Robert Kiyosaki - before starting his own business. Before you start your business you need to know how to use other people's resources

Expression of gratitude

Entrepreneurship is a calling, both professionally and spiritually. We are extremely grateful to Lawrence Kirschbaum, chairman and CEO of Warner Books, for creating the Rich Dad series in such close collaboration with his company. We saw the twinkle of entrepreneurship in his eyes. His “It can be done!” attitude energized the people and the organization as a whole. While publishing may not be one of the cutting-edge industries of modern business, Lawrence Kirschbaum can be considered one of the cutting-edge leaders - and it was a true pleasure to work with him. Thank you Lorrie!

Robert Kiyosaki, Sharon Lecter

Introduction

What sets entrepreneurs apart from everyone else?

I consider one of the most anxious days of my life to be the day I left my full-time job and officially became an entrepreneur. I knew that from that moment on I would no longer have a regularly paid salary, nor would I have health insurance. There will be no more ballots, no more paid vacations.

The moment I left my full-time job, I realized why so many employees never become entrepreneurs. It's all about the fear of ending up completely without money... without any guaranteed income... without a constant salary. Very few people can work for a long period of time without getting paid. And it is this quality that distinguishes entrepreneurs from all other people; we can say that this is one of the main differences - the ability to not lose your head and act wisely without having money.

But on the same day that I was left without a livelihood, my expenses increased significantly: as an entrepreneur, I had to rent an office, a parking lot, a warehouse, buy myself a desk, rent a phone number, pay for my business trips, hotel rooms, taxis, lunches, copies of documents, pens, paper, paper clips, all kinds of forms, postage, brochures and even the coffee I drink between jobs.

In addition, I had to hire a secretary, an accountant, a lawyer, an auditor, an insurance agent, and even a cleaner. Previously, my employer paid for all this. I realized how much I cost him when I was an employee. Only now have I realized that salaried employees cost their employers much more than the amount indicated on their paychecks.

And from here follows another difference between an employee and an entrepreneur. Entrepreneurs must know how to spend money even if they have no money at all.

Start of a new life

The day I officially retired from the company where I was previously employed, I was in the city of San Juan, Puerto Rico. It happened on June 1, 1978, in Puerto Rico, I attended a ceremony honoring the best employees at the Xerox President's Club. People from all over the world came here.

It was a very special meeting - a celebration that I will never forget. I just couldn't believe that Xerox would spend so much money just to honor its best salespeople.

But I was not happy at this holiday - difficult times were coming for me. During those three days while the celebration lasted, I only thought that, by leaving work, I was losing the stable income and social security that the company had previously given me.

I clearly understood that as soon as this whole party in San Juan was over, I would be left to my own devices. I will not be returning to work at the Honolulu branch office or any other Xerox division.

As I was leaving San Juan, our plane got into some kind of emergency. While landing at the Miami airport, the pilot asked passengers to fasten their seat belts, keep their heads in and prepare for a possible impact. I was already in a rather gloomy mood - after all, this was the first day that I became an independent entrepreneur - and now I was also being asked to prepare for death?

Expression of gratitude

Entrepreneurship is a calling both professionally and spiritually. It is a fire that burns deep within, disregards the inequality of initial conditions, creates leaders among us, allows us to quickly realize our dreams and build our future.

The book “Before You Start Your Business” is a wonderful gift for aspiring entrepreneurs around the world, for all those who do not want to give up on their dreams. I am grateful to those people who have inspired me to continually strive for change and help others in this important matter - to learn to challenge the prevailing circumstances and persevere in the chosen path.

Thank you!

Robert T. Kiyosaki

Introduction. What sets entrepreneurs apart from everyone else?

From that day on, my steady income was zero. The fear of not having a permanent fix was one of the worst I have ever experienced in my life. The worst part was that I didn't know how long it would take for me to start making a steady income again. This may take years. The moment I left my full-time job, I realized why so many employees never become entrepreneurs. It's all about the fear of ending up completely without money, without any guaranteed income, without a constant salary. Very few people can work for a long period of time without getting paid. And it is this quality that distinguishes entrepreneurs from all other people; we can say that this is one of the main differences - the ability to not lose your head and act wisely without having money.

But on the same day that I was left without a livelihood, my expenses increased significantly: as an entrepreneur, I had to rent an office, a parking space, a warehouse, buy myself a table and a lamp, rent a telephone number, pay for my business trips, hotel rooms, taxis, lunches, copies of documents, pens, paper, paper clips, all kinds of forms, postage, brochures and even the coffee I drink in between work. In addition, I had to hire a secretary, an accountant, a lawyer, an auditor, an insurance agent, and even a cleaner. Previously, my employer paid for all this. I realized how much I cost him when I was an employee. Only now have I realized that salaried employees cost their employers much more than the amount indicated on their paychecks.

And from here follows another difference between an employee and an entrepreneur. Entrepreneurs need to know how to spend money even if they have no money at all.

Start of a new life

The day I officially retired from the company where I was previously employed, I was in the city of San Juan, Puerto Rico. This happened in June 1978. In Puerto Rico, I attended a ceremony honoring the best employees at the Xerox President's Club. People from all over the world came here.

It was a very special meeting - a celebration that I will never forget. I just couldn't believe that Xerox would spend so much money just to honor its best salespeople. But I was not happy at this holiday - difficult times were coming for me. During those three days while the celebration lasted, I only thought that, by leaving work, I was losing the stable income and social security that the company had previously given me. I clearly understood that as soon as this whole party in San Juan was over, I would be left to my own devices. I will not be returning to work at the Honolulu branch office or any other Xerox division.

As I was leaving San Juan, our plane got into some kind of emergency. While landing at the Miami airport, the pilot asked passengers to fasten their seat belts, keep their heads in and prepare for a possible impact. I was already in a rather gloomy mood - this was the first day I became an independent entrepreneur - and now I was being told to prepare for death! Yes, not a very good start for an independent business!

