said, “If you can turn bad luck into good luck, you will have twice the luck and be twice as lucky in love, life, health, and money.”
Before quitting your job, you may want to practice turning bad luck into good luck or turning any anger you might have into joy. Those skills are important skills to possess, before embarking upon the journey from the world of an employee, a world of avoiding mistakes, into the world of an entrepreneur, a world of making mistakes.
According to Sharon, it is not an entrepreneur’s goal to make a “mistake.” However, experimentation and making wrong choices are natural parts of being an entrepreneur. Successful entrepreneurs are not afraid to risk being wrong, and if they make a mistake they learn from it, and sometimes put it to work for them and capitalize on it. The difference between an entrepreneur and a worker/employee is that the entrepreneur is not paralyzed by remotely possible consequences, but will find a way to minimize likely adverse consequences. The other aspect of fear of making a mistake—a fear of looking stupid —is, well, stupid. Being able to “look stupid” occasionally and ask questions freely opens up a whole new world to top students. But when people are too afraid of making a mistake, they often simply are unwilling to take any risk, and never even consider becoming an entrepreneur. Analysis paralysis is not the only obstacle to taking the first step into entrepreneurship. There is also the “inertia” factor.
Let’s look at the stages you might go through in transitioning from employee to entrepreneur.
Stage 1—You become unhappy as an employee.
Stage 2—Overcome the Fear of Getting Started
Stage 3—Just Start!
To make it more simplified, just follow these steps –
- Start the business.
- Fail and learn.
- Find a mentor.
- Fail and learn.
- Take some classes.
- Keep failing and learning.
- Stop when successful.
- Count your money, the wins and the losses.
- Repeat the process.
You have heard the saying, “Getting started is half the battle.” Use your fear as a motivator to succeed.
Rich Dad’s Entrepreneurial Lesson # 3
Know the Difference Between Your Job and Your Work
The difference between job and work is that, you get paid for a job but you do not get paid for doing your work. When it comes to money, the more homework you do, the more money you earn on your job. People who do not do their homework make less money, regardless if they are an employee or an entrepreneur. And many entrepreneurs quit their job without doing their homework. That is why so many small businesses fail or struggle financially. Many employees do not understand working for free. They expect to get paid for anything they do. That is why they fail. They continue to think like employees. They want that steady paychecks. Employees see no jobs so they do nothing. On the other hand, an entrepreneur sees a lot of opportunity. The entrepreneur knows that the jobs will come if the work is done. Too many won’t learn anything even if it is free or if they are paid to learn it. And this applies to both employees and entrepreneurs. So people are poor financially and poor in health. People who are lazy and lack discipline are often the people with the worst health and the worst wealth. So we need to do our homework if we want to become entrepreneurs.
Before quitting your job, you will need to find out how many different jobs make up a business. An entrepreneur may be working hard but only working hard at one job at a time. That is why so many self-employed business owners struggle or eventually burn out from overwork. They may be working hard but they may not be doing all the jobs a business requires.
The B and I refer to the Business Owner and Investor quadrants of the CASHFLOW Quadrant. Rich dad said, “If you are going to be an entrepreneur or an investor, fully understanding the B-I Triangle is essential to your success.” To be successful, the business needs someone with the skills to fulfil each of those functions. Starting with the level product, you will see the list of jobs required to bring the product to market. In simple terms the levels product, legal, systems, communications, and cash flow are technically all jobs required for a business to function successfully. If one or more of these jobs are not being done, or are being done poorly, the business will struggle and often will fail. The B-I Triangle applies to more than just the B and I side of the CASHFLOW Quadrant. Looking at the quadrant below you can see that there is a triangle in each of the quadrants.
Before quitting his or her job the entrepreneur should do his or her homework. That means making sure that the five jobs of the CASHFLOW Quadrant for his or her new business are covered.
5. Cash flow
If the entrepreneur is weak in covering just one of the five jobs, the business may fail or struggle financially, or fail to grow. That is why the lesson in Chapter One is: A successful business is created before there is a business.
