Last month's "Something to Think About" family meeting was a hoot and a blast! Our topic was multiple streams of income, in particular, entrepreneurialism. The fun part? We pitched business ideas to each other. In our business pitch game, "Swimming with the Killer Whales" (because I'm a bit too big to be a shark), I gave every member of the family $1000 in "Eddiebucks" - named for my late father-in-law -- and each of us who has a business or wants one had to pitch our business ideas. If others liked the idea, they "invested" with their Eddiebucks. The person with the most Eddiebucks at the end of the night won -- in this case, my nephew. We had some really good ideas pitched. In fact, they were so good, I won't even repeat them because I don't want anyone to steal them.
Below are the agenda and handouts from the meeting. The handouts crib heavily from Robert Kiyosaki's "Cash Flow Quadrant" and Richard Harroch's, "Small Business Kit for Dummies," so at the risk of copyright infringement, here goes. Robert and Richard, please do me the favor of just posting your "cease and desist" letter in the comments section.
Here's to my family's revolution -- and yours.
BWB
P.S. The California Department of Industrial Relations has created an online Small Business Portal that serves as a one-stop shop for small business owners:
http://www.dir.ca.gov/SmallBusiness/index.htm
SOMETHING TO THINK ABOUT
A Series of Family Talks
AGENDA
Saturday, April 14, 2012
5:00 pm to 7:00 pm
I.
Prayer, Call to
Order, and Dinner
II.
Purpose of
“Something to Think About”
·
Knowledge: Share What We
Know (mistakes and all), Learn What We Don’t
·
Encouragement: Helping Each
Other Reach Our Goals
·
Action: Holding Each Other Accountable for Taking Positive
Steps Toward Our Goals
III.
Family Sou-Sou
Drawing
IV.
Five Goals for
The Family
·
Financial
Literacy
·
Home Ownership
·
Having a Career
·
Educating Our
Kids to Prepare Them for College or a Vocation
·
Multiple Streams
of Income
V.
Topics to be
Covered Today – Multiple Streams of Income:
Entrepreneurship and Small Business Ownership
·
First Things
First: Why Do I Need Multiple Streams of
Income
·
Entrepreneurship/Small
Business Ownership – Is It For You?
·
Questions to Ask
Yourself Before Starting a Business
·
Starting a
Business: Steps and Resources to
Consider
VI.
The Department of
Gentle Nudges: Encouragement from Each
Other to Achieve Our Goals
VII.
Adjourn; Next
Meeting: Saturday, May 5, 2012 (Topic:
Home Ownership)
Something to Think
About
A series of family meetings
Multiple Streams of
Income
Module 1: Entrepreneurship/Small Business Ownership
I.
First Things
First: Why do I need multiple streams of
income?
·
So you don’t put all your income eggs in one
basket – you job. If your job is
your only source of income and your employer loses a major contract, downsizes
and lays off employees, or furloughs employees, if you have multiple streams of
income in addition to your job, you will have another source of income to help
make up the loss of income from your job.
·
To save for things your job income doesn’t
cover. Having a second source of
income, whether it’s a business or investments (See Something to Think About, Financial Literacy, Module 3 –
Investing), can help fund financial goals that your employment income may not
cover, such as vacations, college or private school tuition, retirement, or
medical bills not covered by insurance.
Having a separate business can allow you to set up a separate
tax-deferred retirement savings vehicle, such as a SEP-IRA (Simplified Employee
Pension-Individual Retirement Account), which allows you to contribute 20 to 25
percent of the profit from your business per year, up to a maximum of $49,000,
which is higher than with a regular 401(k).
·
To reduce your tax rate. Investment profits are taxed as capital
gains, which means they are taxed at a lower rate than wage income. This is why Mitt Romney and Warren Buffett
are taxed at a lower rate than Warren Buffett’s secretary – they derive their
income from investments, not from wages, like Warren Buffett’s secretary.