Thank God, nothing happened to the plane, and I safely flew to Chicago, where I was going to make the first presentation of my nylon wallets. I arrived at a Chicago shopping center late due to a flight delay, and the client I was supposed to meet, a representative of a large department store chain, left without waiting for me. And again I thought: “I’m not starting my entrepreneurial career very well. If I can’t get this deal done, then my new business won’t bring in any income, I won’t get any money, and I simply won’t have anything to eat.” And since I have always loved and love to eat, the prospect of being left without food worried me more than anything else.

Are there natural born entrepreneurs?

– Are people born entrepreneurs or do they become experts in this business through training?

When I asked rich dad what he thought about this, he said:

– The question of whether people are born entrepreneurs or are specially trained in this business does not make sense. This is like asking whether people are born employees or become employees through training.

Rich dad then elaborated:

– People are trainable. Therefore, they can be trained both to become entrepreneurs and to become employees. The reason why there are so many more employees than entrepreneurs is that our schools teach young people to be employees. In addition, most parents constantly tell their children: “Go to school so you can get a good job later.” I have never heard a parent say, “Go to school so you can be an entrepreneur.”

Employees are a new phenomenon

Hired workers are a new phenomenon. In an era when the economy was based on agriculture, that is, in the agrarian era, most people were self-employed entrepreneurs. Many of them were peasants and worked on the king's lands. However, they did not receive any salary. It was just the opposite: it was the peasants who paid the king a tax for the right to use his land. The category of people who were not peasants included artisans or shopkeepers, that is, as we would call them now, representatives of small businesses. These were butchers, bakers, tinsmiths, etc. A reminder of the business they were engaged in is now very often found in the surnames of their descendants. This is why so many people now have the surname Smith (in memory of their ancestors - the village blacksmiths), Baker (in memory of those who owned a bakery) and Farmer (their family business was once farming). But they were all self-employed entrepreneurs, not employees. Most children who were raised in families of entrepreneurs follow in the footsteps of their parents and also become entrepreneurs. And this once again proves that everything depends on training.

But when the industrial era arrived, the need for hired workers increased sharply. In response, the government set out to provide mass education for children and borrowed the Prussian education system, which became the model on which most school systems in the modern Western world are based. If you study the philosophy on which this system was built, you will see that its goal was to raise soldiers and hired workers, that is, people who would strictly follow orders and do only what they are told. The Prussian education system is a very good system designed for mass training of hired workers. In essence, it forms the basis of school education.

The most famous entrepreneurs

You've probably already noticed that many famous entrepreneurs didn't even graduate from high school. Among them are Thomas Edison, founder of General Electric; Henry Ford, creator of the Ford Motor Company; Bill Gates, founder of Microsoft; Richard Branson, creator of Virgin; Michael Dell, creator of Dell Computers; Steven Jobs, creator of Apple Computers and Pixar, and Ted Turner, founder of CNN. Naturally, there are other entrepreneurs who graduated with honors, but few are as famous as the ones I named above.

Transforming an employee into an entrepreneur

I am well aware that I was not born an entrepreneur. I needed to learn this. My rich dad walked me through the entire process by which an employee becomes an entrepreneur. For me this turned out to be quite difficult. I had to unlearn a lot of what I had been taught before I could learn the lessons that rich dad was trying to teach me.

It was difficult for me to accept what he was telling me, because it was exactly the opposite of the lessons that my poor dad was trying to teach me. Every time my rich dad broached the topic of entrepreneurship, he talked about freedom. Every time my poor dad advised going to school to get a good job, he was talking about security. These philosophies collided and fought in my head, which caused confusion.

Finally, I asked rich dad to explain to me how these fundamental questions differ. I asked him:

– Tell me, are security and freedom the same thing or not? Rich dad smiled and replied,

– Security and freedom are not the same thing. In fact, these are opposite concepts. The more you seek security, the less freedom you will have. The greatest security is provided in prison. This is where we talk about the “highest level of security”. - And continued:

– If you want to be free, you must abandon all concern for security. This is exactly what employees strive for, and entrepreneurs seek freedom.

So, if they ask me if anyone can become an entrepreneur, I will answer: “Yes, it can. And it all starts with a change in worldview. It all starts with the desire to have freedom, not security.”

From caterpillar to butterfly

We all know that a caterpillar spins a cocoon around itself and one day becomes a butterfly. This complete transformation is known in science as metamorphosis. One sign that a metamorphosis has occurred is a striking change in character.

It is precisely this metamorphosis that this book is dedicated to. It is about the changes a person undergoes when he transforms from an employee into an entrepreneur. Although many, many people dream of quitting their current job and starting their own business, very few actually do it. Why? Yes, because the transformation from an employee to an entrepreneur is more than just a change of place of work. This is true metamorphosis.

Books about entrepreneurs written by people who have never been entrepreneurs themselves

I've read a lot of books about entrepreneurs and entrepreneurship in my life. I was interested in the lives of businessmen such as Thomas Edison, Bill Gates, Richard Branson and Henry Ford. I also read books about the different philosophical ideas behind entrepreneurship and what makes one person a better entrepreneur than another. In every book, good or bad, I learned to find some valuable piece of information or wisdom that would help me find the path to becoming a better entrepreneur.

Looking back at the books I've read, they fall into two main categories: books written by entrepreneurs themselves, and books written by people who haven't been entrepreneurs. Most books are written by professional writers, journalists or educational teachers, that is, people who are not entrepreneurs.

And although I found something important for myself in each of these books - regardless of who wrote it - there was still something missing from them. And I realized what was missing from them was a description of everything that almost every businessman has to go through: falling into the gutter, stomach cramps from fear, kicks and beatings, terrible mistakes and other monstrous stories. In many books, famous entrepreneurs are portrayed as brilliant, courteous knights “without fear or reproach” who quickly and easily deal with any obstacle that stands in their way. Books about great entrepreneurs are often written in such a way that you can't help but think that these people were simply born entrepreneurs - and I am willing to admit that this is often the case. I am ready to admit that just as there are people who naturally have special physical abilities for playing sports, there are also born businessmen and that most books are written about these people.

