Before You Quit your Job by Robert Kiyosaki. Click Drop-down Arrow for Money Making Resources. 👉

[Music] Time Warner audiobooks presents rich dad's before you quit your job 10 real life lessons every entrepreneur should know about building a multi-million dollar business written by Robert Kiyosaki with Sharon L Lecter and read by Jim Ward and Deanna Hearst one of the most frightening days of my life was the day I quit my job and officially became an entrepreneur on that day I knew there are no more steady paychecks no more health insurance or retirement plan no more days off or being sick or paid vacations the terror of not having a steady paycheck was one of the most frightening experiences I had ever experienced the day I officially left the company I was in San Juan Puerto Rico because I was attending the Xerox corporation's President's Club celebration and event recognizing the top achievers in the company even though it was a celebration I was having a miserable time all I could think about was leaving the job the steady paycheck and the security of the company once the party in San Juan was over I was going to go on my own when leaving someone the plane I was on experienced some kind of emergency in preparing to land at Miami the pilot had us all brace cradle our heads and prepare for a possible crash obviously the plane did not crash and I flew on to Chicago where was going to do a sales presentation for my line of nylons surfer wallets I arrived at the Chicago Mercantile Mart late because of the flight delays and the client I was supposed to meet a buyer from a large chain of department stores was already gone our people born entrepreneurs or are they trained to be entrepreneurs when I asked my rich dad his opinion on this question he said people 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've yet to hear any parents say go to school to become an entrepreneur you may have noticed that many of our most famous entrepreneurs did not finish school some of those entrepreneurs are Thomas Edison founder of General Electric Henry Ford founder of Ford Motor Company Bill Gates founder of Microsoft Richard Branson found her a virgin Michael Dell founder of Dell computers Steven jobs founder of Apple computers and Pixar and Ted Turner founder of CNN obviously there are other entrepreneurs who did well in school but few as famous as these I was not born a natural entrepreneur I had to be trained my Rich Dad guided me through a process of starting as an employee to eventually becoming an entrepreneur for me it was not an easy process there was a lot I had to unlearn before I could begin to understand the lessons he was trying to teach me it was difficult hearing what my rich dad had to say because what he said was exactly opposite from the lessons my poor dad was trying to teach me every time I rich dad talked about entrepreneurship he was talking about freedom every time my poor dad talked to me about going to school to get a job he was talking about security I asked rich dad aren't security and freedom the same thing smiling he replied security and freedom are not the same in fact they are opposites the more security you seek the less freedom you have the people with the most security are in jail that is why it is called maximum security if you want freedom you need to let go of security employees desire security and entrepreneurs seek freedom so the question is can anyone become an entrepreneur my answer is yes it begins with the change in philosophy it begins with the desire for more freedom than security many people do not become entrepreneurs because they are afraid of failing humans learn by making mistakes we learn to walk by first falling down and then trying again if we had never risked falling we would go through life crawling like caterpillars one of the better definitions of an entrepreneur is from Howard H Stevenson a professor at Harvard University he says entrepreneurship is an approach to management that we define as follows the pursuit of opportunity without regard to resources currently controlled in my opinion this is one of the most brilliant definitions of what an entrepreneur is it is bare-bones and brilliant mr. Stevenson had many other barebone gems especially when he compares entrepreneurs to employees or promoters to trustees as he labels them a few of these gems of comparison are one when it comes to their strategic orientation a promoter is driven by perception of opportunity a trustee is driven by control of resources in other words entrepreneurs are always looking for the opportunity without much regard to whether they have resources employees focus on what resources they have or do not have which is why so many people say how can I start my business I don't have the money an entrepreneur would say tie up the deal and then we'll find the money this is also why my poor dad often said I can't afford it being an employee he looked at his resources those of you who have read my other books know that my Rich Dad for bad his son and me to ever say I can't afford it instead he taught us to look at opportunities and ask how can I afford it he was an entrepreneur too when it comes to management structure a promoter is flat with multiple informal networks a trustee is formalized hierarchy with multiple tiers an entrepreneur will keep the organization's small and lean using cooperative relationships with strategic partners to grow the business an entrepreneur will grow the organization horizontally which means outsourcing rather than bringing the work in-house an employee wants to grow the organization vertically which means hiring more employees three when it comes to reward philosophy a promoter is value driven performance-based team oriented a trustee is security driven resource based job promotion oriented employees want job security with a strong company a steady paycheck and the opportunity for promotion the entrepreneur doesn't want to climb the corporate ladder he or she wants to own the corporate ladder an entrepreneur is not driven by a paycheck but by results of the team also as Howard Stevenson states many entrepreneurs start a business because they have very strong values that are more important than simply job security and a steady paycheck they are passionate about their work their mission and love what they do Howard Stevenson acknowledges that many people say that entrepreneurs are not good managers instead of agreeing with his commonly accepted point of view he writes the entrepreneur is stereotyped as egocentric and idiosyncratic and thus unable to manage however although the managerial task is substantially different for the entrepreneur the management skill is nonetheless essential right on Howard in other words entrepreneurs manage people differently since entrepreneurs are not necessarily managing employees they need to manage people differently very simply put entrepreneurs need to know how to manage other entrepreneurs so entrepreneurs are not poor managers as many people think they simply have a very different management style because they are managing people they cannot tell what to do or fire have you ever noticed that software such as Microsoft's Windows comes in versions such as Windows 2.0 and windows 3.0 what that means is that they have improved their product and now want you to buy the better version in other words the first product they sold you was not perfect many people fail to get to market because they are constantly perfecting their product my Rich Dad often said anything worth doing is worth doing poorly Henry Ford said thank God for my customers they buy my products before they are perfected entrepreneurs start and continue to improve themselves their businesses and their products many people will not start unless everything is perfect that is why many of them never start knowing when to introduce a product into the marketplace is as much an art as a science you may not want to wait for a product to be perfect it may never be perfect it just has to work well enough to be accepted in the marketplace however if the product is so flawed that it doesn't work for its intended purpose or otherwise does not meet marketplace expectations or causes problems it can be very difficult to re-establish credibility and a reputation for quality in martial arts there is a saying that goes a cup that is full is useless only when a cup is empty is it useful this is true for the entrepreneur we have all heard people say oh I know all about that those are words coming from a person whose cup is full a person who believes he or she knows all the answers an entrepreneur cannot afford to know all the answers entrepreneurs know they can never know all the answers they know their success requires that their cup is always empty to be successful as employees people need to know the right answers if they do not know the right answers they may be fired or not promoted entrepreneurs do not need to know all the answers all they need to know is who to call that is what advisors are all about people go to school to become specialists people go to school to become an accountant attorney secretary nurse doctor engineer or computer programmer these are people who know a lot about a little what makes an entrepreneur different his entrepreneurs must know a little about accounting the law engineering systems business systems insurance product design finance investing people sales marketing public speaking raising capital and dealing with different people trained in different specialties true entrepreneurs know there is so much to know and so much they do not know they cannot afford the luxury of specialization that is why they're cut must always be empty they must always be learning this means the entrepreneur must be a very proactive learner a true entrepreneur has no graduation day [Music] the diagram from rich dad's cash flow quadrant the second book in the Rich Dad series has four sections in which the e stands for employee the S stands for self-employed small business or specialist the B stands for big business owner 500 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 for a person to move from s to B he or she will need more generalized training one of the reasons why Rich Dad recommended I become an entrepreneur in the B and AI quadrants is that the tax laws are most favorable in those quadrants the tax laws are not as favorable for employees or self-employed people in the E and s quadrants this audiobook will go into the differences in each quarter and how an entrepreneur can migrate from one quadrant to another which dad's entrepreneurial lesson number one a successful business is created before there is a business when I was growing up my poor dad often said go to school get good grades so you can find a good job with good benefits he was encouraging me to become an employee my Rich Dad often said learn to build your own business and hire good people he was encouraging me to become an entrepreneur one day I asked my rich dad what the difference was between an employee and an entrepreneur his reply was employees look for a job after the business is built and entrepreneurs work begins before there is a business statistics show that 90 percent of all new businesses fail within the first five years statistics also show that 90 percent of the 10% that survived the first five years failed before their 10th anniversary in other words approximately 99% of all startup businesses fail within ten years my Rich Dad said starting a business is like jumping out of an airplane without a parachute in midair the entrepreneur begins building a parachute and hopes it opens before hitting the ground he also said if the entrepreneur hits the ground before building a parachute it is very tough climbing back into the plane and trying again for those of you familiar with the Rich Dad books you know that I have jumped out of the plane many times and failed to build the parachute the good news is that I hit the ground and bounced many of my failures and successes were small ones so the bounce was not that painful that is until I started my nylon and velcro wallet business I made many mistakes and learn from them along the way the good news is that it was the best business experience of my life I learned much about business and about myself through the process of rebuilding one of the reasons I fell so hard in the nylon surfer wallet business was that I did not pay attention to the little things my little surfer wallet business grew so fast that the business was a lot bigger than the capabilities of the three entrepreneurs who created the business as three successful entrepreneurs in her late 20s and early 30s we took our minds off the business and partied into the night success and money had blinded us we could not see the cracks forming in the wall of the dam finally the dam broke our parachute did not open a poorly conceived business startup may be able to survive as long as the entrepreneur works hard and holds the business together with sheer determination in other words hard work can cover up a poorly designed business and keep it from failing the world is filled with millions of small business entrepreneurs who are able to keep their leaky business afloat with hard work sheer willpower duct tape and baling wire the problem is if they stop working the business breaks apart and sinks one of the primary reasons for the high failure rate of small businesses is sheer exhaustion it's tough to make money and keep going when so much of your time is tied up in activities that do