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Rich Dad -- Poor Dads Cash Flow Quadrants

Two Beginning Thoughts


The Sooner You Imagine A World Without Paychecks, the Wealthier You Will Become. Job Security = Financial Security = Financial Freedom

Rich Dads Cash Flow Quadrant

Rich Dads Cash Flow Quadrant

Rich Dads Cash Flow Quadrant

You have a job. Someone else is the boss. Security before money.

Mgmt vs Non-Mgmt Jobs


Mgmt/Exempt
 

Non-Mgmt/Exempt
      

   

Considered a professional At least 50% of time using intellect, directing, creativity Has discretion with decisions Sets own work schedule Receives a salary No overtime pay

Considered nonprofessional Up to 100% doing routine, non-thinking tasks Does only what is told to do Has a pre-set schedule Punches a time clock Paid hourly Receives overtime pay

Rich Dads Cash Flow Quadrant

(modified)

You have a job. Someone else is the boss. Security before money.

You own a job. Loner/boss. Perfectionists. Small bus. owners: Drs. Restaurateurs. Independence before money.

Rich Dads Cash Flow Quadrant

You have a job. Someone else is the boss. Security before money.

You own a system others operate. Coordinator. Delegator. Franchiser. Use other people's time and money.

You own a job. Loner/boss. Perfectionists. Small bus. owners: Drs. Restaurateurs. Independence before money.

Rich Dads Cash Flow Quadrant

You have a job. Someone else is the boss. Security before money.

You own a system that others operate. Coordinator. Delegator. Franchiser. Use other people's time and money.

You own a job. Loner/boss. Perfectionists. Small bus. Owners: Drs., restaurateurs. Independence before money.

Your money works for you. Make money with money. Others liabilities are your assets.

Rich Dads Cash Flow Quadrant

Rat Race Side

Job Security

Financial Freedom

Wealth Side

Financial Security

Ultimate Financial Freedom

Rich Dads Cash Flow Quadrant


Earn Money Pay Taxes Spend Job Security Earn Money Spend Pay Taxes Financial Security Ultimate Financial Freedom Financial Freedom Create Money Spend Pay Taxes No Paychecks

Sample Paths To Financial Freedom

Start Rat Race Side or Start End Wealth Side

Sample Paths To Financial Freedom

Start Rat Race Side End Wealth Side

Sample Paths To Financial Freedom

Rat Race Side

Start

Wealth Side

End

Rich Dads Financial Mindset Comparison


Es and Ss Job Model
Job Savings Get Out of Debt Personal Residence Mutual Funds Equities/Stocks 401Ks, IRAs, SEPs

Bs and Is Asset Model


Businesses Real Estate Paper
Municipal Bonds IPOs, PPOs,

Niches and Perfect Customers

The Market/Customer/Niche
Test

Decide Customers
Whats my favorite fish? Whats my Niche? Am I passionate? Do I have expertise?

Select Media
Which ponds have my favorite fish? Find Big, Addicted fish--high probability prospects.

Decide Message

Make
Product/Brand

Start fishing. What bait are my fish eating? Find a Competitive Advantage.

Build Database

Stock your Private Pond

Niche Defined
Business Definition A special, narrow area of demand for a product or service. Personal Definition A situation or activity specially suited to a person's interests, abilities, or nature: found her niche in life. Ecology Definition The function or position of an organism or population within an ecological community. The particular area within a habitat occupied by an organism.

Types of Niches
Occupation: Small biz owners, garbage men, police, executive chefs, x-ray techs, magicians, realtors. Demographics: Gender, weight, disease, car-owned, type of house, college attended, marital status, retired, memberships, crime levels, education, renters, politics, religion, hospitals, dry cleaners, law firms, small airports, pre-schools, pet stores, manufacturers. Geographics: Neighborhoods, school/voting districts, suburb, city, states, resort areas, climate. Psychographics: Passions, hobbies, dislikes. Think Love-Hate Combinations of the above.

Evaluating Possible Niche(s)


Does the niche address one or more of my passions, talents, values, and/or my destiny? Can I easily and affordably contact my niche? Can the niche afford the product or service? Does the niche already buy the product or service? Do I have experience and credentials with the niche? Does the niche have serious problems to be solved? Is there excessive competition in the niche? Do I have a competitive advantage thats important to the niche? Is the niche large enough to make my desired profit?

Niche Example for a Bible Biz


Church-Goers Christian Protestant Asian Korean Decent Recent Immigrants Media Message Product Find Perfect Customer

Who Is Your Perfect Customer?