Those books about entrepreneurs written by academics have a very special spirit. Professors at educational institutions know how to diligently sift out all unnecessary things, leaving only bare facts. It seems to me personally that reading such books, compiled according to all the rules of science, is very difficult, as a rule, because of the unbearable boredom that arises. There is no “meat” here, nothing for the imagination to grasp onto, just “bare bones”.

Why is this book written completely differently?

The book that lies before you now is about entrepreneurship and was written by an entrepreneur who has personally experienced all the ups and downs, successes and failures that befall every businessman operating in the real world.

Today our company – “Rich Dad Company” – is an international business; We produce products in 42 languages and trade in more than fifty-five countries. But it all started with a company that my wife Kim and I started in 1997. Our initial investment was $1,500. The first book, Rich Dad Poor Dad, spent more than four and a half years on the New York Times bestseller list, a success shared by only three other books. Perhaps even now, when you read these lines, our first book continues to be on this list.

But it seems to us that it is not worth telling you how cleverly I acted in business (which in fact was not at all), it is better to write a book about entrepreneurship of a completely different type. Instead of talking about how I've jokingly conquered the steepest peaks and made millions of dollars, we decided that readers would benefit much more if they learned how I dug a deeper hole for myself, fell into it, and fell into it, over and over again. and then worked his way up to get out of it. We decided that you would learn more if you learned about my failures rather than my successes.

Why write about failures?

Many people fail to become entrepreneurs because they are afraid of failure. We hope to help you make the right choice (if, of course, you decide that this is the case for you) and therefore in our book we turned to those problems that cause fear in most people. We do not intend to intimidate you at all, we just want to introduce you to the world of real business, with all the ups and downs that are inevitable for a beginning entrepreneur.

Another reason that motivates us to write about failure is that all people are destined to learn from mistakes. We learn by failing and then trying again to succeed. We learn to ride a bike by falling and then getting back on. If we never dared to try, for fear of falling, we would have to crawl like caterpillars all our lives. After reading many books, we concluded that one of the most important elements that was missing from them (especially those books written by educational teachers) was a lack of interest in the emotional component of the trials and tribulations that befall entrepreneurs. They don't talk at all about what happens to a businessman emotionally when his business fails, when he is left without funds, when he is forced to fire his employees and when he is besieged by disgruntled creditors and investors. And how can many of these professors know how an entrepreneur feels when he fails? How can they know this if they themselves constantly receive their due salary, additional payment for long service, and always know which answers are correct and which are not, and never make mistakes, which is so valued in the academic world. Again, the question is who is trained in what.

In the late 1980s, I was invited to speak at Columbia University about entrepreneurship. I didn't talk too much about my successes, but rather talked about my failures and what I learned from my mistakes. The young people who listened to me asked me many questions and seemed genuinely interested in the ups and downs that are inevitable for a new businessman. I told them about the fear we all experience when starting our own business, and about what I myself experienced in this regard. I shared with students some of the dumbest mistakes I've made and how those mistakes became valuable lessons for me over time. I spoke about the mental pain I experienced when, due to my incompetence, I had to close the case and pay off the people who worked for me. I also shared with them my belief that all my mistakes ultimately helped me become a better entrepreneur, a very rich person, and most importantly, achieve financial freedom by being able to work or not work as I wish. In short, I thought it was an intelligent and businesslike conversation about how people become entrepreneurs.

But a few weeks later I found out that the teacher who invited me to speak was summoned to the rector’s office and received a scolding. The representative of the university authorities ended his rebuke with the following sacramental words: “We must not allow failure to be talked about from the pulpit of Columbia University.”

Who is an entrepreneur?

Now that we have expressed everything we think about teachers in educational institutions, it’s time to say a few kind words about them. One of the best definitions of an entrepreneur was proposed by Howard H. Stevenson, a professor at Harvard University. He says: “Entrepreneurship is the science of management, the essence of which we can formulate as follows: the pursuit of opportunities without regard to the resources that are currently under our control.” In my opinion, this is one of the most brilliant definitions of what an entrepreneur is. It may be a bunch of “bare bones,” but hidden among them is a diamond.

The Power of Excuses

So many people want to become entrepreneurs, but they always have some excuse why they can't quit their job, something like:

"I have no money".

“I can’t quit my job because I need to support my children.”

“I don’t have any connections in the business world.”

“I’m not smart enough to work in this field.”

"I have no time. I'm too busy."

“I can’t find anyone who would want to help me in this matter.”

“Building your own business will take too long.”

"I'm afraid. Starting my own business is too risky for me.”

"I don't like dealing with employees."

"I'm too old for this."

The friend who gave me Professor Stevenson's article remarked: “Any two-year-old child can already be considered an expert in making excuses. The reason why most people who want to become entrepreneurs remain employees is that they constantly find some excuse that keeps them stuck in their place and prevents them from taking the plunge. For many people, the power of their excuses exceeds the power of their dreams.”

Entrepreneurs are completely different

There are many other gems hidden among the bare bones in Mr. Stevenson's article, especially when it comes to comparing entrepreneurs and employees, or, as he calls them, “pushers” and “savers.” Here are some great comparisons:

When it comes to strategic orientation

Pusher is guided primarily by the feeling that he has some opportunities.

Saver guided primarily by the awareness that he has everything under control.

In other words, entrepreneurs are always looking for opportunities, regardless of what resources they have for it. People who are spiritually hired workers always focus on what resources they have; what they have and what they don’t have, and that’s why so many people think, “Well, how can I start my own business? I have no money". And a businessman would simply say to himself: “The main thing is to rush into battle, and the money will be found.” This difference in basic attitudes determines the main differences that exist between employees and entrepreneurs.