not make you any money or that cost you money without offsetting income if you are thinking about starting your own business before you quit your job you might want to talk to an entrepreneur about how much time he or she spends on non income producing activities to run his or her business also ask how he or she handles this challenge the most important job of the entrepreneur begins before there is a business or employees the job of an entrepreneur is to design a business that can grow employ many people add value to its customers be a responsible corporate citizen bring prosperity to all those that work on the business be charitable and eventually no longer need the entrepreneur before there is a business a successful entrepreneur is designing this type of business in his or her mind's eye according to my Rich Dad this is the job of a true entrepreneur the cash flow quadrant explains that there are four different types of people that make up the world of business and they are often technically emotionally and mentally different people as a reminder let's review e stands for employee S stands for self-employed or small business owner B stands for big business owner over 500 employees i stands for investor for example an employee will always say the same words whether he is she is the president or janitor of the company an employee can always be heard saying I'm looking for a safe secure job with benefits the operative words are safe and secure the emotion of fear often keeps them boxed in that quadrant if they want to change quadrants not only are their skills and technical things to learn in many cases there were also emotional challenges to overcome a person in the S quadrant may be heard saying if you want it done right do it yourself in many cases this person's challenge is learning to trust other people to do a better job than he or she can this lack of trust often keeps them small since it's hard to grow a business without eventually trusting other people b quadrant people are always looking for good people and good business systems they do not necessarily want to do the work they want to build a business to do the work a true B Quadrant entrepreneur can grow his or her business all over the world and I quadrant person the investor is looking for a smart S or B to take care of his or her money and grow it as part of my entrepreneurial training with Rich Dad he encouraged his son and me to go out and study as many different types of business systems as we could he said how can you be an entrepreneur designing a business if you do not know about the different types of businesses and entrepreneurs Rich Dad was adamant and explaining that many entrepreneurs were not business owners but self-employed entrepreneurs entrepreneurs who owned a job not a business he said you are probably self-employed when your name is the name of the business your income stops if you stop working if clients come to see you your employees call you if there is a problem you may also be self-employed if you are the smartest most talented or the best educated person in your business he had nothing against self-employed entrepreneurs he simply wanted us to know the difference between entrepreneurs who owned businesses and those who owned jobs the main point rich dad was making about the difference between a self-employed entrepreneur and a big business entrepreneur was that many self-employed businesses had a tough time growing into a big business why again the answer is that the business was poorly designed before there was a business it was doomed before it was even started many professional people such as doctors lawyers accountants architects plumbers and electricians started a self-employed style of business based on a profession or a technical trade many of these professions and trades require government licenses to operate also included in this category are professional salespeople many of whom are licensed independent consultants such as real estate insurance and securities salespeople the problem with this type of business is that there is not really a business to sell because there really isn't a business outside the individual owner in many cases there really isn't an asset the business owner is the asset in my rich dad's mind it made no sense to work hard and not build an asset a very large category of is often referred to as mom-and-pop businesses this type of business gets its name because many small businesses are family businesses many people put their children in charge at the business even though their children may be incompetent because blood is thicker than water often the children don't share the passion for the business that their parents had or they don't have the entrepreneurial drive to lead the business a franchise such as McDonald's is in theory a turnkey operation the entrepreneur sells a ready-made business to a person who does not want to go through the creative and development phase of starting a business one advantage to some franchises is that banks are more inclined to lend money to someone who wants to buy a franchise then to a person who wants to start a business from scratch one of the biggest problems with big name franchises is that they are generally more expensive to get into and have little flexibility for a wannabe entrepreneur the network marketing and direct sales industry is recognized by many to be the fastest growing business model in the world today it is also the most controversial many people still have a negative reaction claiming that many network marketing organizations are pyramid schemes yet in reality the biggest pyramid scheme in the world is the traditional big business corporation with one person at the top and all the workers below everyone who wants to be an entrepreneur should take a look at a network marketing business some of the biggest fortune 500 companies such as Citibank Avon Levi's and Smith Varney distribute their products through a network marketing or direct sales system many of these companies provide essential sales business building and leadership skills not found anywhere else one of the most valuable benefits from associating with a reputable organization is that it teaches the mindset as well as the courage required to become an entrepreneur you will also become more familiar with the systems required to build a successful business the vast majority of businesses large and small are private companies a large private company is often referred to as a closely held company that generally means a company owned by just a few owners and ownership interests are not available to the public at large a public company is a company that sells shares of the business to the public at large most often through stockbrokers and other licensed Securities Dealers a public company sells its shares on a stock exchange like the New York Stock Exchange and operates under much more stringent rules than private companies rich Dan's lesson number one 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 most new entrepreneurs get excited about a new product or opportunity they think will make them rich unfortunately many of them focus on the product or opportunity rather than invest the time designing the business around the product or opportunity later we will introduce the bi triangle which outlines what components are required to create any business regardless if it is big or small once a person understands the different components that make up a business it becomes much easier to design businesses as well as evaluate good ones and bad ones also we always recommend 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 one of the reasons for the success of the Rich Dad Company was that the business was started by three already successful entrepreneurs Sharon Kim and me each of us brought our own experiences and perspectives to the team Sharon came from the background of the proverbial a student a certified public accountant who had migrated into the realm of entrepreneurship she had started and grown several companies of her own prior to starting the Rich Dad company with Kim and me as a bonus for you Sharon will provide her unique perspective and will share her own insights and experiences related to many of the lessons Sharon's insights to lesson number one a successful business has created before there is a business I can't tell you how many people tell us that they want to start their own business most often the conversation goes something like Sharon I am so excited about starting my own business Susan says I reply wonderful what type of business are you interested in Susan answers I want a business that provides good cash flow and that my employees can run so I have a lot of free time to spend with my family oh and I don't want to have to pay a lot for it at this point I know that Susan is not really an entrepreneur and may not be able to become one she truly does not understand the commitment required to build a successful business her comments I don't want to have to pay a lot for it and I want a business that provides a good cash flow tell me that she really wants to acquire a business that has already been built by a successful entrepreneur [Music] rich dad's entrepreneurial lesson number four success reveals your failures street smarts versus school smarts the bi triangle became more meaningful to me after my poor dad shut down his ice cream franchise in his 50s he had taken his early retirement money and his life savings and lost it all rather than start a new business he took a job as the head of the teachers union and went after his ex-boss the Governor of Hawaii demanding better wages and benefits for teachers instead of continuing learning from his mistakes and becoming a better entrepreneur he once again became an employee and an advocate for employee rights one reason why he did not rebound was because he was out of money instead of learning to raise capital for his next business venture he just took a job realizing that it was the lack of skill in the communications level that brought my dad down I applied for a job in sales at IBM and the Xerox Corporation it was not the paycheck but the sales training that I was applying for after two interviews it was obvious that IBM was not the company for me after five interviews at Xerox however I was on the shortlist of 10 candidates applying for four positions the final interview was with the honolulu branch manager on that day six of the ten finalists sat outside his office the other four candidates had already been interviewed at the time of the interview I was still in the marine corps and was dressed in my Marine Corps uniform the Vietnam War was still on and very unpopular in some circles which meant men in uniform were unpopular in those circles as well finally the secretary notified me that the big boss is ready to talk to me entering his office I took a seat in front of him reaching across the desk to shake my hand he wasted no time in saying I've reviewed your file you come highly recommended by the rest of my staff who interviewed you they believed you could be a valuable asset to our sales team I hate to tell you this but I'm gonna be the one who turns you down standing he extended his hand and said thank you for applying I asked with all due respect sir would you mind telling me why you're turning me down you haven't given me the Curtis see of an interview can you give me a specific reason why you're so sure I'm no longer a candidate okay if you must know you are the only applicant without an MBA you only have a bachelor's degree I said after graduating from the Merchant Marine Academy where I earned my bachelor's degree I spent five years in the marine corps fighting a war no one wanted to fight I did not have to go to war because I was employed by Standard Oil which made me draft exempt yet I volunteered anyway and now you're telling me that you're not going to hire me because I didn't go back to college to get my master's degree there was a war to fight and you're telling me that you'd rather hire draft dodgers who went to school we're not here to discuss the war or our political inclinations said the manager who was about my age and yes I am hiring people who went back to school go back get your MBA and then maybe we'll talk the manager holding the door open extended his hand for a week handshake with a weak smile I asked tell me something what does a college degree have to do with sales okay said the manager what makes you think you can sell mr. marine what makes you think you're better qualified to sell than these applicants who have more education than you because I've spent five years getting a different kind of education an education you cannot find in school while these kids were cramming for college exams I was flying a helicopter and a Vietcong machine-gun nests my education has been in leadership to bring out the best in my troops even though we were all terrified not only have you been trained in classrooms to think under pressure we've had to think under pressure in actual combat most important I've been trained to think of the mission before I think of myself to think of my men before I think of myself these college kids have been trained merely to kiss but for a higher grade I know your job is to beat IBM just as my job is to beat the Vietcong my Marine Corps education has prepared me to beat IBM just a minute the branch manager said softly please step back into my office I do have the power to make an exception in spite of our current hiring policy learning to sell was much