·
Most important, to become financially free. At some point, you may not want to work, or
you may want to do a kind of work that rewards you spiritually but not
monetarily. Having multiple streams of income may allow you to not have to work
at all or do work that is spiritually rewarding without lowering your standard
of living.
II.
Entrepreneurship/Small Business Ownership: Is It For You?
A.
Entrepreneurship Versus Small Business
Ownership
I have used the terms “entrepreneur” and “small business
owner” interchangeably. Some people
define entrepreneurship as different from being a small business owner. The website QuickMBA.com defines entrepreneurial
ventures as being different from small businesses in these ways:
1.
Amount of wealth creation: Rather than simply generating an income
stream that replaces traditional employment, a successful entrepreneurial
venture creates substantial wealth, typically in excess of several million
dollars.
2.
Speed of wealth
creation: While a successful small
business can generate several million dollars of profit over a lifetime, an
entrepreneurial wealth creation is often rapid; for example, within 5 years.
3.
Risk: The risk of an entrepreneurial venture must
be high; otherwise, with the incentive of sure profits many entrepreneurs would
be pursing the idea and the opportunity no longer would exist.
4.
Innovation: Entrepreneurship often involves substantial innovation
beyond what a small business might exhibit.
This innovation gives the venture the competitive advantage that results
in wealth creation. The innovation may
be in the product or service itself, or in the business processes used to
deliver it.
Regardless of whether you aspire to be an entrepreneur or a
small business owner, if you are working for someone else at this point, you’re
going to have to change how you think about how you make your money. This is where Robert Kiyosaki’s Cashflow
Quadrant™ comes in.
B.
Robert
Kiyosaki’s Cashflow Quadrant™: Moving
from the Left Side to the Right Side
1.
What Is The
Cashflow Quadrant™?
In his book “The Cashflow Quadrant,” ™ Robert Kiyosaki
defines the four quadrants from which people derive their income, or cash flow,
in a diagram that looks like this:
E | B
S | I
“E” stands
for “Employee” – someone who earns his income by working for someone else.
“S” stands
for Self-Employed – someone who earns his income by working for himself. S’s are usually professionals, such as
doctors, lawyers and accountants, who charge by the hour or the project.
“B” stands
for Business Owner – someone who earns his income from a business that he owns
in which other people work for him.
“I” stands
for “Investor,” someone who earns money from his investments, e.g., stocks,
real estate.
Kiyosaki
states that you can become wealthy from any one of the four quadrants, but the
easiest wealth will come from the quadrants on the right side of the diagram,
not the left, because you are using the work of others to make you rich instead
of trading your own time for wealth.
When you work for someone else or are self-employed (which Kiyosaki
defines as basically “owning your own job”), your wealth depends on you putting
time into your job or your business to earn your wages or increase
profits. Since there are only so many
hours in a day, there’s only so much money you can make. That’s why Kiyosaki recommends moving from
the left side of the quadrant (working for your money) to the right side
(having other people or things working for your money), because the road to
financial freedom is more easily reached by earning from the right side of the
quadrant than the left. And since
earnings from the right side are usually capital gains, not wages, they are
taxed at a lower rate.
2.
Don’t Confuse
Being Rich with Being Wealthy; Wealth is Financial Freedom
Kiyosaki defines wealth as “the number of
days you can go without physically working without lowering your standard of
living.” Kiyosaki measures wealth in
terms of time, not the amount of money you have or earn. When your income comes from investments and
not from working, you are more likely to be wealthy because you don’t have to
physically work for your income. Being wealthy doesn’t necessarily mean that
you are rich; it means that, whatever your standard of living is ($50,000 a
year, $90,000 a year, or whatever), you can maintain it without physically
working. You are, in other words,
financially free.
Kiyosaki
notes that the left side of the quadrant is seen as more secure. E’s are seen as the most secure, since they
have no capital at risk and need only perform to earn money, but, as Kiyosaki
puts it, your boss will never make you wealthy.