That's why my poor dad said so often: "I can't afford it." Being a born employee, he saw in front of him only those resources that were currently under his control. Those of you who have read my other books know that my rich dad simply forbade his son and me from saying anything like, “I can’t afford it” in his presence. Instead, he taught us to first look for opportunities and ask ourselves, “How can we take advantage of this?” He was a true born entrepreneur.

When it comes to management structure

Pusher prefers a network of numerous horizontal informal connections.

Saver prefers a clearly established hierarchical ladder with numerous steps.

In other words, the entrepreneur prefers his organization to be small and cheap. He tries to make the most of mutually beneficial cooperation with strategic partners to grow his business. People who think like employees build a system of hierarchical relationships, that is, a chain of people who give each other commands and orders, in order to become in this chain the person who gives the most important commands. This is their vision of organizing an empire. And a businessman will develop his structure in a “horizontal” direction, that is, he will give preference to the use of “external” resources rather than strive to ensure that everything is done “under his wing.” The manager, who was previously an employee, is trying to develop his organization in a “vertical” direction, that is, to hire more and more employees who would serve in the same organization. When an employee rises up the career ladder, he pays special attention to all sorts of formal, according to all the rules, orders and regulations regarding the creation of more and more new organizational structures.

After reading this book, you will understand why our company, The Rich Dad Company, has remained small in size yet experienced fantastic growth through strategic partnerships with major publishing houses around the world. We decided that we would grow this way because it requires significantly less time, money and people. Our company grew faster, became more powerful, made more profits, spread its activities around the world - and at the same time remained small. To grow our business, we used money and resources that belonged to people other than us. In this book you will find an explanation of why we chose this path and how to follow it.

When it comes to reward philosophy

Pusher prefers values based on task completion within a team.

Saver prefers clear control and security that the principle of career advancement and resource conservation provides.

In other words, employees strive for security: permanent work in a reliable company, a stable salary and the opportunity to move up the career ladder. Many employees view promotion opportunities and positions as more important than money. This is exactly how I remember my poor dad lived. He really liked his rank - head of the Hawaii State Department of Public Education - even though this rank did not bring him very much money.

An entrepreneur does not strive to climb the corporate ladder - he wants to own this ladder. He is not interested in the size of the salary, but in the results of the team’s work. In addition, as Howard Stevenson argues, many entrepreneurs start their own businesses because they are guided by certain values that mean more to them than just security - a permanent job and a reliable salary. This book is also dedicated to values that are more important than money. For many entrepreneurs, their values are more important than money. They are completely devoted to their work, their mission on earth and love the work they do. Many businessmen would do their job even if they did not receive any money for it. At the same time, as rich dad said, “Many employees only love their jobs while they are getting paid.”

From this book you will also learn that there are three types of money: competitive, cooperative and spiritual.

1. Competitive money- This is money for which most people work. These people compete with each other for jobs, for promotions, for higher salaries - and also with their rivals in business.

2. Cooperative money come from interaction with other people in which there is no competition or rivalry. From this book, among other things, you will learn how our company was able to very quickly expand the field of its activities with a very small investment of funds, simply because we used cooperative money in our work.

3. Another significant part of the book is devoted to the issue of recognizing the value of the mission that your business fulfills. We all know that there are a lot of cynical entrepreneurs who say that they work solely for the sake of making competitive money. But there are other people who treat building a business as their life purpose - their mission - they work for spiritual money. And this is the best of all money.

Differences in management styles

There are two other points in Stevenson's article that are worth keeping in mind, especially for our colleagues in higher education who undertake to write books about entrepreneurs. Howard Stevenson notes that many people say that entrepreneurs are generally not good at management and are not good managers. Disagreeing with this generally accepted point of view, he writes:

Everywhere and everywhere it is customary to portray the entrepreneur as a self-centered, intolerant person and, as a result, incapable of leading people well. However, despite the fact that management tasks look completely different from the point of view of an entrepreneur, he nevertheless needs to possess management skills.

Bull's-eye. Bravo, Howard! In other words, we can say that entrepreneurs manage people in a completely different way. Next, we will explain why there must be differences in people management style between an entrepreneur and an employee.

You need to know how to use other people's resources

Later in the article, Stevenson again comes very close to the correct definition of an entrepreneur when he says: “Entrepreneurship is a mode of management that can be defined as follows: the pursuit of opportunity without regard to the resources that are currently under your control.” He states, “Entrepreneurs try to learn how to make good use of other people's resources.” The reason for the differences in management style is that employees tend to hire subordinates who are easy to manage. They want to arrange things in such a way as to control them. Subordinates must do what they are told or they will be fired. Therefore, companies with hired employees usually strive to build a system with a vertical hierarchy. They like the Prussian style of management - the same one that underlies the Prussian education system. These leaders want people to command “Jump!” they would jump without hesitation - without even looking where they were jumping.

But entrepreneurs must manage more than just those they hire, so they have to learn to manage people differently. The point is that entrepreneurs need to know how to manage other entrepreneurs. If you simply shout at them, “Jump!”, they will most likely respond with some kind of swear word or offensive gesture. So businessmen are not such bad managers as many people think, they just manage people in a completely different way, since they cannot order them to do this or that (and often what they need cannot be expressed in the form of an order at all, because you cannot order same for a person to “burn out” at work or to accomplish a feat).

This difference in management styles also explains why employees tend to work for competitive money while entrepreneurs tend to work for cooperative money.

Entrepreneur looking for employees

Very often, new entrepreneurs complain: “I can’t find good employees for myself,” or “My employees just don’t want to work,” or “All my employees want only one thing - to get more money.” These problems arise for new entrepreneurs because they do not understand what management style to follow. Meanwhile, the correct style can be learned. Again, thanks to our fellow professor Howard Stevenson for giving us the opportunity to clearly see the difference between entrepreneurs and employees.