harder for me than learning to fly I am a very shy person so knocking on the doors of strangers was a terrifying daily experience two years I was the worst salesperson on the Xerox sales team finally on the verge of being fired I called rich dad and asked for a meeting I explained to him that I was failing my sales numbers were down my income was down and I was always at the bottom of the list of salespeople what do you think my problem is how many cold calls do you make a day he asked three or four and a good day I replied most of the time I'm doing busy work at the office or hiding in some coffee shop working up the courage to go knock on another door I hate making cold sales calls I hate rejection I do not know anyone who likes rejection or making cold calls said Rich Dad yet I do know people who have learned to overcome their fear of rejection and the fear of making cold calls they became very successful people in spite of their fears so how can I stop failing I asked rich dad said the way to stop failing is to fail faster 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 for a few weeks I took rich dad's advice to heart and did my best to make more cold calls I knocked on door after door the problem was I was still not getting in front of the person I needed to talk to their secretaries were very skilled at keeping pesky sales people like me away from their bosses I called rich dad again and asked for advice he said keep your daytime job and find a sales job at night but find a sales job that will let you fail faster I found a charity that needed people to dial for dollars at night leaving my job at Xerox I would go uptown and dial for dollars from 7:00 p.m. to 9:30 p.m. for two and a half hours I failed as fast as I could over the phone instead of only making three to seven sales calls a day I was sometimes making over 20 sales calls in two and a half hours at night my rejection rate and failure rate went up but curiously as my failure rate went up so did my success and raising money the more calls I made the better I became at handling the rejections I learned what worked with the calls had succeeded and started changing my pitch based on the rejections and the successes the faster I failed at night for charity the more I succeeded at Xerox by day soon I was climbing up the list of salespeople rather than being at the bottom of the list rich dad explained to his son and me that there are four different types of business schools one the traditional business schools these schools are located at accredited colleges and universities and offered agreed programs such as an MBA program to the Family Business School many family businesses such as my rich dad's business are great places to get a business education if you are a member of the family 3 the corporate business school many businesses offer intern programs for promising young students after graduation the company hires them and then guides their career development for the business school of the streets this is the school entrepreneurs attend when they leave the security blanket of school family or the corporate world this is the school where your street smarts are developed in my life I have been fortunate enough to attend all four in one way or another while at Xerox I did attend a local university night school with the intent of receiving my MBA it was not for me the students for the most part we're looking to climb the corporate ladder whereas I wanted to build an own corporate ladders my friendship with Mike allowed me to attend a family business school via rich dad's businesses that was a great school for me simply because it lasted for years and rich dad was not only a successful real-world entrepreneur he was also a great teacher through the Xerox Corporation I attended one of the best corporate sales training programs in the world after receiving our classroom training we immediately hit the streets to practice what we learned in the classroom our sales managers were great teachers and mentors they kept us on track with classroom Theory applied to real-world challenges found on the street but the toughest business school for me was the business school of the streets many times I came face to face with my greatest fears and the depths of personal self-doubt yet it was also the best business school for me instead of A's and B's as grades street grades are measured in dollars earned or dollars lost [Music] lesson number four success reveals your failures another of rich dad's lessons was success reveals your failures again I did not know what he meant until my own business had become successful our nylon surfer wallet business was successful at the communications level and the product level the problem was we were too well trained at the two levels and our success was too great too soon it was I cooking up a plastic garden hose to a fire hydrant as soon as international success put pressure on the system the whole business blew our strengths and revealed our weaknesses our success had revealed our failures we had failed to strengthen the legal the systems and the cashflow levels of the bi triangle after our venture collapsed two of my partner's left the business I wanted to quit also but which dad said rebuild the business it will be the business school you have been waiting for for the next six years I went back to the drawing board many times each failure was less painful and the recovery was quicker each time I failed I knew what I had to study next after my first two partners left and things looked bleak asst two new partners showed up they brought in some money but more important they brought in a new vitality and new skills one new partner Dave brought experience in the system's level of the business he was excellent at manufacturing my brother John came in to handle the cash flow level he was excellent at keeping our creditors happy and suppliers supplying we also brought in a new adviser a retired senior auditor from an accounting firm to help us straighten out our mess to be a successful entrepreneur you and your team need to be school smart and street smart when you look at the bi triangle you can see why while all five levels require street smarts the legal and cash flow levels really do require a school trained professional obviously for the legal level you want an attorney and for the cashflow level you want an accountant preferably a CPA to win in business ultimately it is team smarts that wins when it comes to legal and accounting professionals I've noticed three basic mistakes entrepreneurs make one the entrepreneur does not have or does not seek proper legal and accounting advice before setting up his or her business to the entrepreneur listens to his or her accountant or attorney too much always remember even if they are smarter than you in certain subjects you need to decide the course of your business 3 the entrepreneur has an accountant or attorney who is not part of the entrepreneurs team this does not mean you have to employ them full time it simply means you need to trust them the difference between school smarts and street smarts my Rich Dad said if you are to develop as an entrepreneur you will need to develop all four areas of yourself these are a thinker analytical skills critical thinker C thinker creative thinker flexible logic T thinker technical skills expertise P thinker people skills personal leadership I will briefly explain each quadrant a thinker we all know people with great analytical skills if you offer a new idea they will probably be critical or cynical more than open to the new idea before making a decision they will come back to you and ask for more details see thinker we all know people who are creative artists in their work they like to see the big picture they think outside the box flexible logic means they are flexible and what makes sense to them for example when I say I can make more money when the market is crashing see thinkers may be better able to grasp that logic more than an a thinker t thinker we all know people who are technical wizards they may be computer Wizards who speak a language found only on Mars or they may be motor heads who think everyone knows how to drop a transmission and fix it P thinker in high school the strongest P thinkers often ran for student body officer or were voted most popular these people can start a conversation with anyone at a party P thinkers are the stars in business the staff and employees love this person each different type of thinker will be attracted to different types of entrepreneurial businesses for example a tea thinker Motorhead may enjoy opening an auto parts store and a thinker lawyer may like opening a law practice a C thinking medical doctor may want to become a cosmetic surgeon and P thinkers may become perpetual politicians always running for office they may also become a minister ministering to their flock or they may become entertainers getting paid to be the center of attention 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 one of the reasons why my nylon surfer wallet business failed was that we were too strong in the C and P categories and very weak in the a and T categories Rich Dad was concerned about my becoming an entrepreneur because I was weak in all four categories I was not strong as an a T P or C thinker he said you have to find one category and become good at it on a legal tablet he wrote down the five jobs of the BI triangle one product two legal three systems for communications five cash flow he then said I don't think you have a realistic chance in the legal systems or cashflow levels of the BI triangle I don't think you'll ever go back to school and become a lawyer accountant or engineer that leaves the product level and the communications level choose one and commit the rest of your life to being the best at that level and that is how I decided to leave the Marine Corps and work for the Xerox Corporation in 1974 I decided my best chance for success as an entrepreneur was to be an expert at communicating to people 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 it is very to strive to be as smart as you can be both in street smarts and in school smarts [Music] rich dad's entrepreneurial lesson number five 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 explaining he would say if you ask most people who wants to be a millionaire most people would raise their hand that would mean they have a goal of becoming a millionaire but now they need to choose the process for achieving that goal there are many ways a person can reach their goal of becoming a millionaire Rich Dad said the reason the process is more important than the goal is that the process determines who you become in attaining your goals some examples of this are one you can become rich by inheriting money but most of us know if we stand to inherit money two you can become rich by marrying for money the problem is we all know who and what you become in the process it is the oldest profession in the world 3 you can become rich by being cheap the problem is if you become rich by being cheap at the end of the process you are still cheap and the world hates rich cheap people in fact the rich cheap people of the world give rich people a bad name for you can become rich by being a crook the problem is at the end of the process you are a rich crook with crooked friends honest rich people do not like crooked rich people 5 you can become rich by being lucky you can be born with great talent as many athletes and actors are you can win the lottery you can be born rich or you can just happen to be in the right place at the right time the problem is if you lose the money you have to count on luck to get the money back 6 you can become rich by becoming a smart entrepreneur to become a rich entrepreneur you need to become a smart entrepreneur the reason I like this process of becoming rich is that the process requires you to become smart if you lose your money this process we'll teach you how to get it back and become even smarter in the process the educational process of becoming an entrepreneur requires the entrepreneur to learn and gain experience in the five levels of the BI triangle once a person becomes somewhat proficient in all five levels life is pretty good it took me about 10 years as an undergraduate student of the business school of the streets to attain a basic level of proficiency can a person attain proficiency at all five levels faster absolutely most want to be entrepreneurs focus on the product level the top level of the BI triangle while the product is important cash flow is the base level with the most area allocated to it in the diagram when I first started out as a professional entrepreneur I used to get excited looking at new products or ideas that is how I got caught up in the nylon wallet business the nylon wallet was just one of about 50 different product ideas we considered it was not long before we were hitting the streets looking for investors most potential investors were polite and took time to look at our product and its packaging then if they were interested they all asked the same questions may I see your numbers what are your projections when we did not have them we were turned down quickly even Rich Dad turned us down but he did not turn us down politely he was furious kicking my two partners out of his office he closed the door behind him and gave me one of the most severe reprimands I have ever had from either of my dads the lesson is for successful businesspeople and investors the numbers are very important