A business is far more complex than this overly simplified list of five jobs. We can often use these five jobs as a checklist. Whenever a business begins to struggle, this list of five jobs can help analyse and identify where the problem or problems may lie. One reason why so many want-to-be entrepreneurs give up is that they start to realize they are only trained for one out of the five jobs
Many want-to-be entrepreneurs who have a great idea for a new product or new business. The problem for most of them is that they cannot sell, which means they cannot raise money. The inability to raise money may be reason number one why most want-to-be entrepreneurs give up and go back to their jobs. An entrepreneur raises money in these ways.
1. From friends and family
2. From banks and organizations that support entrepreneurs
3. From customers
4. From suppliers
5. From investors
6. From public markets
Before you quit your job, it is important to look deeper into each job level of the B-I Triangle. This does not mean you have to be an expert at each level. This does mean as an entrepreneur, you do not have just one job, you have five jobs. So before quitting your job, spend a little time learning a little more about each level.
According to Sharon, you can bring someone that has the skills that you lack on to your team. That person can be an equity participant in (part owner of) your business, an employee, or an advisor. No one can be an expert in everything. In planning your business, you bring together a team that covers all five jobs to ensure a strong B-I Triangle. That is why “Team” is part of the framework of the B-I Triangle.
Rich Dad’s Entrepreneurial Lesson # 4
Success Reveals Your Failures.
“Sometimes we win the most when we have nothing to lose.” Rich dad also said, “The hard part for most people is getting to nothing. Most people would rather hang on to a little than let go and get to nothing.”
Being a shy person, author had a hard time as a salesperson, he faced rejection at every door. Yet, he learned to overcome his fear of rejection and the fear of making cold calls.
Rich dad suggested, “The way to stop failing is to fail faster. If you don’t fail faster, you’ll fail anyway. The process requires that you make many mistakes and learn from those mistakes. The faster you make mistakes, the faster you get through the process and get to the other side. Or you can quit. Then the process spits you out.” To give a way out to overcome his fear, rich dad said to author, “How badly do you want to be an entrepreneur? The number one skill of an entrepreneur is their ability to sell. If you do not get through this part of the process, you’ll be better off as an employee. It’s your life, it’s your future, it’s your choice. You can fail now or you can fail later.” Rich dad explained that there are four different types of business schools. They are:
- The Traditional Business Schools.
- The Family Business School
- The Corporate Business School.
- The Business School of the Streets
The toughest business school for author was the Business School of the Streets. Once he left Xerox job and hit the streets for sales job, I literally hit the streets. The Business School of the Streets was a horrible school, a harsh teacher, and tough on grades. Many times he came face to face with his greatest fears and the depths of personal self-doubt.
Another of rich dad’s lessons was “success reveals your failures.” In other words, your strengths will reveal your weaknesses.
To be a successful entrepreneur, you and your team need to be school smart and street smart. While all five levels require street smarts, the legal and cash flow levels really do require a school-trained professional. More important, an entrepreneur needs to have team smarts, which means finding the best combination of people required by the task at hand. To win in business, ultimately, it is team smarts that wins.
Rich dad said, “If you are to develop as an entrepreneur, you will need to develop all four areas of yourself.”
A-Thinker: If you offer a new idea they will probably be critical or cynical more than open to the new idea. Rather than make a quick decision, they will usually think and analyse the situation for a long period of time before deciding.
C-Thinker: This does not mean they are artists who paint. It’s just that they are creative. They like to see the big picture. They think outside the box. C-Thinkers often drive A-Thinkers crazy. Flexible logic means they are flexible in what makes sense to them. They are more open-minded. A-Thinkers often just reject anything that does not fit their way of thinking.
T-Thinker: T-Thinkers are often the exact opposite of P-Thinkers. Because T-Thinkers seem to be most comfortable with people who enjoy the same technical subject they do.
P-Thinker: These people can start a conversation with anyone, unlike the T-Thinker. In business P-Thinkers can make great leaders if they also possess the necessary business skills. When they speak, people listen.
Rich dad said, “All four types of thinkers are important for a business. Small businesses stay small or fail because they lack one or more of the different types of thinkers. You have to find one category and become good at it.”
Some self-employed people do not do as well as they could because they feel they have to be experts at all five levels of the BI triangle They are often smart, and good at all five levels, but they may not be strong at all levels. This may be why they often stay in the S quadrant. If you want to be a success in the B quadrant, you need to be the best at one of the levels, and then build a team of experts around you that fill in the rest of the levels.