Expression of gratitude

Robert Kiyosaki

Sharon Lecter

Introduction

What sets entrepreneurs apart from everyone else?

ism distinguishes entrepreneurs from all other people; we can say that this is one of the main differences - the ability to not lose your head and act wisely without having money.

And from here follows another difference between an employee and an entrepreneur. Entrepreneurs must know how to spend money even if they have no money at all.

Start of a new life

The day I officially retired from the company where I was previously employed, I was in the city of San Juan, Puerto Rico. It happened on June 1, 1978, in Puer-

In ToRico, I attended a ceremony honoring the best employees at the President's Club of the Xerox company. People from all over the world came here.

It was a very special meeting - a celebration that I will never forget. I just couldn't believe that Xerox would spend so much money just to honor its best salespeople.

Yes, not a very good start for an independent business!

And again I thought: “I’m not starting my entrepreneurial career very well. If I can’t get this deal done, then my new business won’t bring in any income, I won’t get any money, and I simply won’t have anything to eat.”

And since I have always loved and love to eat, the prospect of being left without food worried me more than anything else.

Are there natural born entrepreneurs?

Are people born entrepreneurs or do they become adept at it through training?

When I asked rich dad what he thought about this, he said:

The question of whether people are born entrepreneurs or are specially trained in this business does not make sense. This is like asking whether people are born employees or become employees through training.

Rich dad then elaborated:

People are trainable. Therefore, they can be trained both to become entrepreneurs and to become employees. The reason why there are so many more employees than entrepreneurs is that our schools teach young people to be employees. In addition, most parents constantly tell their children: “Go to school so you can get a good job later.” I have never heard a parent say, “Go to school so you can be an entrepreneur.”

Employees are a new phenomenon

Current page: 3 (book has 19 pages total) [available reading passage: 4 pages]

Rich Dad's First Lesson for Entrepreneurs

In order to create a successful business, you first need to just start some kind of business

Chapter 1. What is the difference between an employee and an entrepreneur

Start with the right mindset

When I was a teenager, my poor dad often said, “Go to school, get good grades, so you can find a good job with a decent salary.” Thus, he set me up in advance to become an employee in the future.

My rich dad, on the other hand, often said, “Learn to start your own business and attract the right people to it.” Thus, he encouraged me to become an entrepreneur.

I once asked rich dad what the difference was between an employee and an entrepreneur. He replied: “An employee seeks employment in a business after that business has already been built. And the work of an entrepreneur begins even before any business appears.”

The probability of failure is 99 percent

Statistics show that 90 percent of all new companies fail within the first five years. Additionally, 90 percent of the 10 percent of companies that survive those first 5 years also don't make it to their 10th anniversary.

In other words, approximately 99 percent of all new businesses fail within 10 years of their inception. Why? Although, in general, there are many reasons, some of them are the most important:

Our schools prepare students to become employees who will look for work, and not entrepreneurs who will create this work by organizing some new business.

The skills required to be a good employee have nothing to do with the skills required to be a good entrepreneur.

Many businessmen find themselves unable to build a real business. Instead, they work hard to create a place for themselves as employees. They can be considered more like self-employed employees than company owners.

There are many entrepreneurs who work longer in terms of time costs and receive less than their employees. And as a result, these people become so exhausted that they are forced to quit their jobs.

Many new entrepreneurs start a business without enough experience and money.

Many businessmen undertake to produce good products or provide much-needed services, but they lack the business acumen to organize a successful business.

To succeed you need to lay the foundations

My rich dad said, “Starting your own business is like jumping out of a plane without a parachute. Already falling in the air, the entrepreneur begins to “sew his own parachute,” counting only on the fact that he will have time to do this and the parachute will open before he hits the ground.” In addition, he said: “But if an entrepreneur fails to sew himself a good parachute and he falls to the ground with all his might, he will have no choice but to rise and climb into the plane again to repeat this attempt.”

Small cracks in a big dam

One of the reasons I failed so miserably with the nylon jogging boot wallet business is because I didn't pay enough attention to the little things. There is a certain truth in the old saying “the taller a person is, the more painful it is for him to fall.” My initially small wallet business began to grow so quickly that very soon its management exceeded the capabilities of the three entrepreneurs who founded the business. It turned out that instead of a business, we, like Dr. Frankenstein, created some kind of monster, although at that moment we did not understand this. In other words, our unexpectedly spectacular success hastened and aggravated the inevitable catastrophe. In fact, the main problem was that we simply did not understand that we had already approached the very threshold of this catastrophe. We thought things were going better than ever. We considered ourselves rich. We thought we were geniuses. We didn't worry too much about taking advice from outside experts (such as patent lawyers).

The three of us became thriving entrepreneurs very early on (some in our early thirties, some under thirty) and stopped thinking much about our business, preferring instead to party all night long. We thought we had already built a business. We believed that we were great entrepreneurs. We believed that our success had already gone down in history. We began to wonder and boast. Champagne flowed like a river. Very soon, each of us had expensive, fast sports cars and even more expensive, nimble girls. We were so blinded by success and money that we were completely unaware of the little cracks that began to form in the foundation of our business.

But the cracks grew - and eventually the entire dam collapsed. It fell apart like a house of cards and took us with it. We didn't have a ready-made parachute that we could deploy.

When success is too much

Hard work makes up for bad calculations

From the very beginning, a poorly conceived business can survive as long as the entrepreneur works hard and keeps everything under strict control. In other words, hard work can go some way to compensate for the shortcomings of a poorly designed business and keep it from failing. The world around us is chock-full of millions of small entrepreneurs who keep their failing businesses afloat only through hard work, willpower, belt-tightening and constant emergency situations. But the problem is that as soon as they stop doing this, their business will immediately fall apart and go to the bottom.