today older wiser and much wealthier whenever I am asked to evaluate a new product or business I ask for the numbers and then ask someone who is trained at reading the numbers to go over the numbers with me my level of expertise is the communications level and I do go over that portion of the business plan carefully that I am pretty good at the communications level and not that good at the cash flow level is not an excuse for me to ignore the cash flow level or any level for that matter one of the primary reasons I created the cashflow boardgame is the reprimand my Rich Dad gave me back in the night 70s for most of my life Rich Dad had been emphasizing the importance of the numbers it was not until he chewed me out when I lost so much money that I began to understand why he put such emphasis on the numbers the game serves as a communication bridge between you and your accountant the game will give you the advantage of being more familiar with the tee thinking and a thinking logic of the accounting profession if you're like me weak at the subject of accounting and numbers I strongly suggest you use the cash flow games as an educational tool when wannabe entrepreneurs call looking for money they fall into two categories they are one those with a business plan and financial projections two 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 if I am interested I may suggest they go back to the drawing board follow the BI triangle as an outline and then hire an accountant and come up with a business plan which includes a set of numbers whenever someone asks how do I raise money for my business I respond by asking do you have a business plan 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 this does not mean that the numbers of the business plan are cast in stone the financial results of most start-up businesses do not typically follow the plan or precisely meet the projections 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 a plan simply lets the potential investors 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 entrepreneurs ideas are off the company's most important assets the attorneys job is to protect the company its products and its intellectual property before there is a product or a business one reason why your banker does not ask you for your school report card or your grade point average or what subject you majored in is that a banker is not looking for a measure of your academic intelligence your banker is looking for your level of financial intelligence which indicates your level of financial responsibility how much you earn what you spend your money on and how much you keep when looking at the numbers forecasts or actual there are certain items that are red flags for me they are red flag salaries more than a paycheck what is more important to the entrepreneurs the business or their personal lives a friend of mine consulted with a building maintenance company that was having cashflow problems in Denver the business had great contracts with offices and apartment houses to keep the parking areas swept in summer and free of snow in winter with low overhead and high margins the company should have been doing well instead the business was always in financial trouble upon further inspection my friend found that the owner had expensive ski chalets in Vail and Aspen on top of that the company had flashy cars and threw lavish parties all at company expense to make matters even worse he had been lying to the IRS and the state tax department and his actions were starting to border on tax evasion rather than tax avoidance when my friend recommended that he sell his houses and his cars cut back on his spending and hire a high-powered accounting firm to beg for mercy my friend was fired the owner still thought there was something wrong with the business this is an extreme example of an entrepreneur putting his needs before the needs of the business red flag 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 the rich are rich because they have expenses that make them rich the poor are poor because they have expenses that make them poor one of the downfalls of my nylons surfer wallet business was my desire to save money and not spend seven thousand dollars on patent attorney fees that saving of a few thousand dollars cost me a multi-million dollar business my lesson was to learn to spend money that made me money [Music] one of the reasons that bi triangle is named after the B and I quadrants of the cash flow quadrant is that on the right side of the quadrant an individual must know how to spend money and get that money back with a respectable return one of the reasons why people on the E and s side of the quadrant have a tough time as entrepreneurs is simply that they know how to work for money but they do not know how to spend money and then have the money come back with more money this ability to spend money and have your money come back with more money is essential to entrepreneurs and investors on the B and I side of the quadrant red flag 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 BI triangle a few years ago I read an article about a couple who were both laid off after September 11th both were highly paid marketing executives making over $250,000 combined income with a major New York firm after a year in their own business as marketing experts their business earned less than $26,000 suddenly they found out that owning a business does not mean simply working hard and being busy owning a business means your activities show up directly to the bottom line as money made and money lost that is why the cash flow level is the base of the BI triangle Sharon's insights to lesson number 5 the process is more important than the goal understanding cash flow and cash management is an absolute necessity for any entrepreneur or business owner starting a business almost always costs more than an entrepreneur expects what are your sources of cash how much money are you investing how much investor money are you intending to raise are you borrowing money to start the business do you have a joint venture partner willing to produce the product with their dollars and resources for a share of the profit will your customer pay at the time of sale or do you need to extend credit if you need to extend credit to your customer how long will it take to collect on your receivables what level of bad debt should you expect from your customers how many production cycles will it take before you start seeing positive cash flow can you license your product to other companies that are in different industries so they don't compete with you and collect royalty payments can you license your product to other companies that are in different geographical territories so they don't compete with you and collect royalty payments what are your uses of cash do you have an idea for a product do you protect your product do you plan the business around the idea or product do you need to pay your advisors for their consultation do you need to build a prototype do you need to find your source of goods your suppliers can you negotiate payment terms with your suppliers do you need an office a warehouse a vehicle what kind of office supplies do you need what kind of office equipment do you need computers copiers how long will it take for you to produce your goods how many employees will you need at what pay levels at what stage of development how much salary do you and your team required during the initial stage of the business how much money will you need and when will you need it to produce the goods how will you package your product how much will it cost how will you promote your product will you create a website do you have credit card processing set up for your customer orders how much will your marketing materials cost where will you store your inventory how much will it cost to get the inventory to your warehouse how long is the production cycle to replenish your inventory how will you take orders how will you ship orders what types of insurance do you need how will the insurance cost how will you process returns of your product how will you handle customer service related to your products if you have debt how much interest or debt service will you owe how many production cycles will you go through before you start seeing collections on your sales cycles I know these questions can appear overwhelming but a potential investor will want to see the answers to these questions thoroughly examined and planned for in determining the cash needs of the business as an integral part of the business plan this is where the skill of an excellent accountant will be invaluable in helping you create the plan for your cash requirements when cash becomes tight the entrepreneur loses focus on building the business and starts focusing on survival it's Friday and I can't make payroll I have to pay my supplier before he will ship my goods and I don't have enough cash I have large accounts receivable but no cash in the bank the bank just put a hold on her credit card deposits when I start hearing these statements in a company they are the red flags that rich dad spoke to Robert about the entrepreneur enters a critical time in his or her business if he or she cannot stop these types of cash emergencies from taking his or her focus away from building the business as an entrepreneur ask yourself how you are spending your time in the beginning all your time is spent on the future developing the product and the systems to create and launch the business as the business grows its demand on the entrepreneurs time will automatically change day to day operations become important legal and accounting issues must be addressed I have a wonderful exercise I learned from a friend who learned it at a seminar I would love to give credit to the source but I don't know where it originated ask yourself the following questions as it relates to your business what percentage of time are you spending on the future what percentage of time are you spending on the present what percent time are you spending on the past in analyzing your time I would identify the following tasks and how they might be categorized future marketing public relations research and development strategic partnerships licensing new deals cash projections and requirements good legal issues present sales order taking shipping and receiving customer service cash requirements past accounting bad legal issues compliance requirements with federal state or local governments or regulatory agencies employee reviews the right answer for your business may not be the same as the right answer for my business typically I encourage 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 when an issue arises that requires the entrepreneur to focus attention on present or past issues have a process planned that will allow other people on your team to increase their focus on the future which dad's entrepreneurial lesson number eight design a business that can do something that no other business can do what is the job of a business leader a leaders 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 I use the BI triangle to further clarify this point when I was in the S quadrant our products were the business school for entrepreneurs and the business school for investors the problem with the business was that I was too much a part of the product as well as the rest of the bi triangle if I was going to be a leader I needed to stop and completely redesign the business trying to fix a poorly designed business while the business is running it's like trying to change a flat tire while the car is still moving that is why Kim and I stopped and took two years off before starting a new business in 1996 when I came out of the mountains around Bisbee Arizona all I had were pencil sketches of the cash flow game board a rough draft of Rich Dad Poor Dad in my computer and a simple two-page business plan as the sole employee of my yet to be formed company I knew my next step was to find the right people and put a team together sketching the game board was the easy part finding someone who could engineer the information systems required to make the game work was the first step the game had to be engineered to literally change the way people think about money at that time there was only one person I knew who had such a mind and that was an old friend named Ralph parta fondly known as Spock we call him spot because he looks like Leonard Nimoy of Star Trek Fame he also happens to be as smart as the character Nimoy plays this is where the four types of thinking are important for this phase of the business I brought these see thinking and P thinking to the project I was creative enough to sketch a crude game board design and I understood how people learn from my 10 years of teaching Spock brought the T thinking and a thinking to the project arriving at his home I spread my crude sketches and diagrams on his dining room table about an hour into the discussion Spock's eyes lit up he was beginning to understand the people and creative side why do people need this game he asked this is common sense chuckling I replied to you it's common sense you have an MBA you're a CPA and a former banker but to the average person this is a foreign language for many people this is a radically new way of thinking Spock grinned give me three months and I'll give you what you want we agreed upon a price for his services shook hands and I left feeling confident I'd found the right person for the task three months later and after much interaction with