S’s are less secure but more in control, since they work for no one but
have capital at risk. Still, S’s are
limited in how much they can earn because they have to show up to earn their
money. B’s and I’s can stay in bed and
the money still comes.
3.
The Difference
Between an “S” and a “B” and the Path to Financial Freedom
Many self-employed people think
they are business owners. Kiyosaki would
beg to differ. He defines a true business owner as someone who could leave her
business for a year and come back to the business still running more profitably
than when she left. In other words,
if you became ill, would your business die?
If so, you’re not a true business owner in Kiyosaki’s eyes.
Kiyosaki says that an “S” owns a
job, while a “B” owns a system and then hires people to operate that
system. For “S’s” to evolve into “B’s”,
they need the following to become successful:
a.
Ownership or
control of systems; and
b.
The ability to lead people.
The example Kiyosaki gives of a system is McDonald’s. While many people can make a better hamburger
than McDonald’s, few have a better business system than McDonald’s. Think about it.
·
McDonald’s is a franchise. People pay the McDonald’s corporation to
operate one.
·
McDonald’s has a standard manner of operating –
a certain time in which customers are to be served, certain ingredients, and a
certain manner in which the food is to be prepared – which it teaches all its
franchisees to make sure the brand is consistent no matter where a McDonald’s
is, i.e., the fries taste the same no matter where you buy them.
·
McDonald’s controls who gets a franchise and
where they are so that they are profitable, i.e., not too many franchises
within a short distance of each other
·
If McDonald’s loans franchisees the money to pay
the franchise fee, they make money twice – once on the loan, a second time on
the royalties paid by franchisees
In other words, McDonald’s doesn’t make money because they
make a better burger; they make money because they have a better system of selling burgers.
Kiyosaki recommends Network
Marketing as a low-cost way of owning a franchise. Examples of network marketing companies
include:
·
Avon
·
Primerica
·
Amway
·
Mary Kay Cosmetics
·
Organo Gold Coffee
·
Melaleuca
·
Pampered Chef
·
Cookie Lee Jewelry
·
Tupperware
Kiyosaki says that the average wealthy person earns 70% of his income from the right side of the quadrant and 30% from the left, and most people feel comfortable earning their income from both sides, but the truth path to financial freedom is to get to the “I” quadrant. The path he recommends is going from being an “E” and an “S” to becoming a “B,” and then eventually an “I”. As Kiyosaki says, most people say that the keys to wealth are OPT and OPM:
OPT = Other People’s Time
OPM = Other People’s Money
III.
Before You Start Your Business - Question to Ask Yourself
Here are some questions you may want to consider before you
take the step from being an “E”
to an “S”:
to an “S”:
·
What are you going to sell?
o
Product?
How are you going to develop your product?
o
Service? How is your service going to be
different or better than what’s already out there?
·
Who’s going to buy what you’re selling?
o
Can your proposed customers afford to buy what
you’re selling?
§
You don’t want the “orphan drug” problem: Creating a product that fills a need but is
too expensive for potential customers to buy
o
Are your proposed customers willing to buy what you’re selling? Just because people say you
have a good idea doesn’t mean they’re willing to pay for it.
·
Who is your competition? Can you beat them?
o
Is the field so crowded that you can’t make a
profit?
o
How can you distinguish yourself from your
competitors?
o
Is your service or product easily replicable by
your competitors? (E.g., Groupon being replicated by Living Social and
Amazon.com; MySpace being replicated and improved by Facebook).
·
Can you sell what you’re selling at a profit?
·
Do you have the time to devote to a
business?
o
According to Robert Kiyosaki, his “rich dad”
said the difference between the wealthy and those who are not is how they spend
their free time.
·
See Harvey Mackay’s “Checklist for Starting Your
Own Business,” Sacramento Business Journal, July 22, 2010.
IV.
Starting Your
Business – Some Things to Think About and Resources to Consider
A.
Steps (from “The
Small Business Kit for Dummies” by Richard D. Harroch)
a.