So before quitting your job, know that your most important job is to develop yourself. If you will dedicate yourself to becoming a great entrepreneur you will find it easier to find great people to be members of your team. If you can put together a great team, you will find it easier to be successful wherever you are. So it is not a matter of which kind of smarts is more important. Just remember it is very important to strive to be as smart as you can be, both in street smarts and in school smarts.
According to Sharon, the combination of school smarts and street smarts will help you build a successful business. But “team smarts” is the true formula of success. It combines school smarts and street smarts from your entire team. All of your team’s shared education and experience combined to work on your business collaboratively will surely propel your business forward.
Rich Dad’s Entrepreneurial Lesson # 5
The Process Is More Important than the Goal.
Rich dad said, “Yes. If all I wanted was a secure job, a steady paychecks, and a home away from home, I would never have become an entrepreneur. I wanted beyond security and money. A different world . . . a different way of living. I knew I faced greater chances of failing than succeeding. I knew there would be highs and lows as an entrepreneur. And like everyone else, I was concerned by the highs and lows. Yet, it was the thought of a different level of life that made the risks seem worthwhile. It was not just about making money, it was about a life’s adventure.”
The process has a beginning and an ending. It may take years, but it does have an ending. Someday this struggle you are in, will suddenly end and a new life and new process will begin. You will win if you remain faithful to this process. During this current process, you will be given many more challenges, and more lessons to learn. The process is testing you as well as teaching you. If you pass the test and learn the lesson, you get to go on to your next process. If you fail a test and quit rather than retake the test, the process spits you out. So those months of the good life gives you a glimpse of your future, a glimpse of the world you seek, a glimpse of a world that awaits you. A glimpse of your future and a way of saying to you, ‘Keep going. You’re on the right track.’ It’s giving you a shot of courage to face the process to come and the motivation to keep going and to keep learning.
LESSON #5: The process is more important than the goal. Most of us have heard that it is important to set goals. Yet rich dad had a different take on goals. He said, “Goals are important, but the process of obtaining the goal is far more important than the goal.”
While the product is important, looking at the B-I Triangle, you notice that cash flow is the base level with the most area allocated to it in the diagram.
The lesson is, for successful business people and investors, the numbers are very important.
As an entrepreneur and an investor, you need to know the entire business, not just the parts of the business you are interested in.
Again, before quitting your job to start your business, it is strongly recommended that you sit down with an experienced accountant and go over a budget on what it may cost to start and operate your business. If the numbers shock you, simply take a deep breath and sleep on it for a night or two. Give yourself time to expand your mind around the costs. The cost of starting, building, or growing a business is often more than originally imagined.
If your costs frighten you off, then maybe being an entrepreneur is not for you. High expenses are an everyday challenge in business. Taking on that challenge is one of the most important jobs of an entrepreneur. It requires a lot of A-, T-, P-, and C-Thinking power to solve these challenges.
When want-to-be entrepreneurs call looking for money, they fall into two categories. They are:
1. Those with a business plan and financial projections
2. Those with nothing
If a person comes with empty hands, it either means they are very early in the process or they don’t have a clue what they are doing, or both. Talking only about the product without financial projections indicates these people have not really thought through the process.
A good business plan with a great presentation can raise the money you need. A bad business plan with a poor presentation can lose you money.
The process of creating a business plan with numbers is an A-Thinking and T-Thinking process that causes the entrepreneur to think through the venture in more detail and then put it down on paper. The plan does not have to be elaborate. It can be very simple. A plan simply lets the potential investor see the thoughts inside the mind of the entrepreneur. Also, it allows the investor to know that the person is serious about the proposed business.
One reason why the legal level lies just below the product level of the BI triangle is that the entrepreneur’s ideas are often the company’s most important assets. The attorney’s job is to protect the company, its products, and its intellectual property—before there is a product or a business
Rich dad often said, “There are no bad investments, but there are many bad investors.” He also said, “There are no bad business opportunities, but there are many bad entrepreneurs.”
According to rich dad there are some red flags. Rich dad said, “Red flags are warnings. We can choose to heed the warning and learn, or ignore the warning. If you do not heed the warning the process may change directions on you and a new process may begin.”
- Salaries more than a paychecks.