All over the world, businessmen, setting out to “faithfully serve” their business, kiss their wives and children goodbye. Many of them go to work believing that if they devote even more time and effort to their company, they will finally be able to solve serious problems - such as low sales, careless employees, incompetent advisers, lack of free funds for development business, price gouging by suppliers, demands from insurance companies and land owners for increased premiums, unfavorable changes in business regulations by the authorities, unexpected inspection visits, tax increases, double taxation, quarrelsome customers, customers unwilling to pay for goods received, and too there are few hours in the day, leaving no time to solve even a few of these problems.

As a rule, entrepreneurs do not understand that the difficulties that their business is now facing did not appear today or yesterday, but long before they started their own business.

And one of the main reasons for such a high level of failure among small businesses is simple exhaustion. It's too difficult to try to make money and continue on your path when most of your time ends up being completely occupied with something that doesn't bring in any income or even requires additional investment without any return. So if you're thinking about starting your own business, before you leave your current job, try talking to an entrepreneur about how much time that person is spending on business-related things that aren't bringing him or her any benefit. income. And at the same time, ask him how he copes with these problems.

As one friend of mine said, “I am so busy with issues related to my business that I simply have no time to make money.”

Does hard, never-ending work guarantee the success of your business?

A friend of mine left a high-paying job at a large bank in Honolulu and opened a small diner in one of the working-class areas of the city. He always wanted to become an independent entrepreneur and start his own business. At the bank, he was involved in issuing loans and saw that the richest clients were independent entrepreneurs. My friend wanted to join their ranks, so he quit his job and began to make his dream come true.

Every day, he and his mother had to get up at 4 a.m. in order to have time to prepare food for the workers who wanted breakfast. Both of them devoted all their efforts to work, limiting themselves in everything - just to be able to provide customers with the best breakfasts at lower prices.

A few years ago I stopped by to have breakfast with them and see how they were doing. My friend and his mother looked very happy and satisfied with both their clients and their work. “Someday, over time, we will expand our business,” my friend said. “And then we can finally hire someone to do the hard work for us.” But the thing is that this “someday” never came. His mother died, the diner closed, and my friend ended up working as a manager at a fast food restaurant. He became an employee again. The last time I saw him, he admitted to me: “The salary is small, but at least now I have free time.” In this case, we can say that his parachute did not open. This man hit the ground before he even had time to properly organize his business.

Many of you, I think, might be saying, “At least he tried,” or “It was just an accident. If his mother had not died, they would have been able to strengthen their business and eventually start making a lot of money,” or “How can you even criticize such hardworking people?” I fully share these feelings and do not intend to criticize anyone. Although I had little contact with this man, I always treated him very well. I knew that he and his mother were happy doing this work, but at the same time I still felt pain when I saw them exhausted day after day, making little progress.

I tell this story only to clarify the point with which I began. This business was doomed to fail even before that how they started it. They miscalculated everything before they left their previous job.

Are you running your business in your own best interests?

If stories of hard, hopeless work that end in failure or are doomed to fail, and jumping out of airplanes without a parachute and ending up hitting the ground frighten you, then you should not become an entrepreneur.

But if these cases intrigue you or make you think about how you might overcome difficulties if you take them as a challenge, then read on. At the very least, after finishing this book you will have a better understanding of what a businessman needs to know to be successful. You will better understand how to design, create, and build a business that can grow with or without your participation and that can provide you with wealth beyond your wildest dreams. After all, if you're going to jump out of a plane without a parachute, you have to hope to win big, if you win at all.

The work that an entrepreneur must do

The most important part of an entrepreneur's job begins before he even has his own business or hires anyone. This work consists in the fact that he must calculate everything well in advance and design his future business in such a way that he can

Involve a lot of people;

Bring benefits to clients;

Provide opportunities to be responsible citizens;

To ensure prosperity for everyone who works in this business;

Provide assistance in carrying out charity events;

And over time, begin to work independently, without requiring the constant participation of the entrepreneur who founded it.

Before a business even exists, a successful entrepreneur already creates it in his own mind and sees it in his mind's eye. This is what my rich dad believed the job of a true entrepreneur was.

Failures lead to success

After one of my discouraging business failures, I went to rich dad and asked him:

- Tell me, what am I doing wrong? I felt like I had worked it out so well this time.

“You probably didn’t think of something after all,” rich dad replied with a grin.

– So how many times do I have to go through this?! – I exclaimed. “I think I’m the biggest loser I know!”

Then rich dad said:

– Do you know what the difference between a winner and a loser is? The losers, having failed, lay down their arms and give up their business. And winners are willing to fail until they succeed.

For a while he rearranged the papers lying on his desk, and then looked at me and continued:

– The world is filled with people who want to be entrepreneurs. They sit behind desks, hold respectable-sounding titles such as vice president, branch manager or inspector, and some even take home a sizable paycheck. These people who want to be entrepreneurs dream of one day starting their own business empire and perhaps one of them will do so one day. But it still seems to me that most of these people will not do anything significant. Almost every one of them will find some excuse, some completely logical reason not to jump from the plane. For example, “I’ll do this when the children grow up,” or “First, I’ll need to get some training,” or “When I collect enough money, then...”

“But they will never jump out of a plane,” I said, summing up his thoughts. Rich dad nodded.

What kind of entrepreneur do you want to be?

Rich dad continued to explain that the world is populated by all types of entrepreneurs. There are entrepreneurs big and small, rich and poor, honest and crooked, working only for money and working for the sake of work, virtuous and sinful, not leaving their town and acting in the international arena, and, finally, successful and unsuccessful. At the same time he said: “The word entrepreneur has a wide range of meanings and means very different things and very different people.”

Cash Flow Quadrant

As I noted in the introduction, the Cash Flow Quadrant is designed to help us understand the types of people who operate in the business world and how they differ from each other in terms of technique, personality, and mindset.

The letter P denotes employees.

The letter C denotes those who provide themselves with work, representatives of small businesses or specialists.