me he had all the complex mathematical equations done I had done my part and made better crude sketches together Kim Spock and I played the game surprisingly the game ran well it was a tough game but the numbers worked the lessons were revealed and we were happy the next person they went to see was my collector the attorney on our team Mike began the process of filing for patents trademarks and other legal fences to protect my intellectual property as you may have already guessed I was now building a new bi triangle as entrepreneurs Kim and I were clear on our mission now as leaders of the project and using the five levels inside the triangle as a guide we were putting together a team after about a month my collector called and said you can now move forward and show your game to other people we do not have a patent yet but I filed the application and you've staked your claim you still need to have people signed confidentiality agreements before they see your product as you may recall this is the step I left out when I created the runners shoe pocket wallet would you mind if I told my wife Sharon about your game Mike said she's a trained CPA she's worked for one of the big accounting firms and she started several businesses but the real reason I'd like to tell her about what you're doing is that she shares your mission she's passionate about teaching people about money I think she would be really interested would you mind if I tell her just the broad strokes not the details no please do I replied hesitantly but please remind her that I am NOT a CPA just like rich dad I am one of those people who have no formal training in any of the levels of the BI triangle as I spent time creating the game the idea that I a person with no formal accounting training was creating a game that taught the basics of accounting was a little daunting for the next few weeks Kim Spock and I worked to get our prototype games ready we had played the game with a number of our friends and the game worked well the reason the game worked well is that all of our friends are professional investors now we were about to beta test the game a beta test is a trial run to see if the game works on normal people we reserved a hotel conference room enough for about 20 people and then began calling people mostly strangers to come and play just when we thought we were going to be short of people Mike called and said hey would you mind if I brought my wife and daughter to the beta test your wife I gulped the CPA yeah I think she'd get a kick out of it okay I said weekly and how old is your daughter she's 19 in fact she's on her way to college that day I think it'd be great if she were there too one bright Saturday morning in what nine people one who agreed to be there simply did not show up Sharon Mike and their daughter Shelly were prompt after a few niceties the game was on there were two tables one table with four people and one with five after about three hours Sharon raised her hand to signal she had won her game the game had worked for one person and the game went on and on and on as the two tables ground on and on Sharon stood and left taking her daughter with her she had told us ahead of time that she needed to get on the road to take Shelly to Tucson where she was a student at the University of Arizona finally at about 1:00 p.m. we shut the game down frustration was so high I thought fights were about to break out no one else had gotten out of the rat race no one else had won the game we called Sharon and set up a meeting I loved the game said Sharon it's better than I expected when I saw the components of the game job's financial statements and the amount of math to do I was concerned that it would be boring but it brings everything together Thanks I said I know you are a CPA you have no idea how nervous that made me this took place in the summer of 1996 Kim and I then went forward and hired Kevin stock a fabulous graphic artist to bring the game to life Kevin then shipped his work to a game manufacturing company in Canada in November 1996 the commercial version of the game was played at a friend's investment seminar in Las Vegas Nevada the game worked participants loved the game the paradigm shifts we wanted were happening immediately we flew to Singapore to another friend's investment workshop and once again the game did its magic while Kim and I were showing the game off to the world Sharon volunteered to look at the rough draft of the book sitting in my computer she transformed a hodgepodge of stories about lessons that I learned from my rich dad into Rich Dad Poor Dad on April 8 1997 the book was launched at Sharon and Mike's home on my fiftieth birthday soon there after Sharon Kim and I formed the Rich Dad company my training as a military officer required we know the difference between a tactic and a strategy in very simple terms a tactic is what you do a strategy is the plan on how to get the tactic done one of my military science instructors was adamant about the importance of using a single tactic multiple strategy of warfare to win he would say a military leader must focus on one objective or tactic he must only want to do one thing everything else is a strategy on how to get that one tactic done he would then use examples of military conflict after military conflict that was won by the leader that had the best strategies focused on a single tactic when I entered the business world I carried his lessons with me soon I began to seek companies that use the single tactic multiple strategy type of planning where companies that won in business for example Domino's Pizza started with a single tactic to beat its competition to distinguish itself in the Pizza wars Domino's designed a company around a single tactic and that tactic was to promise pizza in 30 minutes or less to make that single tactic a reality the company then had multiple strategic plans once Domino's entered the marketplace it immediately began taking market share from its competitors competitors such as Pizza Hut could not compete because the business was not designed to meet such a promise when I was in the Arizona mountains the very simple business plan I came up with was based upon one single tactic and three strategies the first page of the simple two page plan sounded like this tactic played the cashflow game strategies one write a book to do an infomercial three teach investment seminars using the game on the second page I wrote a brief plan on how I thought I could accomplish the three strategies the single tactic was to get as many people as possible to play the game I knew that if I created a great game and people played it their lives would change they would be able to see another world of opportunity that was it I knew successful I would make money from the strategies as well as the single tactic the first lesson always have a low-risk idea or strategy to fall back on Rich Dad taught me that whenever you start a business or invest in something you need to have a low-risk idea for example when investing in real estate if the investment paid me something each and every month that was a low-risk investment even if the property did not go up in value I was still receiving some compensation for my investment dollars the strategy of teaching investment seminars using the game was my low-risk idea since I came from the seminar business I knew that if the other two strategies did not work and no one wanted my game I could recoup my investment in the product development of the game simply by putting on investment seminars the second lesson designed the business around a unique tactical advantage in my plan by having the tactic be to play the game i virtually eliminated all competition because if the legal work was strong no one else could do what our business did no one else has our cash flow games as rich dad said design a business that can do something that no other business can do the plan worked once I saw the article about the cash flow game in the New York Times I knew my job as an entrepreneur was over Sharon Kim and I had taken the business as far as the three of us could take it we knew it was time for a new team in summer 2004 our new team took over their jobs as leaders r1 clearly define the mission goals and vision of the company to 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 [Music] rich dad's entrepreneurial lesson number nine don't fight for the bargain-basement how to find good customers one day during my junior year of high school rich dad and I were walking past an entrance to a hotel when we heard a man's voice shouting loudly I will not pay you another dime you have not kept your agreement I saw a family of five with a very upset father yelling at a local man in a Hawaiian print shirt but all you have paid is a deposit that local man protested you still owe us the balance I cannot let you check in until the balance is paid you were to have paid your balance in full a month ago you're lucky we even held your rooms for you this is our peak season it's a good thing you did hold our rooms for us snarl the father you'd have heard from my attorney if you didn't I still need to be paid said the local man holding his ground I told you I will pay you don't you have ears just check us in and I will pay you the father growled I have a check right here made out to you let us get into our room and we will settle this once and for all this was the era before credit cards you need to pay in cash a check will not do that is why we asked you to pay in full in advance and gives us time to clear a personal check he'll never get paid said Rich Dad as we continued how do you know I asked we dealt with the same guy three years ago he did the same thing to us he's going to go to the room write the check and then stop payment on it what happened after he stopped payment I asked by the time we found out his check was no good he had already checked out when we threatened to take him to court he agreed to pay us half of what he owed since it would have cost more to take him to court we agreed even then it was six months before he paid anything I asked is this common in business yes you will always have good customers and bad customers fortunately I found that about 80% of all customers are good customers five percent are like him just horrible and the other 15% are in-between replied rich dad Oh on top of that the same guy had the nerve to call again last year and try to book a tour package with us what nerve did you do business with him are you kidding laughs riched I'd already fired him you fire customers I asked in surprise absolutely said rich dad 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 the same is true with advisors you must be able to fire bad advisers the ultimate price of bad advice is far more than what you pay your advisers and fees for good advice I had one accountant give me bad tax advice and it cost me nearly $60,000 in back taxes and penalties on top of that had caused me another $12,000 to hire another accounting firm to straighten up the mess in addition this mistake upset me so much I was not effective for months and the business suffered as a result so as an entrepreneur you must realize that you are responsible for your mistakes as well as the mistakes of others if you cannot hire and fire people including yourself you should not be an entrepreneur Rich Dad said a business is a working model of human conflict it is a melting pot of egos that is always boiling when you look at the BI triangle you will understand why 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 Salesman made promises the company cannot keep the customer is irate your attorney will not agree with your accountants assembly line workers will not agree with the engineers who designed the assembly line management is a war with labor technical people are fighting with creative people analytical people do not get along with people people college-educated people feel they're smarter than people who did not go to college add to this interoffice politics or worse sexual Affairs within the company and you will never need to watch TV again so that is why an entrepreneur needs to know when to fire someone if one person upsets the balance the whole business can boil over because the internal friction gets too great exactly smile rich dad that is why every team has a coach a band has a conductor and every business has a leader a leaders job is to turn people into teams one of the reasons so many people are self-employed or owned businesses that stay small is that the leader is either not competent with dealing with people or simply does not want to learn to deal with so many different people rich dad continued let me give you three tips I learned about dealing with people in business 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 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 and what is tip number two I asked learn to hire slow and fire fast said Rich Dad take the hiring of people very seriously and slowly screen them carefully and if it is time to let them go do it quickly too many managers allow people too many chances 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 all people need to be treated with the appropriate dignity many times and I have let people go they were happy to move on I have found that if people are acting up or underperforming it is not because they are lazy many are simply unhappy for a number of reasons if you as a leader can find a way to make them happy find it and what is the third lesson I asked the third lesson