Perfect Customers are:
Affluent Addicts  with Big Mouths  who Love You to Death!


And, You only deal with those Perfect Customers who want to deal with you. So, Leave a trail where those Perfect Customers can find you.

Crafting a Winning Business Plan

Rank in order of importance.

Execution
In theory, if everyone takes the same approach. If everyone follows the same course, uses the same tools, and plays by the same rules. Then, in theory, everyone should end up with the same results. (But they dont.) Um, guess execution is a pretty important part of the game.

What Makes Us Special?


-- IBM Commercial
(Aired in the 2006 Masters Golf Tournament)

The Essential Functions of the Business Plan


If You Fail to Plan, You Plan to Fail.
A roadmap that guides the company by charting its future course and defining its strategy for following it. Makes us think (in writing) before we act. Balcony View Makes us list and test our assumptions about the business idea. Helps us make the Go/No Go decision. Helps us manage risk:
  

Makes us quantify our the situation. See how much we can gain/lose. Helps us formulate contingency plans. Provides standards to measure performance against.

Helps us describe our ideas to others Lenders, investors, and family.

Key Elements of a Business Plan


Executive Summary Mission Statement Company History Business and Industry Profile Business Strategy Description of Products/Services

Key Elements of a Business Plan


(continued)

Marketing Strategy Competitor Analysis Description of Management Team Plan of Operation Forecasted Financial Statements Loan or Investment Proposal

Tips for Preparing a Business Plan


Remember: No one can create your plan for you. Your plan must prove that the business will make money (not necessarily immediately, but eventually). Remember, youre telling a story with words and numbers. Make it interesting. Potential lenders want to see financial projections (and the assumptions behind them), but they are more interested in the strategies for reaching those projections.

Tips on Preparing a Business Plan


(Continued))

Identify your target market, and offer evidence that customers are hungry for your product/service. Empathize your Competitive Advantage. Show how you plan to set your business apart from competitors; don't fall into the "me too" trap.
Always include cash flow projections, not just words. Tell the truth always.

Tips on Preparing a Business Plan


(Continued) )

Keep your plan crisp between 25 and 50 pages Include a table of contents to allow readers to navigate your plan easily. Looks counts as much as content.  Make sure your plan has an attractive cover.  Rid your plan of all spelling and grammatical errors.  Make your plan visually appealing. Prepare a dynamic/confident plan presentation that can be done in as little as 20 minutes. (10 minutes for our end-of-class presentations.)

The Perfect Business

The Perfect Business

The ideal business is where these lines converge. Market Need Passion Competency

Created by Alan Weiss

More on the Perfect Business


Easy to get into: You already have the experience and capital and theres not much red tape. Easy to get out of: No long term legal, financial, ethical commitments. Your rights are liquid. Meaningful and fun: Success comes from playing hard, not working hard. Bill Cohen Supports your lifestyle choices: Your work is compatible with your desired lifestyle. Forgiving: Theres a fairly large margin of error. A few mistakes wont kill you. Theres room to evolve.

More on the Perfect Business


(cont.)

Protected from competition: You have a little monopoly. You efforts/rights are protected by strong brand, contracts, patents, secret formulas, etc. Limited financial exposure: Someone else carries the major financial risks with little or no recourse to you. Youre protecting your future. Fast results: You can quickly determine success or failure. A cookie cutter: You can multiply/leverage your efforts/rewards by bringing in others wholl do it for you or with you. A cash-out value: You can create and maintain salable value for when you must exit the business. Its an investment.

Prof. Whites Perfect Business


Only start/buy/invest in businesses that work harder for you than you work for them.

An Autonomous Web Business Model


Content Component:

Key: P-Provider; W-Website; C-Customer

Revenue Component Added:


5b 5a 4

2 3 Key: P-Provider; W-Website; C-Customer; A-Advertiser

Sample Autonomous Web Models


Content-Based
Dating Expert.com/  Yes No Maybe.com  Newsvine.com  Fundable.org


Product-Based
Caf Press.com  Zazzle.com


Mid-Term Presentation
Topics and Order

Cover the following:


Whos My Customer?
My Niche? Passion? Talent? Values? Destiny?

Whats My Product?

Whats My Competitive Advantage?

Whats My Business Model?

Mid-Term Presentation
Notes

5 minutes maximum


Rehearse

PowerPoint including the following:


Slide for each topic  Business Model Chart  Visuals of the product, location, customers, etc., if available.  Only one presenter