- Good expenses and bad expenses. This is one of rich dad’s most important lessons. He said, “The reason so many people are poor is that they are poor spenders. In other words, there are good expenses and bad expenses.” He also said, “The rich are rich because they have expenses that make them rich. The poor are poor because they have expenses that make them poor.”
- Money talks. Rich dad said, “There is a big difference between a business and busyness. The reason most people do not make good entrepreneurs is that they are busy, they work hard, but they do not make any money. An entrepreneur must make money and that money shows up at the cash flow level of the B-I Triangle.” Rich dad would say, “An employee can be paid for being busy. An entrepreneur is paid for results.” The results are often known as the bottom line. That is why the cash flow level is the base of the B-I Triangle. As rich dad said, “You do not need a safe deposit box for excuses.”
According to Sharon, she encourages entrepreneurs to spend more than half of their time working on the future of their business and build a strong team to concentrate on the present and past issues of the business. In some cases, the entrepreneur may need to spend more than 80% of his or her time focusing on the future.
Rich Dad’s Entrepreneurial Lesson # 6
The Best Answers Are Found in Your Heart . . . Not Your Head.
There are three kinds of income. They are:
1. Earned income
2. Portfolio income
3. Passive income
While there are three different types of money. They are:
1. Competitive money
2. Cooperative money
3. Spiritual money
Competition is survival of the fittest dog or the dog that eats the other dogs. Most people work for competitive money.
Cooperation is known as teamwork. The richest, most powerful entrepreneurs have built the biggest businesses in the world via cooperation. They become more competitive due to the cooperation of their team. Most entrepreneurs of large businesses are great team leaders.
Spiritual money is created by doing God’s work—work that God wants done. It’s work being done in response to a higher calling. It’s about doing a job not because you want to do it but because it must be done and you know deep down in your soul you’re the one that is supposed to do it.
Rich dad said, “Because finding your gift, developing your gift, and giving your gift is very hard work. Most people do not want to work that hard. One need to dedicate their life to developing their strength and skills in order to develop their gift.”
For author, the lesson that hit him the hardest was the lesson that greatness is a choice. It is not about being gifted, or talented, or more fortunate than others. It’s about a choice we all can make. Being a person who has been average and below average for most of his life, the idea that he had the choice to change all that was a message from the book that went straight to his heart and my soul.
Very often we hear people say, “I’m doing what I love.” Also we hear people say, “Do what you love and the money will follow.” While this is good advice, there are also some flaws in the advice. The most obvious flaw is the use of the word “I.” One’s true mission is about who you love. It is not about you. A mission is about who you do your work for. It’s not about working for yourself.
Rich dad said, “Dealing with people is the hardest part of any business. Your company is not training you to be good but to be great at dealing with people. That is a priceless skill and a skill essential to be of service to your fellow human beings. But you and only you can make that choice to be great. Most people are happy just to be good because being good is all they need to serve themselves. That is my experience. Too many people go to work simply to make money. A few people go to work to be of service. Different people, different missions.”
Before you quit your job, remember the three kinds of money and that one type of money is not better than the other.
If you are about to become an entrepreneur, your first mission is to master the B-I Triangle, especially the levels from cash flow up through product. If you do not learn the B-I Triangle, and continually work on mastering the levels, and if you are not competitive, you might not survive. If you are not competitive, you will find it difficult to be cooperative and to work for cooperative money. In the game of business, it is tough being cooperative with poor people or poor companies. It’s like playing football with a teammate who has a broken leg.
So before you quit your job remember that your mission starts at your core, in your soul, felt in your heart, and spoken through your actions—not just your words.
According to Sharon, as rich dad said, “The more people you serve, the richer you become.” you must question, in planning your business, what is your mission? Do you have both a business mission and a spiritual mission? Your mission is the foundation of the B-I Triangle.
Rich Dad’s Entrepreneurial Lesson # 7
The Scope of the Mission Determines the Product.
Most small businesses remain small because there are weaknesses in their B-I Triangle, it’s tough going from the S quadrant to the B quadrant if the B-I Triangle is not strong. Visual aids such as the B-I Triangle and the CASHFLOW Quadrant not only helps see forward when designing a business, they also assists in seeing backward The process will give a glimpse of your future, but you must be faithful to the process.
Rich dad had said that once you complete a process, you take the best with you and leave the rest behind. You then move on to the next process. Once again, once the process is over, you take the best of the process with you and leave the rest behind.