Choosing a Business Entity
i.
Sole Proprietorship – If all you have is a
business license, you’re a sole proprietorship.
Sole proprietorships have no legal separation between the assets of the
person running the business and the business itself. If a sole proprietorship is sued, the sole
proprietor’s assets may be at risk to satisfy any judgment, e.g., your house,
your car, your bank account.
ii.
Partnerships – Partnerships are created through
legal agreements by which two or more people agree to own a business.
·
General Partnership – Not the best
option.
·
Like a sole proprietorship, partners in a
general partnership can be personally liable for the partnership’s debts and
obligations.
·
You need a detailed Partnership Agreement to
state the rights and obligations of the partners to determine how profits and
losses are split, whether the partners have equal control over the business,
and whether interests can be transferred.
Don’t try to draft a Partnership Agreement yourself; get a good
attorney.
·
Partnership income is taxed to the partners, not
the partnership (called “pass-through taxation”), so partnership earnings are
not double taxed like corporation income.
·
Limited Partnership – Limited
partnerships consist of one or more general partners and one or more limited
partners. General partners tend to make
all the business decisions, and limited partners are typically passive
investors or participants.
·
General partners have unlimited liability for
the partnership’s debts and obligations; the general partner should not be an
individual but a corporation or an LLC.
Limited partners have no personal liability for the partnership’s debts
and obligations, but they may lose their investment.
·
The partnership agreement states the partners’
rights to profits and losses, and transfer of ownership typically requires the
general partner’s approval.
·
The partners are taxed on partnership income
just like a general partnership.
·
Limited Liability Partnership (LLP) –
Typically general partnerships that are restricted to professionals, i.e.,
accountants and lawyers, in order to shield them from being personally liable
for negligence or malpractice in the practice of their professions.
iii.
Corporations
·
C Corp – A C corporation is your normal
corporation. Unlike partnerships,
corporations of any kind require you to observe certain formalities, especially
in forming them in compliance with state laws.
·
Shareholders, who are the owners of the corporation,
officers and directors are not personally liable for the debts and obligations
of a corporation.
·
Corporations typically, but not always, pay dividends,
or profits, to shareholders, and whether a shareholder receives dividends
depends on the type of stock they own. Some corporations never or rarely pay
dividends (Apple, Microsoft, Google).
However, common stock shareholders split dividends pro rata based on the number of shares owned (e.g., a shareholder
who owns seven shares of stock will receive seven times the amount of dividends
as a shareholder who owns one share of stock.)
·
Corporate income is taxed twice. First, the earnings of the corporation are
taxed to the corporation. If the
corporation then decides to pay out some of its profits to shareholders in the
form of dividends, shareholders pay capital gains taxes on dividends.
·
S Corp – An S corp has some significant
differences from a C corp.
·
Like a C corp, an S corp limits liability for
debts and obligations to the corporation itself, not the shareholders,
directors or offices.
·
Unlike a C corp, an S corp limits the number of shareholders you can have to
75. There can be only one class of
stock, unlike with a C corp.
·
Unlike a C corp, an S corp’s income is taxed to
the shareholders, whether or not it has been distributed to the shareholders,
and its losses can be passed through to shareholders to offset other income,
with some restrictions.
iv.
Limited Liability Company (LLC) – Is very
similar to an S corp, except you don’t have a limitation on the number of
members.
·
Members of an LLC are generally not liable for
the LLC’s debts and obligations.
·
There’s no limit on the number of members an LLC
may have, and the LLC agreement can decide how profits and losses are allocated
in its membership agreement.
·
LLC’s can choose to have pass-through taxation
(like a partnership) or be taxed as a separate entity, like a regular
corporation.
b.
Business Plan
i.
I’m A Small
Business Owner – Why Bother With a Business Plan?
Three reasons, according to Richard
Harroch:
·
To have a planning tool for the growth of the
business
·
To attract investors
·
To measure and monitor your company’s
performance over time.
ii.