is that there are two kinds of communicators said Rich Dad when upset or unhappy one type of communicator will come talk to you face-to-face they lay the cards on the table in front of you and the second I asked the second type stabs you in the back they gossip talked badly about you spread rumors or complain to everyone else but never to your face basically these people are cowards they lack the courage to confront you to be forthright often they will blame you for their lack of courage saying you are too mean or will not listen or they were afraid of being fired their perceptions about you could be true but generally these people would choose to talk behind a person's back rather than face to face it's just in their nature so how do you handle that I ask well one way is it every meeting I remind my staff of the two types of communicators and leave it at that I say to them there are people who speak to you face-to-face and there are others who speak behind your back which one are you once the rest of the company is aware of the two types they generally remind someone who was gossiping or stabbing someone in the back about the two types of people it doesn't totally stop the gossiping but it does keep it down and in general overall communication improves I also tell them that I would prefer to be stabbed in the chest and stabbed in the back have you been stabbed in the chest I asked Oh a number of times and I deserved it I need to be corrected and reminded to be open-minded as much as anyone else aren't people afraid of being fired oh there was always that risk smiled rich dad that is why it takes courage and excellent communication skills to be successful in business in many instances it is not what you say but how you say it and always remember that communication does not mean talking communication also includes listening the reason God gave us two ears and one mouth is to remind us to listen more than speak so being an entrepreneur is a lot about people and the communication skills needed to communicate to them Rich Dad agreed and continued saying leadership requires great communication skills one of your first steps in your leadership development is to develop the courage to be a face-to-face communicator and to work on developing your communication skills remember that just because you're talking you're not necessarily communicating how to find good customers in business a very important word is the word margin it is as important a term as cash flow in fact both terms are intricately related in overly simple terms margin is the difference between what it costs to produce your product and the price you sell your product for for example let's say costs you two dollars to manufacture your widget and you sell your widget for $10 in this case your gross margin is $8 there are three reasons why a product's gross margin is so important they are one the gross margin finances the rest of the bi triangle margin pays for the teams salaries legal fees operating the company systems marketing and accounting also known as operating expenses - margin determines the price of your product obviously the more margin the higher the price of your product three product and price determine your customer you don't have the RLB arrive to lead the business a franchise such as McDonald's is in theory a turnkey operation the entrepreneur sells a ready-made business to a person who does not want to go through the creative and development phase of starting a business one advantage to some franchises is that banks are more inclined to lend money to someone who wants to buy a franchise then to a person who wants to start a business from scratch one of the biggest problems with big name franchises is that they are generally more expensive to get into and have little flexibility for a wannabe entrepreneur the network marketing and direct sales industry is recognized by many to be the fastest growing business model in the world today it is also the most controversial many people still have a negative reaction claiming that many network marketing organizations are pyramid schemes yet in reality the biggest pyramid scheme in the world is the traditional big business corporation with one person at the top and all the workers below everyone who wants to be an entrepreneur should take a look at a network marketing business some of the biggest fortune 500 companies such as Citibank Avon Levi's and Smith varney distribute their products through a network marketing or direct sales system many of these companies provide essential sales business building and leadership skills not found anywhere else one of the most valuable benefits from associating with a reputable organization is that it teaches the mindset as well as the courage required to become an entrepreneur nor you will also become more familiar with the systems required to build a successful business the vast majority of businesses large and small are private companies a large private company is often referred to as a closely held company that generally means a company owned by just a few owners and ownership interests are not available to the public at large a public company is a company that sells shares of the business to the public at large most often through stockbrokers and other licensed Securities Dealers a public company sells its shares on a stock exchange like the New York Stock Exchange and operates under much more stringent rules than private companies rich dad's lesson number one 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 most new entrepreneurs get excited about a new product or opportunity they think will make them rich unfortunately many of them focus on the product or opportunity rather than invest the time designing the business around the product or opportunity later we will introduce the bi triangle which outlines what components are required to create any business regardless if it is big or small once a person understands the different components that make up a business it becomes much easier to design businesses as well as evaluate good ones and bad ones also we always recommend 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 one of the reasons for the success of the Rich Dad Company was that the business was started by three already successful entrepreneurs Sharon Kim and me each of us brought our own experiences and perspectives to the team Sharon came from the background of the proverbial a student a certified public accountant who had migrated into the realm of entrepreneurship she had started and grown several companies of her own prior to starting the Rich Dad company with Kim and me as a bonus for you Sharon will provide her unique perspective and will share her own in and experiences related to many of the lessons Sharon's insights to lesson number one a successful business has created before there is a business I can't tell you how many people tell us that they want to start their own business most often the conversation goes something like Sharon I am so excited about starting my own business Susan says I reply wonderful what type of business are you interested in Susan answers I want a business that provides good cash flow and that my employees can run so I have a lot of free time to spend with my family oh and I don't want to have to pay a lot for it at this point I know that Susan is not really an entrepreneur and may not be able to become one she truly does not understand the commitment required to build a successful business her comments I don't want to have to pay a lot for it and I want a business that provides a good cash flow tell me that she really wants to acquire a business that has already been built by a successful entrepreneur [Music] rich dad's entrepreneurial lesson number four success reveals your failures street smarts versus school smarts the bi triangle became more meaningful to me after my poor dad shut down his ice cream franchise in his 50s he had taken his early retirement money and his life savings and lost it all rather than start a new business he took a job as the head of the teachers union and went after his ex-boss the Governor of Hawaii demanding better wages and benefits for teachers instead of continuing learning from his mistakes and becoming a better entrepreneur he once again became an employee and an advocate for employee rights one reason why he did not rebound was because he was out of money instead of learning to raise capital for his next business venture he just took a job realizing that it was the lack of skill in the communications level that brought my dad down I applied for a job in sales at IBM and the Xerox Corporation it was not the paycheck but the sales training that I was applying for after two interviews it was obvious that IBM was not the company for me after five interviews at Xerox however I was on the shortlist of 10 candidates applying for four positions the final interview was with the honolulu branch manager on that day six of the ten finalists sat outside his office the other four candidates had already been interviewed at the time of the interview I was still in the marine corps and was dressed in my Marine Corps uniform the Vietnam War was still on and very unpopular in some circles which meant men in uniform were unpopular in those circles as well finally the secretary notified me that the big boss is ready to talk to me entering his office I took a seat in front of him reaching across the desk to shake my hand he wasted no time in saying I've reviewed your file you come highly recommended by the rest of my staff who interviewed you they believed you could be a valuable asset to our sales team I hate to tell you this but I'm gonna be the one who turns you down standing he extended his hand and said thank you for applying I asked with all due respect sir would you mind telling me why you're turning me down you haven't given me the Curtis see of an interview can you give me a specific reason why you're so sure I'm no longer a candidate okay if you must know you are the only applicant without an MBA you only have a bachelor's degree I said after graduating from the Merchant Marine Academy where I earned my bachelor's degree I spent five years in the marine corps fighting a war no one wanted to fight I did not have to go to war because I was employed by Standard Oil which made me draft exempt yet I volunteered anyway and now you're telling me that you're not going to hire me because I didn't go back to college to get my master's degree there was a war to fight and you're telling me that you'd rather hire draft dodgers who went to school we're not here to discuss the war or our political inclinations said the manager who was about my age and yes I am hiring people who went back to school go back get your MBA and then maybe we'll talk the manager holding the door open extended his hand for a week handshake with a weak smile I asked tell me something what does a college degree have to do with sales okay said the manager what makes you think you can sell mr. marine what makes you think you're better qualified to sell than these applicants who have more education than you because I've spent five years getting a different kind of education an education you cannot find in school while these kids were cramming for college exams I was flying a helicopter and a Vietcong machine-gun nests my education has been in leadership to bring out the best in my troops even though we were all terrified not only have you been trained in classrooms to think under pressure we've had to think under pressure in actual combat most important I've been trained to think of the mission before I think of myself to think of my men before I think of myself these college kids have been trained merely to kiss but for a higher grade I know your job is to beat IBM just as my job is to beat the Vietcong my Marine Corps education has prepared me to beat IBM just a minute the branch manager said softly please step back into my office I do have the power to make an exception in spite of our current hiring policy learning to sell was much harder for me than learning to fly I am a very shy person so knocking on the doors of strangers was a terrifying daily experience for two years I was the worst salesperson on the Xerox sales team finally on the verge of being fired I called rich dad and asked for a meeting I explained to him that I was failing my sales numbers were down my income was down and I was always at the bottom of the list of salespeople what do you think my problem is how many cold calls do you make a day he asked three or four and a good day I replied most of the time I'm doing busy work at the office or hiding in some coffee shop working up the courage to go knock on another door I hate making cold sales calls I hate rejection I do not know anyone who likes rejection or making cold calls said Rich Dad yet I do know people who have learned to overcome their fear of rejection and the fear of making cold calls they became very successful people in spite of their fears so how can I stop failing I asked rich dad said the way to stop failing is to fail faster 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 for a few weeks I took rich dad's advice to heart and did my best to make more cold calls I knocked on door after door the problem was I was still not getting in front of the person I needed to talk to their secretaries were very skilled at keeping pesky sales people like me away from their bosses I called rich dad again and asked for advice he said keep your daytime job and find a sales job at