The letter B denotes owners of their own business.

The letter I stands for investors.

For example, if we have a born employee, he will always repeat the same words, regardless of whether he holds the position of president of the company or a doorman. An employee can always be recognized by characteristic expressions like: “I’m looking for a reliable, profitable job.” The key word here is “reliable”. In other words, fear is what keeps him in this quadrant. And if such a person wants to move to another quadrant, then the matter for him does not come down to learning some new methods and gaining additional skills - most often this person needs to overcome an obstacle of an emotional nature.

A person from the S quadrant can be easily recognized by statements like: “If you want something done well, do it yourself.” The main difficulty for these people is to learn to trust others to do any responsible work and recognize that they can do it better than themselves. It is this distrustful attitude towards people that most often keeps them within the very narrow confines of a small business, since a more or less large business ultimately cannot be created if you do not trust any of your subordinates. When S-quadrant people grow in business, it is most often within companies organized as partnerships, which are a group of friends working together, each of whom is a typical S-quadrant professional.

People from the B quadrant are always looking for subordinates and trying to organize a well-functioning business system. They don't feel like they necessarily have to do all the work within a given business. Their job is to build a business that would do this work for them. A true B quadrant entrepreneur is able to grow his business anywhere, even around the world, while a C quadrant entrepreneur is most often limited to a narrow framework within which he can personally control and manage everything. But, naturally, there can be exceptions to every rule.

A person from the I quadrant - an investor - is looking for smart people from the S and B quadrants who would take care of his money and put the capital to work so that it grows and brings good income.

In teaching his son and me about business, rich dad taught us to first focus on creating a successful S-quadrant business that could eventually be expanded into a B-quadrant business. And that's what this book is about.

What type of business are you going to create?

As part of our preparation as entrepreneurs, rich dad encouraged his son and me to explore as many types of businesses as possible. He said, “How can you become an entrepreneur and develop your own business if you don’t know anything about what types of businesses and entrepreneurs there are?”

Entrepreneurs who hire themselves

Rich dad never tired of saying that many entrepreneurs are not actually business owners at all, but people who hire themselves to run a business—so they don't own the business, they only work in it. He said: “You probably hired yourself if the name of your business bears your last name; if your income stops coming in as soon as you stop working; if you meet your clients in person; if employees can come to you with any problem. Often, you may consider yourself hired when you are the most experienced, most talented, and most educated person in your organization.”

This doesn't mean that rich dad had anything against businessmen who hire themselves. He just wanted us to understand the difference between entrepreneurs who own their own business and those who have a workplace in that business. Various consultants, musicians, actors, cleaners, owners of small restaurants, shops and shops - as well as most other owners of small business companies - fall into this category of people who do not run a business, but simply have a workplace in their own business, and are in this regard typical representatives of the C quadrant.

The main point that rich dad made about the difference between self-employed entrepreneurs and true entrepreneurs who build big businesses is that many entrepreneurs of the first type are unable to turn a small company into a large one in any short period of time. In other words, their main obstacle is the need to move from the S quadrant to the B quadrant. Why? Again, the answer is that their business is usually poorly planned to begin with. Therefore, he is doomed to vegetate.

Rich dad started out as a self-employed S quadrant entrepreneur. But at the same time, in his mind, he was constantly focused on the fact that in the future he would create a truly big business, within which he would manage people who were more experienced and endowed with greater abilities than himself. And he continuously calculated and refined the B quadrant business, so that - before actually starting it - he was able to tailor his S quadrant business so that it grew and naturally became a B quadrant business.

Professionals and people related to a profession

Rich dad also wanted us to know how many professionals—doctors, lawyers, accountants, architects, plumbers, and electricians—organize their businesses by employing themselves because of the nature of their profession or work practices. The fact is that these professions require special licenses from the authorities to work.

This category also includes professional sales agents, many of whom have special licenses as independent consultants, such as real estate, insurance, or securities. In fact, most of them are technically self-employed, or (which is the same thing) independent contractors.

The problem with this type of business is that with this type of business you don't have a company to sell because it really comes down to the personality of the owner. And often such companies have virtually no assets. Their only asset is the owner. If such a company can be sold, then it usually will not get more for it than for a similar mid-level company managed according to the true principles of the B quadrant. In addition, when selling his company, the owner often agrees to stay on to help him further function normally. In essence, this is a typical example of a manager turning into an employee.

According to rich dad, it is not worth working hard for because there is no accumulation of assets. That's why he advised his son and me never to aspire to become employees. He said, “Why work so hard if you end up creating nothing worth owning?”

Later in this book, we'll look in detail at some of the ways that these types of entrepreneurs can create assets for themselves—assets that will grow over time and that they can then sell to someone else.

"Business for Mom and Dad"

A very significant proportion of firms are known as “mom and pop businesses.” They received this name because most often we are talking about family firms. For example, my mother’s mother once owned a small grocery store, in which all family members worked a little.

A big obstacle to the growth of this type of business is the influence of family relationships. Many entrepreneurs do not hesitate to involve their children in this business, giving them responsible positions, even when they do not understand anything about it - according to the principle “well, how can you not please your loved one.” But it often happens that children do not share their parents' passion for a given business or they simply do not have the entrepreneurial abilities necessary to manage a business.

Franchises

Franchises, such as McDonald's, are theoretically a business that can be purchased ready-made, so to speak, on a turnkey basis. This company is able to sell a ready-made business to any person who does not want to go through the inevitable creative and organizational phase when creating it. It's like becoming an entrepreneur by magic. Another advantage of good franchises is that banks are usually more willing to lend to someone buying a franchise than to someone who wants to start a business from scratch. In this case, it is more convenient for banks to conduct business, since they have already collaborated with other buyers of the same franchises, and, in addition, they believe that proprietary training programs will certainly help a newly minted entrepreneur get on his feet and thus significantly reduce the risk that he will go bankrupt.