Exhaustion is what often occurs with successful people in the S quadrant. Since an S individual often works himself, more success means more work. An S often works for a dollar per hour compensation plan, and as we all know, there are only so many hours in a day. Rich dad said, “One of the big differences between an S and a B quadrant person is the number of customers they can handle.” He also said, “If you want to be rich, simply serve more people.” One of the problems with being self-employed in the S quadrant is the word self. In most cases, being self-employed makes it very difficult to get to the B quadrant. It can be difficult to get your self out of the way of the process.
Rich dad taught about the eye of the needle. He said, “A popular saying in church goes something like, ‘It is easier for a camel to pass through the eye of a needle than for a rich man to pass into heaven.’” Rich dad continued, modifying the saying to, “Forget the camel. If a man can pass through the eye of the needle he will enter the world of tremendous wealth.” Now rich dad was a very religious man and was not making fun of the religious lesson. He was simply using the lesson and modifying it to create his own lesson. In business terms, what he meant was that for an entrepreneur to pass through the eye of the needle, the entrepreneur had to leave him- or herself behind. What passed through the eye of the needle was the intellectual property of the entrepreneur. Looking at the diagram below, you may better understand what rich dad meant.
Having a great team is essential for moving from the S quadrant to the B quadrant. And rich dad always said, “If you are the smartest person on your team, you are in trouble.” With the right mission and the right team, our B business began to flourish.
Before you quit your job, you may want to remember the lesson of this chapter. The lesson is that the scope of the mission determines the product. It is very tough making a lot of money or serving a lot of people simply by working harder physically. If you want to serve a lot of people and/or make a lot of money, you may need to get yourself out of the way and pass through the eye of the needle. Before you quit your job, you may also want to determine if you would be happiest in the S quadrant or the B quadrant. If you want to grow into the B quadrant, remember that it takes much stronger fundamentals in the B-I Triangle and an even stronger team to allow you to go through the eye of the needle.
According to Sharon, the most successful businesses usually do one of two things:
1.Solve a problem
2.Fill a need
Having a mission that relates to the solution of a problem or filling a need, combined with a desire to serve as many people as possible, are fundamental building blocks of the most successful businesses. Typically, a company whose mission is “to make money first” or to be the “biggest and best provider of a certain product or service” instead of solving a problem or filling a need will not have the fundamental strength to build a strong B-I Triangle. Obviously, there is nothing wrong with making money, or wanting to be the “biggest and best.” However, that type of mission provides no real direction or focus for the company, nor does it provide the proper mind-set for building. As rich dad said, “The more people you serve, the richer you will become.”
Rich Dads Entrepreneurial Lesson #8
Design a Business That Can Do Something That No Other Business Can Do.
According to rich dad, the most important jobs for an entrepreneur are –
1. Clearly define the mission, goals, and vision of the company.
2. Find the best people and forge them into a team.
3. Strengthen the company on the inside.
4. Expand the company on the outside.
5. Improve the bottom line.
6. Invest in research and development.
7. Invest in tangible assets.
8. Be a good corporate citizen.
“You need to change leaders,” said rich dad. “Besides, if the leader cannot do these things, the company will probably disappear anyway. That is why most new companies are gone within ten years.” A leader’s job is to change the company to allow it to grow and serve more people. If the leader cannot change the company, the leader keeps the company small and the company may begin to shrink.
There are many ways a business can expand, including:
1.Replicating the entire B-I Triangle.
3.Taking the company public through an IPO.
4.Licensing and joint ventures
The first lesson: Always have a low-risk idea or strategy to fall back on. Rich dad taught that whenever you start a business or invest in something, you need to have a low-risk idea. Simply put, a low-risk idea is something you know you can do
The second lesson: Design the business around a unique tactical advantage. Simply put, focus all your efforts on your core strength, your unique product
According to Sharon, the ‘mission’ defines the purpose and direction of the business. The ‘leadership’ makes the decisions and keeps the business focused on the mission. The ‘team’ provides the business with all the different types of special expertise and skills necessary to operate. ‘Cash flow’ provides the base of the foundation for any healthy business. Timing of when cash comes in and when it is needed to go back out—alone—can make or break a business. ‘Communications’ represents the interaction and relationships between the leadership and the team, and between the business and the outside world —things like public relations, marketing, and sales. Getting the protection is part of the ‘legal’ level, but once you have the protection it does ‘communicate’ who you are to the public. ‘Systems’ represent the biggest difference between a small business and a large one. Systems are the way that a large business leverages the expertise of the owner or other skilled workers without losing quality control. And ‘Sustainable competitive advantage’, in order for a business to be successful it must have some sort of competitive advantage. And if it’s going to stay successful it has to be able to sustain that competitive advantage.