night but find a sales job that will let you fail faster I found a charity that needed people to dial for dollars at night leaving my job at Xerox I would go uptown and dial for dollars from 7:00 p.m. to 9:30 p.m. for two and a half hours I failed as fast as I could over the phone instead of only making three to seven sales calls a day I was sometimes making over 20 sales calls in two and a half hours at night my rejection rate and failure rate went up but curiously as my failure rate went up so did my success in raising money the more calls I made the better I became at handling the rejections I learned what worked with the calls that succeeded and started changing my pitch based on the rejections and the six the faster I failed at night for charity the more I succeeded at Xerox by day soon I was climbing up the list of salespeople rather than being at the bottom of the list rich dad explained to his son and me that there are four different types of business schools one the traditional business schools these schools are located at accredited colleges and universities and offered agreed programs such as an MBA program to the Family Business School many family businesses such as my rich dad's business are great places to get a business education if you are a member of the family 3 the corporate business school many businesses offer intern programs for promising young students after graduation the company hires them and then guides their career development for the business school of the streets this is the school entrepreneurs attend when they leave the security blanket of school family or the corporate world this is the school where your street smarts are developed in my life I have been fortunate enough to attend all four in one way or another while at Xerox I did attend a local university night school with the intent of receiving my MBA it was not for me the students for the most part we're looking to climb the corporate ladder whereas I wanted to build an own corporate ladders my friendship with Mike allowed me to attend a family business school via rich dad's businesses that was a great school for me simply because it lasted for years and rich dad was not only a successful real-world entrepreneur he was also a great teacher through the Xerox Corporation I attended one of the best corporate sales training programs in the world after receiving our classroom training we immediately hit the streets to practice what we learned in the classroom our sales managers were great teachers and mentors they kept us on track with classroom Theory applied to real-world challenges found on the street but the toughest business school for me was the business school of the streets many times I came face to face with my greatest fears and the depths of personal self-doubt yet it was also the best business school for me instead of A's and B's as grades street grades are measured in dollars earned or dollars lost [Music] lesson number four success reveals your failures another of rich dad's lessons was success reveals your failures again I did not know what he meant until my own business had become successful our nylon surfer wallet business was successful at the communications level and the product level the problem was we were too well trained at the two levels and our success was too great too soon it was I cooking up a plastic garden hose to a fire hydrant as soon as international success put pressure on the system the whole business blew our strengths and revealed our weaknesses our success had revealed our failures we had failed to strengthen the legal the systems and the cashflow levels of the bi triangle after our venture collapsed two of my partner's left the business I wanted to quit also but which dad said rebuild the business it will be the business school you have been waiting for for the next six years I went back to the drawing board many times each failure was less painful and the recovery was quicker each time I failed I knew what I had to study next after my first two partners left and things looked bleak esc' two new partners showed up they brought in some money but more important they brought in a new vitality and new skills one new partner Dave brought experienced in the system's level of the business he was excellent at manufacturing my brother John came in to handle the cashflow level he was excellent at keeping our creditors happy and suppliers supplying we also brought in a new adviser a retired senior auditor from an accounting firm to help us straighten out our mess to be a successful entrepreneur you and your team need to be school smart and street smart when you look at the bi triangle you can see why while all five levels require street smarts the legal and cash flow levels really do require a school trained professional obviously for the legal level you want an attorney and for the cashflow level you want an accountant preferably a CPA to win in business ultimately it is team smarts that wins when it comes to legal and accounting professionals I've noticed three basic mistakes entrepreneurs make one the entrepreneur does not have or does not seek proper legal and accounting advice before setting up his or her business to the entrepreneur listens to his or her accountant or attorney too much always remember even if they are smarter than you in certain subjects you need to decide the course of your business 3 the entrepreneur has an accountant or attorney who is not part of the entrepreneurs team this does not mean you have to employ them full time it simply means you need to trust them the difference between school smarts and street smarts my Rich Dad said if you are to develop as an entrepreneur you will need to develop all four areas of yourself these are a thinker analytical skills critical thinker C thinker creative thinker flexible logic t thinker technical skills expertise P thinker people skills personal leadership I will briefly explain each quadrant a thinker we all know people with great analytical skills if you offer a new idea they will probably be critical or cynical more than open to the new idea before making a decision they will come back to you and ask for more details see thinker we all know people who are creative artists in their work they like to see the big picture they think outside the box flexible logic means they are flexible and what makes sense to them for example when I say I can make more money when the market is crashing see thinkers may be better able to grasp that logic more than an a thinker t thinker we all know people who are technical wizards they may be computer Wizards who speak a language found only on Mars or they may be motor heads who think everyone knows how to drop a transmission and fix it P thinker in high school the strongest P thinkers often ran for student body officer or were voted most popular these people can start a conversation with anyone at a party P thinkers are the ours in business the staff and employees love this person each different type of thinker will be attracted to different types of entrepreneurial businesses for example a tea thinker Motorhead may enjoy opening an auto parts store and a thinker lawyer may like opening a law practice a see thinking medical doctor may want to become a cosmetic surgeon and P thinkers may become perpetual politicians always running for office they may also become a minister ministering to their flock or they may become entertainers getting paid to be the center of attention 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 one of the reasons why my nylon surfer wallet business failed was that we were too strong in the C&P categories and very weak in the A&T categories Rich Dad was concerned about my becoming an entrepreneur because I was weak in all four categories I was not strong as an a T P or C thinker he said you have to find one category and become good at it on a legal tablet he wrote down the five jobs of the BI triangle one product two legal three systems for communications five cash flow he then said I don't think you have a realistic chance in the legal systems or cash flow levels of the BI triangle I don't think you'll ever go back to school and become a lawyer accountant or engineer that leaves the product level and the communications level choose one and commit the rest of your life to being the best at that level and that is how I decided to leave the Marine Corps and work for the Xerox Corporation in 1974 I decided my best chance for success as an entrepreneur was to be an expert at communicating to people 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 it is very important to strive to be as smart as you can be both in street smarts and in school smarts [Music] rich dad's entrepreneurial lesson number five 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 explaining he would say if you ask most people who wants to be a millionaire most people would raise their hand that would mean they have a goal of becoming a millionaire but now they need to choose the process for achieving that goal there are many ways a person can reach their goal of becoming a millionaire Rich Dad said the reason the process is more important than the goal is that the process determines who you become in attaining your goals some examples of this are one you can become rich by inheriting money but most of us know if we stand to inherit money two you can become rich by marrying for money the problem is we all know who and what you become in the process it is the oldest profession in the world 3 you can become rich by being cheap the problem is if you become rich by being cheap at the end of the process you are still cheap and the world hates rich cheap people in fact the rich cheap people of the world give rich people a bad name for you can become rich by being a crook the problem is at the end of the process you are a rich crook with crooked friends honest rich people do not like crooked rich people 5 you can become rich by being lucky you can be born with great talent as many athletes and actors are you can win the lottery you can be born rich or you can just happen to be in the right place at the right time the problem is if you lose the money you have to count on luck to get the money back 6 you can become rich by becoming a smart entrepreneur to become a rich entrepreneur you need to become a smart entrepreneur the reason I like this process of becoming rich is that the process requires you to become smart if you lose your money this process will teach you how to get it back and become even smarter in the process the educational process of becoming an entrepreneur requires the entrepreneur to learn and gain experience in the five levels of the BI triangle once a person becomes somewhat proficient in all five levels life is pretty good it took me about 10 years as an undergraduate student of the business school of the streets to attain a basic level of proficiency can a person attain proficiency at all five levels faster absolutely most want to be entrepreneurs focus on the product level the top level of the bi triangle while the product is important cash flow is the base level with the most area allocated to it in the diagram when I first started out as a professional entrepreneur I used to get excited looking at new products or ideas that is how I got caught up in the nylon wallet business the nylon wallet was just one of about 50 different product ideas we considered it was not long before we were hitting the streets looking for investors most potential investors were polite and took time to look at our product and its packaging then if they were interested they all asked the same questions may I see your numbers what are your projections when we did not have them we were turned down quickly even Rich Dad turned us down but he did not turn us down politely he was furious kicking my two partners out of his office he closed the door behind him and gave me one of the most severe reprimands I have ever had from either of my dads the lesson is for successful businesspeople and investors the numbers are very important today older wiser and much wealthier whenever I am asked to evaluate a new product or business I ask for the numbers and then ask someone who is trained at reading the numbers to go over the numbers with me my level of expertise is the communications level and I do go over that portion of the business plan carefully that I am pretty good at the communications level and not that good at the cash flow level is not an excuse for me to ignore the cash flow level or any level for that matter one of the primary reasons I created the cashflow boardgame is the reprimand my rich dad gave me back in the 1970s for most of my life Rich Dad had been emphasizing the importance of the numbers it was not until he chewed me out when I lost so much money that I began to understand why he put such emphasis on the numbers the game serves as a communication bridge between you and your accountant the game will give you the advantage of being more familiar with the tee thinking and a thinking logic of the accounting profession if you're like me weak at the subject of accounting and numbers I strongly suggest you use the cash flow games as an educational tool when wannabe entrepreneurs call looking for money they fall into two categories they are one those with a business plan and financial projections two 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 if I am interested I may suggest they go back to the drawing board follow the bi triangle as an outline and then hire an accountant and