From Employee to Investor


Again moving forward with some of Kiyosaki’s thoughts on business, investing and entrepreneurship, together with some of my own humble opinions.

The Four Quadrants of the employment ladder.

E = Employee – Earns wages through labor for another.
S = Self-Employed (or Small Business) – Earns wages through labor for himself.
B = Business Owner – Starts a system for business growth through others’ labor.
I = Investor – Buys into Assets and Businesses.

Once you categorize yourself as a B or an I, it is important to recognize whether you are more of an Entrepreneur (start business and then transfer or sell to more competent management), Investor (passive owner), or Officer (involved with day to day operations of the business).

The Entrepreneur prides himself in being a great leader and initiator, as well as a big thinker. He has a great idea, plans on how to implement it and goes in. He often comes across all four roles.

The Investor often sits on the sidelines accumulating wealth with the growth of the business, thus his income is passive. The business pays people to do the work.

The Officer is the one who goes all the way from founder or buyer to active management. He builds a successful business with his ability to lead and then enables his ability to manage it properly. His income is both active as well as passive.

Leadership is the ability to initiate an idea of goodwill and influence people around you to achieve that goal.

Management is the ability to work together with people and at the same time complete the necessary tasks of operations.

Taxes are the cost of living in a safe and prosperous society. These are nevertheless deferred for the Business Owner and Investor, particularly when they serve a common good (such as creating jobs or homes). This is why E’s and S’s are taxed first and at much higher rates, while B’s and I’s are taxed last and at lower rates.

Charity stems from the old adage “Give a man a fish and he’ll have food for a day. Teach him to fish and he’ll have food everyday.” To properly reap the benefits of success one must also contribute. The greatest of businesses were often solutions to problems and contributions to a better and more efficient economy.

The Greatest Fears we are often faced with are the “Fear of Rejection” – the whole world will never love you – and “The Fear of Failure” – you can’t win every time. The greatest of mankind are those who strive to conquer these two emotions. After that life is nothing but wonderful.

The advantages of the business owner are immense. As a corporation an individual enjoys a sense of security and protection, as well as a tax-efficient method for increasing wealth through entrepreneurship and enterprise.

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