But the most important problem when purchasing such well-known franchises is that they are very expensive and place the entrepreneur in strict limits. Franchises are a type of business in which legal issues play an important role and which can force its owner to become involved in litigation. And such processes can be classified as the most slippery that exist in the business world.

In such cases, one of the main reasons for the clashes is that the people buying the franchises do not want to run their business the way the creators and owners of the franchise require. Another reason is that if the buyer of a franchise cannot achieve financial success, he may want to pursue a claim against the company that sold the franchise. If you have no desire to follow this path, then it is better for you to create some kind of your own business.

Network and direct marketing

Network and direct marketing, according to many entrepreneurs, are the fastest growing business models in the modern world - but at the same time the most controversial. They still cause a strong negative reaction among many people: these people claim that network marketing is nothing more than a regular pyramid scheme. But in fact, the largest pyramids in the world are just traditional corporations, in which there is one person at the top, and all the other employees and workers are at the bottom.

Anyone who wants to become an entrepreneur cannot ignore the network marketing business. Some of the largest companies on Fortune magazine's list distribute their products through network or direct marketing.

We do not engage in network or direct marketing, but we have a positive attitude towards these types of businesses. People who want to become entrepreneurs, before leaving their current job, should consider pursuing these options and joining some company operating under this scheme. Why? Because many of these companies can help you achieve immediate sales, help you build your business, and help you develop leadership skills. You won't find such opportunities anywhere else. One of the most valuable things about joining a reputable organization is that you will be able to quickly learn how to change your mindset and also gain self-confidence - both of which are absolutely necessary for any entrepreneur. You will also become more familiar with the systems that help you build a successful business. Moreover, all this can be done for a very reasonable fee, while the acquired knowledge can be truly invaluable. (To better explain the benefits of skills that can be gained from these types of businesses, we wrote a little book called Business School.)

If I were to start my entrepreneurial career again, I would start with network or direct marketing - not so much because it can make a lot of money, but because these types of marketing can provide truly world-class training that is in no way inferior to that which Rich dad once gave it to me.

How to steal without breaking the law

One of the most interesting conversations Mike and I had with rich dad was how some entrepreneurs steal from other entrepreneurs. As an example, rich dad told a story about an accountant. One fine day, he left the company he worked for and started his own business, attracting clients from his former company. In other words, this accountant slammed the door, but did not forget to take their business with him. About this, rich dad said, “Although there is nothing illegal here, it is still theft.” While this could be considered a form of planning for a future business, it is clear to me that rich dad would not want his son and I to have anything to do with this type of “entrepreneurship.”

Entrepreneurs with a creative approach to business

Rich dad wanted us to become creative entrepreneurs, like Thomas Edison, Walt Disney, or Steven Jobs. He said: “It’s so easy to be a small, run-of-the-mill entrepreneur, like those family sandwich businesses! It is also not difficult to engage in trade or provide some professional services, such as those provided by plumbers and dentists. It's easy to become a successful entrepreneur by taking over or copying some good idea that someone else has and then going against the person who created it.” These are the people I met when I started producing nylon wallets and became a pioneer in this field. Once we created a market and attracted attention from customers to new products, competitors appeared out of nowhere, copied my methods exactly, and then simply crushed my small company. Of course, I can't blame them. I have only myself to blame because, again, it was all about me not thinking through and designing my business well before I started it.

Catherine Lavery from the USA became rich thanks to the creation of the company Calm The Ham. She decided to start her own business after reading 22 books, purchasing which she spent $238.

1.

These are the inspiring lessons from business coach Tony Robbins that will help change your entire life.

2. Outliers, Malcolm Gladwell, 2011

3. The Tipping Point, Malcolm Gladwell, 2006

This book talks about when a trend or idea reaches a point where it spreads rapidly. It is useful to read it to understand how to create fashion for your product.

4. The Millionaire Fastlane, MJ DeMarco, 2011

The author talks about three ways to travel through life in different lanes: on the side of the road, slowly on the right side, or quickly on the left. He also exposes millionaire advisers who make fortunes from theoretical advice alone.

5. 6. Productivity: The Four Hour Work Week, Tim Ferriss, 2009

How can you work less and earn more? Tim Ferriss knows the answer to this question. He also talks about the power of outsourcing, which in some cases helps increase productivity.

7. The Compound Effect, Darren Hardy, 2012

This is a basic guide to achieving success in any endeavor. The book will help you start an extraordinary life that is different from many others.

8. 9. The Ultimate Sales Machine, Chet Holmes, 2008

Many managers do up to 4 thousand things in their business. However, to achieve results, it is enough to perform only 8 specific tasks perfectly. The book will help make your business easier.

10. 11. “The Personal MBA”, Josh Kaufman, 2012

Everything you need to know about business. The book is written in simple language. This will help you understand complex concepts with simple examples.

12. “Business from Scratch” (The Lean Startup), Eric Reis, 2011

A big book that will tell you how to make the best use of your small resources to start your business.

13. “The $100 Startup”, Chris Guilbeault, 2012

14. “Smash it!” (Crush It), Gary Vaynerchuk, 2009

A book about how to turn passion and passion into your business. She will also help you crush your competitors with the help of transparency in your business and social networks.

Trivial fears or incorrect forecasts can become an obstacle to the development of your business. The author will talk about imaginary barriers to the establishment of your business that hinder rapid growth.

16.

As the title suggests, the book will tell you how to make your business unique and different from your competitors.

17. ReWork, Jason Fried, 2010

18. This Book Will Teach You How to Write Better, Neville Medora, 2013

You can earn millions by pressing keys on your keyboard. If you choose the right words, you can find many clients. The book will teach you how to do it correctly.

19. “To Sell Is Human”, Daniel Pink, 2013

Selling is not shameful, as many people believe. The book will help you understand the art of sales, get rid of prejudices and establish this process in your company.