Rich Dads Entrepreneurial Lesson #9
Don’t Fight for the Bargain Basement
You will always have good customers and bad customers. Rich dad said, “You fire bad customers just as you would fire a bad employee. If you do not get rid of your bad employees the good employees will leave. If I do not fire bad customers, not only will my good customers leave, many of my good employees will leave as well. Often it is our fault. Our staff does make mistakes or may offend the customers. Our systems can break down. That is why we look into every complaint and take it seriously. Just as you look both ways before you cross a street, when it comes to complaints, we have to look both ways—at the customer and at our operations. An entrepreneurs job is a people job. People are your biggest assets and biggest liabilities. One day you’ll have to fire someone. I am sure it will be an experience you will never forget. The same is true with advisors. You must be able to fire bad advisors. If you have accountants or attorneys who do a poor job, or if the job is too big for them, or if they are only interested in receiving their fees and not helping your business, your business will suffer. If you do not get rid of bad advisors, you are responsible. The ultimate price of bad advice is far more than what you pay your advisors in fees for good advice. So as an entrepreneur you must realize that you are responsible for your mistakes as well as the mistakes of others. It is extremely difficult. If you cannot hire and fire people, including yourself, you should not be an entrepreneur. Remember this: Your success or failure as an entrepreneur depends a lot on your people skills. If you have strong people skills, your business will grow. If you have poor people skills, your business will suffer. If you hire people simply because you like them, or because they are relatives, and you cannot fire them when they need to go, then you have poor people skills. Remember that people are different, and as an entrepreneur you need to be flexible enough to work with different types of people—people with different skills, ambitions, dreams, behaviour, and experiences. If you cannot work with different types of people, once again your business will suffer. A leader’s job is to get people to work as a team.”
A business is a blending of different people, different temperaments, different talents, different education, different ages, sexes, and races. Every day when you come to work, most of your problems will be people problems. A normal business has so many competitors inside the business it’s amazing that anyone gets any work done at all.
Rich dad taught three tips to deal with people –
- Tip number one is what I call the ‘pain in the ass factor.’ That means all people have skills and talents and are also pains in the ass. I do not care who they are, they have all three—including me. If their pain in the ass factor exceeds their skills and talents, it is time for them to go or to move them to another part of the business
- Learn to hire slow and fire fast. Take the hiring of people very seriously and slowly. Screen them carefully. And if it is time to let them go, do it quickly. If you can’t fire them for some reason, then move them and isolate them. Don’t let them contaminate the rest of the people in the business. Maybe you can help them find jobs at a company where they might be happier and more productive. Or just pay them to leave. It will be less expensive in the long run. Remember to do it humanely and legally.
- There are two kinds of communicators. One type of communicator will come talk to you face to face. They lay the cards on the table in front of you. The second type stabs you in the back. They gossip, talk badly about you, spread rumours, or complain to everyone else but never to your face. Basically, these people are cowards. So, deal with the later carefully.
Rich dad said, “Entrepreneurship is for people with courage, not cowards. If you will work on always improving your communication skills, your business will grow. Remember that just because you’re talking, you’re not necessarily communicating. And in sales, telling is not selling. Communication is a far more complex affair than simply moving your lips and wagging your tongue”
As the entrepreneur, one of your jobs is to protect your company and employees from cheap customers—the customers who want more than they pay for, the customers who want something for nothing. There are rich cheap people and poor cheap people. Cheap has nothing to do with money. It has to do with a state of mind. We all love a bargain. Yet as much as we love value for our money, very few of us want value at the expense of someone else. But a cheap person does. A cheap person borders on being a thief—sometimes they are thieves. If it’s not money they’re stealing, they steal your time and your energy. They steal your peace of mind.
