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The CASHFLOW Quadrant

This book is legendary. The book that actually put Robert Kiyosaki on the map was Rich Dad Poor Dad, but the book that has had the most tangible impact for me as an entrepreneur is Rich Dad’s CASHFLOW Quadrant: Rich Dad’s Guide to Financial Freedom. It is a top 5 mandatory read.

In CASHFLOW Quadrant, by telling the story of two people, one doing business the old way and one doing business the new way, Kiyosaki lays out the four types of people that exist in the working world – employees, the self-employed, business owners, and investors. He displays them in a simple quadrant pattern that has employees and the self-employed on one half of the quadrant and the business owners and investors on the other half.

The main reason that the self-employed and employees are on the same side of the quadrant is that they both trade time for money. Even though you may “own” your own business, you still have to show up each day and turn the lights on, make the tacos, pies or whatever your product is. The only difference is that you have just bought your job and still have to perform it.

It requires capital and ingenuity to utilize other people’s time and resources to build a business that operates while you are not there. I don’t want to steal too much of the book’s thunder so I will stop there.  This book is in my all-time, top 5, mandatory reads because it is short, simple and to the point and uses a simple story to convey maybe one of the biggest truths in business – start with the end in mind.

So many self-employed people start out falling in love with a trade and want to control their destiny but they don’t start out with the end in mind. They need to create a system so others can perform the primary functions of their business, that way they have the freedom and flexibility to do other things.

Robert Kiyosaki nails this book and you should read it. Just writing about it makes me want to read it again. The life of an entrepreneur, investor or business owner requires the right mindset and the right tools to help shape and keep the right mindset over time. This book does that in spades.

Here are a couple of other things to think about. If we don’t start out with the end in mind, it’s much easier to get lost on our business or entrepreneurial path. Staying focused is key and dominating one thing is very powerful. This book is really going to make you think about where you are and where you’re going and some people aren’t ready for that. But if you are, this book is for you. If you just can’t get enough and want to put your knowledge into action, it even has a board game to go with it.

The biggest takeaway is that each one of us fit into one of the four quadrants and it’s important over time to have a plan to get from where you are to where you want to be in the quadrant that’s right for you. You do that through specialization and managing your resources well.

If you can’t wait another minute to get started, you can find the book here. Now get going!