Small Business and Money

Excellent presentation based on Robert Kyosaki's Books

 "Rich Dad/Poor Dad"

 "Cash Flow Quadrant"

View a professional explanation about how we market and distribute our products. Click here to view What the Wealthy Buy on Pay Day (English)

The number one reason why people start a small business should be to make money. There are a number of very important secondary  reasons including gaining  independence, fulfilling your life's purpose, achieving a dream or a goal, and putting a good idea into action. What's your reason?

 Money is not the most important thing in life but it is for a small business. Cash flow is critical. The income from a small business should not just replace a job. You will no doubt work harder and longer at your own small business than you ever will at a job so make sure it's worthwhile from a monetary point of view. The end result should give you the lifestyle that far exceeds anything you could have with  a job.  

Having a small business is an important way to make money but as you can see from the following discussion being self employed is not the same as have a business. Similar yes but not the same. In self employment, you are the business--nobody else. If  your dentist is sick, he can't send his wife into work unless of course she is also a dentist. If your family doctor is sick, she can't send her husband to fill in for her unless of course he is a doctor too. I area business, it should run itself whether you are their or not. You leverage other people. This is sometimes very hard for people who like to be always hands on and in charge. A business owner has to learn to hire the right people and let them do their job.

Since I am writing about making money, it's helpful to review how we all make money.

Money ! Believe it or not, there are only 4 ways we make money. Well five, if you count printing it yourself.

Making Money Activities

1. Employment----"the job"

2. Investments

3. Self Employment

4. Business Ownership

The Pros and Cons of each one of these is as follows: (you may think of a few more)

The Job: Making Money by the Hour  Economic Reports on Jobs In America

The vast majority of people in North America use this vehicle but times "they are a changing" Why?

The last job I had was in 1976 and I still have vivid memories of my boss. He cured me from ever wanting any job ever again. Whoever invented the job also invented "rush hour" especially in urban areas. People are "rushing" to a job they don't particularly like and then "rush" home to where their heart is. They don't call it the rat race for nothing.

Jobs used to be long term, secure, with pension and benefit plans and were often very rewarding so young people were encouraged to go to school, get a good education and then get a good job. This model has changed over the past 15 years.

Downsizing is a word everyone knows. Another phrase we are getting used to is "outsourcing" not just to other places in North America but to India and other far away places. This has resulted in many highly educated young people (with big education debts) working at low paying jobs in fields they dislike. Older workers who may have worked for companies for 10 or more years are let go because the company is downsizing or moving. Do you know why companies move? They hope that their long term employees won't follow them. Jobs of equal value are not often there so these older workers suffer the same fate as the younger person.(It is a little easier to take when you are younger but much harder when you're in your 50's and 60's. Life can look pretty bleak.)

Some people have great jobs and more power to them. Great jobs are out there but not so easy to find and your employer will ask and probably get his "pound of flesh" from you.  

2. The Investor: Making Money via Leveraging Money

Investors make money with money and there's the rub: you need money. Return on investments is in direct proportion to the risk involved. It's definitely not a walk in the park requiring a high degree of specialized knowledge, and guts to believe in yourself. (It's not gambling) Investors will often have a lot of free time because their money is at work, not them.

3. The Self Employed: Making Money on Your Own

These are the "Rambo" types who like to do it all their way. They will often value independence higher than money. Many work long hours for average income but satisfaction comes from being in control, being your own boss. Many highly paid, highly educated professional people fit this category: your doctor, lawyer, dentist, accountant, and sometimes your real estate agent. Having been a real estate agent for 12 years in the 70's and 80's , I understand the pressures of this job. What I came to dislike was that "I was the business" . This means you always feel you should be working. Even when you take time off, your clients have other ideas. Other groups such as trades people belong in this group: your plumber, electrician, hairstylists, and many small business owners.

There is a huge downside to being self employed and that is: You are the business. If you are sick or want to take a vacation the business stops. A heart surgeon can't send his wife to work for him if he's not feeling well. When a dentist takes a holiday he not only has to pay his office expenses but he also loses huge sums when he is away from the office: real expensive vacations. Trouble is you can't quit and the boss won't fire you. You basically own a job and sometimes the job will own you. .

4.The Business Owner: Making Money Leveraging Time and Money via Employees

If you look real close you might be able to find him or her "working" the golf course. The business owner might actually be working because that's where his or her business owner friends are. The one big advantage to conventional business is that you can leverage your time and money through employing other people. The true business owner doesn't have to be there all the time. Hence they can play golf when the employees are working for him. Vacations are not a problem.

Lest we think this is paradise, there are just a few downsides. One, most conventional businesses require a lot of start up money. Sometimes millions of dollars and sometimes years to do it. At the beginning the business owner was not playing golf, but busting his or her butt getting the business off the ground, working with new prospects, generating leads through advertising and the myriad of other tasks that are required.

So What's The Point Here

If you have the money, go leverage it! If you don't, read on!

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