Having a bad customer can cost us good customers. That is why rich dad say, you need to fire your cheap customers. They’re too expensive. This is a very important lesson to learn, if you want to be an entrepreneur. Always remember, take very good care of your good customers and fire your cheap customers. So to find good customers, you need to match the product and the price to fit the customer’s needs, wants, and ego. In many cases, the customer’s ego is far more important than wants and needs.
These are the five things a marketer must know when selling a product. They are:
A marketer must know what the product is, who the person who wants the product is, what price they are willing to pay, where the product will be placed so the customer can find it, and how to position it in the marketplace, that is, the biggest, the smallest, the first, the last, and so on.
There are three price points for any product. The lowest-priced product, the highestpriced, and the middle-priced. The worst price to be is the middle price. Nobody knows who you are. The trouble with being the lowest-price product is that someone is always trying to beat you. Someone will find a way to sell the same product for less than you. To win the lowest-price competition, you have to make less and less money. On top of that you have to deal with cheap customers. Design your product and price it for a very special customer. Your marketing should then find ways of reaching that special customer. Be creative. Don’t be cheap. The bargain basement is not a place to find good customers.
The five Ps are a simple guideline for your market plan. Before you quit your job remember these important points.
1. There are three price positions in any market. The highest price, the middle price, and the lowest price. Decide which price best fits you. Always remember that the middle price may be the most comfortable but it is also the most crowded. It’s hard to be outstanding if you’re average.
2. The lowest-price leaders do not just lower their price. The winners in the lowest-price category do something brilliant in business that their competitors cannot do.
3. If you are going to be the highest-price product in your market niche, then you have to give your customers something your competitors cannot give.
4. Don’t try to be all things to all customers. If you want the high end and the low end, start two brands.
5. Instead of discounting down, bonus up.
6. Weak salespeople always want new products to sell.
7. Look for strategic partners who already sell to the customer you want to sell to.
8. Treat your best customers well. The rule of thumb is: Focus on keeping your best customers happy, because not only will they buy more from you, they will tell their friends about you, and that is the best kind of marketing of all. It’s called word of mouth. When it comes to taking care of your best customers, be creative.
In conclusion, the most important place you want to be first in is in your customers’ minds
According to Sharon, it is very important for you as a business owner to pick the right target customer. As rich dad said, when you compete based on price there is always someone else willing to offer a lower price. Creating a competitive advantage based on quality provides for better profit margins, and typically a higher-level customer. Instead of concentrating on the people who do not like you or your product, consider spending your energy on supporting the one-third of your customers who love you. Turn these customers, who are already fans, into testimonials for you and your products. The result is called viral marketing. With their help, you can more easily convert the one-third of potential customers in the middle. Plus it is a lot more fun spending time with people who love you, instead of worrying about those who don’t. Many business owners also miss the boat when it comes to understanding the value of each and every customer. They celebrate when they sell one product to one customer. True success comes when you have a community of customers who buy repeatedly from you. This loyalty and shared community creates a sustainable and successful business model.
In fact, it is much harder to find a new customer than to keep a satisfied customer coming back. One of the greatest assets of a business is its customer list. The customer cycle has the following stages:
1. Attract the customer (hardest part).
2. Make a sale.
3. Capture your customers’ contact information.
4. Make your customer feel special (thank the customer for his or her purchase).
5. Keep in contact with your customer (send the customer advance announcements of new products, special promotions, or events).
6. Answer customer inquiries in a timely and friendly manner (turn complaining customers into happy customers).
7. Create a community or club for customers to join (give them value for free just for joining).
8. Ask your happy customer to “tell a friend” about your business or product. 9. Make a repeat sale to your customer.
10. Repeat the cycle.
Now that you have your B-I Triangle in place, it is time to review your five Ps. You may come up with more questions (Qs) than answers. Bring your team together and create your business tactic and strategies while keeping your five Ps in mind. With your product, person (target customer), price, place, and position planned well and supported by a strong B-I Triangle, you will more easily find the sixth P. PROFIT! In order to realize your business mission, your planning time is over. Take action on your new business today.
Rich Dad’s Entrepreneurial Lesson # 10
Know When to Quit.