What’s In a Business Plan?
Business plans vary, but Harroch
states the following as the key sections of a business plan:
·
Cover
page: Contains contact information
and a confidentiality blurb
·
Table of
contents: Enables your readers to
quickly find the exact information they’re looking for
·
Executive
summary: Explains briefly your
business’s prospects, needs, and situation
·
Company
description: Contains a historical
account of the company as well as its future prospect
·
The
product or service: Explains what is unique about the
products or service that the business will deliver.
·
The
market: Creates a picture of the market in which
your business competes
·
Marketing: Informs your reader of how you plan to
capture your business’s potential market (packaging, distribution, advertising,
and so on)
·
Management/ownership: Introduces the people holding leadership
positions in the business
·
Competition: Focuses on your competitor’s strengths and
weaknesses
·
Financial
statement and projections: Includes
lots of numbers like your balance sheet, income statement, cash flow statement,
and financial forecasts
·
Appendices: Contains resumes of key personnel, an
organizational chart with positions and responsibilities, extended market
information, and other data to back up the claims in your business plan.
iii.
Who Can Help
Me Write My Business Plan (For free or cheap)?
·
SCORE (Service Corps of Retired Executives)
(score.org). SCORE is supported by the
U.S. Small Business Administration and has over 13,000 volunteers nationwide to
provide services at no charge or at low cost.
SCORE can provide you
o
Volunteer mentors from over 62 industries
o
Free business tools, templates, and tips online
o
Free, confidential business counseling in person
or via email
o
Inexpensive or free local business workshops and
webinars
·
Business students. Some MBA programs and college business departments
have their students act as consultants to provide free services to small
businesses. Check your local community
college business faculty or university MBA program.
·
Your local Chamber of Commerce. Your local chamber of commerce might have resources
to help you write a business plan or find someone to write one for you.
c.
Organizing Your Corporation (if you choose to
become one)
Should you choose to organize your business as a corporation
or an LLC, there are very specific legal requirements that you need to satisfy
as well. Consult “The Small Business Kit
for Dummies” for more information.
d.
Raising Capital
i.
Loans
·
Promissory Notes – Promissory notes are
essentially IOU’s formalized on paper. There are specific terms they must have
in order to be legally enforceable.
·
Formal Business Loans
·
The SBA has a loan and grants finder on its
website at http://www.sba.gov/content/search-business-loans-grants-and-financing
.They also have information on what your business loan application should
contain and what your SBA loan application should look like at http://www.sba.gov/content/sba-loans
·
Microlenders – There are non-profit
microlenders that make very small loans to small businesses. They include:
·
For more information, Google “microlender” or
check the Frugal Entrepreneur site blog entry, “20 Sites to Help You Get a
Microloan for Your Small Business or Startup” http://frugalentrepreneur.com/2011/01/14-sites-to-help-you-microfinance-your-business-or-startup/
·
Crowd Funding -- These are online
organizations by which large groups of people decide to pool their money to
make loans to small businesses. They
include sites such as Kickstarter
http://www.kickstarter.com)
·
Commercial Peer-to-Peer Lending –
Business organizations that loan to other businesses. You typically need a credit score of 660 or
above to participate.
ii.
Grants --
The Small Business Association (sba.gov) has a loan and grants finder on its
website to help you locate grants and loan programs specific to your industry
and to you (minority-owned business, woman-owned business) at http://www.sba.gov/content/search-business-loans-grants-and-financing
iii.
Equity – This means selling partial ownership of
your company in exchange for stock or stock options and having investors
instead of lenders. Your investors may
also want to have a say in the running of your company
·
Stock
·
Types of stock
·
Common --
Has no priorities or preferences over other classes of stock
·
Preferred – Gives shareholders various benefits
over common stock holders, such as a priority on the businesses’ assets upon
liquidation, special voting rights, or a priority on dividends. Many professional investors prefer preferred
stock to common stock
·
Types of Equity Investors
·
Angel Investors – Individuals interested in
funding start-ups or early stage companies in exchange for equity. They’re usually not interested in taking an
active role in running the company.
