Building a Pipeline to Wealth
(The Four CASHFLOW Quadrants)
By Robert Kiyosaki
Each of us resides in at least one of the four quadrants of
the CASHFLOW Quadrant. Where we are is determined by where our
main source of income comes from.
Many of us rely on pay checks and are therefore employees, while
others are self-employed. Employees and self-employed individuals
reside on the left side of the CASHFLOW Quadrant. The right
side of the CASHFLOW Quadrant is for individuals who receive
their cash from businesses or investments they own.
My Rich Dad told me a simple story when I was 12 years old that
has guided me to great wealth and financial freedom. It was
Rich Dad’s way of explaining the difference between the left
side of the CASHFLOW Quadrant, the ‘E’ and ‘S’ quadrants, from
the right side of the ‘B’ and ‘I’ quadrants.
It goes: "Once upon a time there was this quaint little village.
It was a great place to live except for one problem. The village
had no water unless it rained. To solve this problem once and
for all, the village elders decided to put out to bid the contract
to have water delivered to the village on a daily basis.
Two people volunteered to take on the task and the elders awarded
the contract to both of them. They felt that a little competition
would keep prices low and ensure a back-up supply of water.
Self Employed Thinking "The first of the two people who won
the contract, Ed, immediately ran out, bought two galvanised
steel buckets and began running back and forth along the trail
to the lake which was a mile away. He immediately began making
money as he labored morning to dusk hauling water from the lake
with his two buckets. He would empty them into the large concrete
holding tank the village had built.
Each morning he had to get up before the rest of the village
awoke to make sure there was enough water for the village when
it wanted it. It was hard work, but he was very happy to be
making money and for having one of the two exclusive contracts
for this business.
Business Owner Thinking "The second winning contractor, Bill,
disappeared for a while. He was not seen for months, which made
Ed very happy since he had no competition. Ed was making all
the money. "Instead of buying two buckets to compete with Ed,
Bill had written a business plan, created a corporation, found
four investors, employed a president to do the work and returned
six months later with a construction crew.
Within a year his team had built a large volume stainless steel
pipeline which connected the village to the lake. At the grand
opening celebration, Bill announced that his water was cleaner
than Ed’s water.
Bill knew that there had been complaints about dirt in Ed’s
water. Bill also announced that he could supply the village
with water 24 hours a day, 7 days a week. Ed could only deliver
water on the weekdays--he did not work on weekends.
Then Bill announced that he would charge 75% less than Ed did
for this higher quality and more reliable source of water. The
village cheered and ran immediately for the faucet at the end
of Bill’s pipeline.
In order to compete, Ed immediately lowered his rates by 75%,
bought two more buckets, added covers to his buckets and began
hauling four buckets each trip. In order to provide better service,
he hired his two sons to give him a hand for the night shift
and on weekends.
When his boys went off to college, he said to them, "Hurry back
because someday this business will belong to you." For some
reason, after college, his two sons never returned. Eventually
Ed had employees and union problems. The union was demanding
higher wages, better benefits and wanted its members to only
haul one bucket at a time.
"Bill, on the other hand, realised that if this village needed
water then other villages must need water too. He rewrote his
business plan and went off to sell his high speed, high volume,
and low cost and clean water delivery system to villages throughout
the world.
He only makes a penny per bucket of water delivered, but he
delivers billions of buckets of water, and all that money pours
into his bank account. Bill had developed a pipeline to deliver
money to himself as well as water to the villages.
Bill lived happily ever after and Ed worked hard for the rest
of his life and had financial problems forever after. The end."
That story about Bill and Ed has guided me for years. It has
assisted me in my life’s decision making process. I often ask
myself, "Am I building a pipeline or hauling buckets?" "Am I
working hard or am I working smart ? " And the answers to those
questions have made me financially free.
The
CASHFLOW Quadrant is about the four different types of people
who make up the world of business, who they are and what makes
individuals in each quadrant unique. It will help you define
where you are in the Quadrant today and help you chart a course
for where you want to be in the future as you choose your own
path to financial freedom.
While financial freedom can be found in all four of the quadrants,
the skills of a ‘B’ or ‘I’ will help you reach your financial
goals more quickly. A successful ‘E’ should also become a successful
‘I’.
First printed in Pow Wow News, Autumn 1999
___________
Born and raised in Hawaii, Robert Kiyosaki is fourth-generation
Japanese-American investor, businessman and best-selling author.
His book, Rich
Dad Poor Dad, the #1 New York Times bestseller, reveals
what the rich teach their kids about money that the poor and
middle class do not. Robert has appeared on Oprah and other
top national TV and radio shows. Robert has a profound message
for those wanting to improve their financial lives. That message
is: "With every dollar in your hand, you have the power
to choose to be rich, poor or middle class." For more information,
visit
his web site.
-----------------------------
|
If
you enjoyed the article above -- Don't miss out on our FREE
Let's Talk Motivation newsletter. Each issue includes
the same high quality advice from leaders in the area of motivation
and personal development -- like the article you just read :-)
... Sign up now:
(Your email address will not be shared, or rented,
and you'll be free to unsubscribe at any time.)
|