come up with a business plan which includes a set of numbers whenever someone asks how do I raise money for my business I respond by asking do you have a business plan 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 this does not mean that the numbers of the business plan are cast in stone the financial results of most start-up businesses do not typically follow the plan or precisely meet the projections 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 a plan simply lets the potential investors 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 entrepreneurs eye DEA's are often the company's most important assets the attorneys job is to protect the company its products and its intellectual property before there is a product or a business one reason why your banker does not ask you for your school report card or your grade point average or what subject you majored in is that a banker is not looking for a measure of your academic intelligence your banker is looking for your level of financial intelligence which indicates your level of financial responsibility how much you earn what you spend your money on and how much you keep when looking at the numbers forecasts or actual there are certain items that are red flags for me they are red flag salaries more than a paycheck what is more important to the entrepreneurs the business or their personal lives a friend of mine consulted with a building maintenance company that was having cashflow problems in Denver the business had great contracts with offices and apartment houses to keep the parking areas swept in summer and free of snow in winter with low overhead and high margins the company should have been doing well instead the business was always in financial trouble upon further inspection my friend found that the owner had expensive ski chalets in Vail and Aspen on top of that the company had flashy cars and threw lavish parties all at company expense to make matters even worse he had been lying to the IRS and the state tax department and his actions were starting to border on tax evasion rather than tax avoidance when my friend recommended that he sell his houses and his cars cut back on his spending and hire a high-powered accounting firm to beg for mercy my friend was fired the owner still thought there was something wrong with the business this is an extreme example of an entrepreneur putting his needs before the needs of the business red flag 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 the rich are rich because they have expenses that make them rich the poor are poor because they have expenses that make them poor one of the downfalls of my nylons surfer wallet business was my desire to save money and not spend seven thousand dollars on patent attorney fees that saving of a few thousand dollars cost me a multi-million dollar business my lesson was to learn to spend money that made me money [Music] one of the reasons that bi triangle is named after the B and I quadrants of the cash flow quadrant is that on the right side of the quadrant an individual must know how to spend money and get that money back with a respectable return one of the reasons why people on the E and s side of the quadrant have a tough time as entrepreneurs is simply that they know how to work for money but they do not know how to spend money and then have the money come back with more money this ability to spend money and have your money come back with more money is essential to entrepreneurs and investors on the B and I side of the quadrant red flag 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 BI triangle a few years ago I read an article about a couple who were both laid off after September 11th both were highly paid marketing executives making over $250,000 combined income with a major New York firm after a year in their own business as marketing experts their business earned less than $26,000 suddenly they found out that owning a business does not mean simply working hard and being busy owning a business means your activities show up directly to the bottom line as money made and money lost that is why the cash flow level is the base of the BI triangle Sharon's insights to lesson number 5 the process is more important than the goal understanding cash flow and cash management is an absolute necessity for any entrepreneur or business owner starting a business almost always costs more than an entrepreneur expects what are your sources of cash how much money are you investing how much investor money are you intending to raise are you borrowing money to start the business do you have a joint venture partner willing to produce the product with their dollars and resources for a share of the profit will your customer pay at the time of sale or do you need to extend credit if you need to extend credit to your customer how long will it take to collect on your receivables what level of bad debt should you expect from your customers how many production cycles will it take before you start seeing positive cash flow can you license your product to other companies that are in different industries so they don't compete with you and collect royalty payments can you license your product to other companies that are in different geographical territories so they don't compete with you and collect royalty payments what are your uses of cash do you have an idea for a product do you protect your product do you plan the business around the idea or product do you need to pay your advisors for their consultation do you need to build a prototype do you need to find your source of goods your suppliers can you negotiate payment terms with your suppliers do you need an office a warehouse a vehicle what kind of office supplies do you need what kind of office equipment do you need computers copiers how long will it take for you to produce your goods how many employees will you need at what pay levels at what stage of development how much salary do you and your team required during the initial stage of the business how much money will you need and when will you need it to produce the goods how will you package your product how much will it cost how will you promote your product will you create a website do you have credit card processing set up for your customer orders how much will your marketing materials cost where will you store your inventory how much will it cost to get the inventory to your warehouse how long is the production cycle to replenish your inventory how will you take orders how will you ship orders what types of insurance do you need how will the insurance cost how will you process returns of your product how will you handle customer service related to your products if you have debt how much interest or debt service will you owe how many production cycles will you go through before you start seeing collections on your sales cycles I know these questions can appear overwhelming but a potential investor will want to see the answers to these questions thoroughly examined and planned for in determining the cash needs of the business as an integral part of the business plan this is where the skill of an excellent accountant will be invaluable in helping you create the plan for your cash requirements when cash becomes tight the entrepreneur loses focus on building the business and starts focusing on survival it's Friday and I can't make payroll I have to pay my supplier before you will ship my goods and I don't have enough cash I have large accounts receivable but no cash in the bank the bank just put a hold on her credit card deposits when I start hearing these statements in a company they are the red flags that rich dad spoke to Robert about the entrepreneur enters a critical time in his or her business if he or she cannot stop these types of cash emergencies from taking his or her focus away from building the business as an entrepreneur ask yourself how you are spending your time in the beginning all your time is spent on the future developing the product and the systems to create and launch the business as the business grows its demand on the entrepreneurs time will automatically change day to day operations become important legal and accounting issues must be addressed I have a wonderful exercise I learned from a friend who learned it at a seminar I would love to give credit to the source but I don't know where it originated ask yourself the following questions as it relates to your business what percentage of time are you spending on the future what percentage of time are you spending on the present what percent of time are you spending on the past in analyzing your time I would identify the following tasks and how they might be categorized future marketing public relations research and development strategic partnerships licensing new deals cash projections and requirements good legal issues present sales order taking shipping and receiving customer service cash requirements past accounting bad legal issues compliance requirements with federal state or local governments or regulatory agencies employee reviews the right answer for your business may not be the same as the right answer for my business typically I encourage 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 when an issue arises that requires the entrepreneur to focus attention on present or past issues have a process planned that will allow other people on your team to increase their focus on the future which dad's entrepreneurial lesson number eight design a business that can do something that no other business can do what is the job of a business leader a leaders 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 I use the BI triangle to further clarify this point when I was in the S quadrant our products were the business school for entrepreneurs and the business school for investors the problem with the business was that I was too much a part of the product as well as the rest of the bi triangle if I was going to be a leader I needed to stop and completely redesign the business trying to fix a poorly designed business while the business is running it's like trying to change a flat tire while the car is still moving that is why Kim and I stopped and took two years off before starting a new business in 1996 came out of the mountains around Bisbee Arizona all I had were pencil sketches of the cash flow game board a rough draft of Rich Dad Poor Dad in my computer and a simple two-page business plan as the sole employee of my yet to be formed company I knew my next step was to find the right people and put a team together sketching the game board was the easy part finding someone who could engineer the information systems required to make the game work was the first step the game had to be engineered to literally change the way people think about money at that time there was only one person I knew who had such a mind and that was an old friend named Ralph parta fondly known as Spock we call him spot because he looks like Minard Nimoy of Star Trek Fame he also happens to be as smart as the character Nimoy plays this is where the four types of thinking are important for this phase of the business I brought these see thinking and P thinking to the project I was creative enough to sketch a crude game board design and I understood how people learn from my 10 years of teaching Spock brought the T thinking and a thinking to the project arriving at his home I spread my crude sketches and diagrams on his dining room table about an hour into the discussion Spock's eyes lit up he was beginning to understand the people and creative side why do people need this game he asked this is common sense chuckling I replied to you it's common sense you have an MBA you're a CPA and a former banker but to the average person this is a foreign language for many people this is a radically new way of thinking Spock grinned give me three months and I'll give you what you want we agreed upon a price for his services shook hands and I left feeling confident I'd found the right person for the task three months later and after much interaction with me he had all the complex mathematical equations done I had done my part and made better crude sketches together Kim Spock and I played the game surprisingly the game ran well it was a tough game but the numbers worked the lessons were revealed and we were happy the next person they went to see was Collector the attorney on our team Mike began the process of filing for patents trademarks and other legal fences to protect my intellectual property as you may have already guessed I was now building a new BI triangle as entrepreneurs Kim and I were clear on our mission now as leaders of the project and using the five levels inside the triangle as a guide we were putting together a team after about a month Mike Lecter called and said you can now move forward and show your game to other people we do not have a patent yet but I filed the application and you've staked your claim you still need to have people signed confidentiality agreements before they see your product as you may recall this is the step I left out when I created the runners shoe pocket wallet what do you mind if I told my wife Sharon about your game

Channel: Insider Audiobooks

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Keywords: Before You Quit your Job by Robert Kiyosaki Audiobook, Rich Dad Poor Dad, How to get rich, How to retire early, Audiobook, 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Million-Dollar Business

Id: YENo61PkPek

Length: 122min 44sec (7364 seconds)

Published: Fri Jul 13 2018