·
Venture Capitalists – Professional investment
groups that invest primarily in high-growth companies and provide significant amounts
of funding, management advice, business strategy, and contacts and
introductions to other companies.
Venture capitalists want equity and a significant say or veto power in
the running of the business.
·
Strategic partners – A strategic partnership or
joint venture with another company can provide financing, resources, technology
or information. Strategic partner financings are typically on better terms than
venture capital financing.
(Example: Cingular Cellular
started as a joint venture between AT&T and BellSouth).
·
Private placements through private placement agents
-- You can hire a placement agent or broker-dealer to help raise money by
finding investors to buy into your company for a commission.
e.
Bookkeeping and Accounting
Once you become a business, you’ve got to account for your
money. You’ll have to do at least three
main things: 1) Determine your
accounting method; 2) Keep records and books; and 3) generate your financial
forms. Quite frankly, I think this is
best left to an accountant or bookkeeper or to small business accounting
software such as QuickBooks.
i.
Accounting Method:
Cash or Accrual
An accounting method is a set of
rules used to determine when and how to report income and expenses in your
business books and on your business income tax returns. There are two basic accounting methods:
·
Cash – You report income that you receive
during the year, and you usually deduct expenses as you pay them. Service providers and construction companies
typically use the cash method.
·
Accrual method – You report income when
you earn it (such as when you ship the product or perform the service), even
though you may receive payment later. You deduct expenses when you incur them
(such as when you receive a product or service), regardless of when you pay
them. Manufacturers and retail stores
that maintain inventories typically use the accrual method.
ii.
Keeping Records and Books – This is done by use
of supporting documents, journals, and ledgers
·
Supporting documents are documents that
are evidence of business transactions, such as invoices, receipts, deposit
slips, and canceled checks.
·
Journals are books in which you record
each business transaction shown on your supporting documents. You
may keep separate journals for transaction that occur frequently.
·
Ledgers are books that contain the totals
from all your journals. Ledgers are
organized into different accounts.
iii.
Financial Forms
The three financial forms you’ll
have to generate are:
·
Income Statement: Your income statement figures net income or the bottom line. It is calculated by adding up all the revenue
from your business and then subtracting all the costs and expenses of operating
your business, e.g., Revenue – Costs = Net Income
·
Balance Sheet: The balance sheet shows the company’s
financial condition as of a specific date – what the business owns (assets) and
what the business owes (liabilities).
The difference represents the business’s equity (or net worth), e.g.,
Assets – Liabilities = Equity
·
Cash Flow Statement: Shows what happens to your cash over a
specific period of time. You can have
very good profits and a strong Balance Sheet and still not have money in the
bank to pay your bills. Because cash
flow may be critical to a business’s daily operations, you may need to follow
it weekly.
For more on financial forms, read “The Small Business Kit for Dummies.”
f.
Taxes
As soon as you open your business,
you need a Taxpayer Identification Number.
If you’re a sole proprietorship, it can be your Social Security Number
(SSN). Any other business form –
corporation, LLC, LLP – will require an Employer Identification Number (EIN).
i.
The Five
General Taxes You’ll Pay
·
Income tax – Generally, sole proprietors,
partners and shareholders of an S corporation make regular estimate tax
payments throughout the year. If you
expect to owe taxes, including self-employment tax, you generally have to make
estimated tax payments.
·
Self-employment taxes (the combination of
Social Security and Medicare tax for individuals who work for themselves. You generally pay self-employment tax if your
annual net earnings from self-employment are $400 or more. See IRS Publication 533
·
Employment taxes consist of federal
income tax withholding, Social Security and Medicare taxes, and federal
unemployment taxes for your employees
·
Excise taxes are taxes you pay if you
manufacture or sell certain products, operate certain kinds of business, or use
various types of equipment, facilities or products. Most small businesses don’t fall into these
categories, which include retail sales of heavy trucks, wagering, guns, and
tobacco and alcohol.