That you do not like your job is not a reason to become an entrepreneur. It may sound like a good reason but it is not a strong enough reason. It definitely lacks a strong enough mission. Although almost everyone can become an entrepreneur, entrepreneurship is not for everyone. According to author, a quitter is someone who quits simply because things have gotten tough.
One of the reasons author did not quit his process in becoming an entrepreneur was that he really wanted to be one. He wanted it badly. He wanted to enjoy the freedom, the independence, the wealth, and the ability to make a contribution to this world that a successful entrepreneur has. In spite of how badly he wanted to become a successful entrepreneur, the powerful concept of quitting was always right in front of him, holding the door open. For him, becoming an entrepreneur is a process, a process he is still in. He believe he will be an entrepreneur in training till the end. He love business and he love solving business problems. There have been times I have cut my losses, shut a business down, changed directions, but when it came to the process of becoming an entrepreneur, he have never quit—at least not yet. It is a process he love. It is a process that brings him the kind of life he want. So although the process has been tough for him, it has been worth it.
Before You Quit Your Job Authors Offer These Tips –
- Check your attitude. Attitude is almost everything. Authors don’t recommend becoming an entrepreneur just to make money. There are far easier ways to make money. If you do not love business and the challenges a business offers, then entrepreneurship may not be for you.
- Get as much experience as possible on five levels of the B-I Triangle. Instead of taking jobs for the money, take jobs for the experience.
- Always remember that Sales = Income. All entrepreneurs need to be good in sales. If you are not good in sales, get as much experience as possible before you quit your job.
- Be optimistic as well as brutally honest with yourself. On the flip side, know the difference between being brutally honest and being pessimistic. Negative people, or pessimistic people, are not the same as brutally honest people.
- How are you at spending money? Too many people struggle financially because they do not know how to spend their money. Too many people spend their money and it never comes back. An entrepreneur needs to know how to spend money and have more money come back. It is not about being cheap, tight, or frugal. It’s about knowing when to spend, what to spend on, and how much to spend.
- Start a business to practice on. No one can learn to ride a bicycle without a bicycle and no one can learn to start, build, and run a business without a business. Once you are familiar with the different parts of the B-I Triangle, stop planning and start doing.
- Be willing to ask for help. Rich dad often said, “Arrogance is the cause of ignorance.” If you don’t know something, ask someone who does know. On the flip side, don’t be a pest and ask for too much help. There is a fine line between help and a crutch.
- Find a mentor. Rich dad was author’s mentor. Read books about great entrepreneurs such as Edison, Ford, and Gates. Books can be your best mentors. The Rich Dad Company has a mentoring program known as Rich Dad Coaching. The coaches on the other side of the phone are entrepreneurs, investors, and great coaches. Hire them to keep you on track to getting what you want from your life. One of the most important things an entrepreneur can build is a business with a strong culture
- Join an entrepreneur’s network. Birds of a feather do flock together. Attend their meetings and find one that fits your needs. Surround yourself with fellow entrepreneurs.
- Be faithful to the process. One reason why many people do not quit their jobs and become entrepreneurs is that entrepreneurship can be extremely challenging, especially when first starting out. Author suggests you to follow the basics of the B-I Triangle and diligently do your best to master all eight categories of the triangle. It takes time, but if you are successful the rewards can be immense. As rich dad said, “Entrepreneurship is a process, not a job or profession.” So be faithful to the process and remember that even when times are bad, the process will give you a glimpse of the future that lies ahead.
Rich dad drew for his son and author a diagram that looked like this: He said, “If you are going to have a big goal you need a strong mission to push you through the process. With a strong mission, anything is attainable.”
So, that is all about the great financial education book RICH DAD’S BEFORE YOU QUIT YOUR JOB by Robert T. Kiyosaki with Sharon L Lechter. Authors have poured their life long financial knowledge in just ten lessons so that normal people could gain some knowledge and build their financial intelligence , hence improving their lives. Hope, you would try to learn from this great book and change your perspectives about finance.
As a bonus information, you all can visit www.richdad.com to learn more, play the cashflow game and build your financial intelligence. You all can also visit https://theanamikapandey.com/rich-dad-poor-dad/ (if not visited earlier) to check out our summary of the great book RICH DAD POOR DAD.
So, lets end up here, will catch you all with other interesting summaries soon, so be tuned to our website. If you want any other book summary, please feel free to comment below your choices. Thanks for reading!
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