·
Sales tax. If your business sells retail products and
your state imposes sales tax on these goods, your business is responsible for
collecting and paying that tax.
g.
Hiring Employees . . . Or Not
The people who work for you in
your business belong to one of two categories:
Employees or Independent Contractors.
Most small businesses prefer independent contractors. Why:
·
With employees, you have to
o
Pay them benefits
o
Have consistent employee personnel policies
o
Withhold taxes
o
Hire and train them
o
Be aware of and not violate antidiscrimination
laws
o
Carry Worker’s Compensation Insurance
o
Make employer contributions to Social Security
and Medicare
o
Pay overtime for hourly employees
You don’t have to do any of these
things with independent contractors, BUT you have no control on how an
independent contractor.
h.
Legal – Contracts, Compliance, Intellectual Property
and Customer Issues
At some point, you will need legal
advice or forms for:
·
Contracts
·
Compliance with all applicable laws –
securities, licensing, regulatory, employment, antitrust
·
Protection of your intellectual property –
patents, formulas, creations, software, brand
i.
Marketing and Advertising
You can no longer be content to put up a website and call that
“marketing.” In addition to your
website, a small company needs to leverage social media and search engines in
addition to seeking exposure through mainstream media in order to get the
business before the right folks. You’ll
have to get comfortable with Facebook, Twitter and other social media, if for
no other reason, to monitor what’s being said about your company.
B.
Resources
The Small Business Administration http://www.sba.gov
QuickMBA.com http://www.quickmba.com
Service Corps of Retired Executives (SCORE)
http://www.score.org
Inc. Magazine http://www.inc.com
Black Enterprise Magazine http://www.blackenterprise.com
Go Big Network, “How to Raise Money 101” http://www.gobignetwork.com
Richard D. Harroch, “Small Business Kit for
Dummies”
Something to Think
About
A series of family meetings
Multiple Streams of
Income
Business Example of
Moving from the Left Side of the Cashflow Quadrant ™ to the Right:
My Niece’s Place, LLC
I wanted to give a real life example of a business that
shows the progression from the left side of the Cashflow Quadrant™ to the
right: My Niece’s Place, LLC.
Remember the Cashflow Quadrant™:
E | B
S | I
“E” stands
for “Employee” – someone who earns his income by working for someone else.
“S” stands
for Self-Employed – someone who earns his income by working for himself. S’s are usually professionals, such as
doctors, lawyers and accountants, who charge by the hour or the project.
“B” stands
for Business Owner – someone who earns his income from a business that he owns
in which other people work for him.
“I” stands
for “Investor,” someone who earns money from his investments, e.g., stocks,
real estate.
E: My niece worked as
an employee with AT&T for 14 years.
She decided she wanted more out of life and goes back to college,
finishing her Bachelor’s in Early Childhood Education.
S: My niece opens My
Niece’s Place, LLC, a daycare and preschool for special needs children. She is the sole owner and operator, yet she
opens as an LLC, insulating herself from any personal liability if something
happens to the kids. Smart cookie.
What’s Next?
B: My niece hires
employees and opens new locations of My Niece’s Place, LLC. She develops a curriculum and approach for
her daycare/preschool and licenses franchises of My Niece’s Place, LLC, now the
premiere provider of daycare and preschool for special needs children. She is no longer self-employed but a business
owner overseeing other people, i.e., getting rich using Other People’s Time and Other
People’s Money.
I: My niece sells the
entire company, takes the profits, and invests in other companies, living off
her stock dividends. She’s financially
free.
Something to
Think About
A series of family meetings
Multiple Streams
of Income Module
“Swimming with the
Killer Whales” Business Pitch Game
·
The
Problem: What problem will your business
solve?
·
The
Solution: What is your solution to the
problem?
·
Your
Market: Who’s going to buy what you’re
selling?
No comments:
Post a Comment