Entrepreneurs instead of employees
The problem is that most people don't know how to turn their multi-million dollar idea into an actual million. Why can't people turn their idea into millions of dollars? Because most of the people in school learned to become employees and not entrepreneurs.
This is why most people are told: "Learn something and then find a job." You never hear: "Go to school and learn how to create jobs", what the successful entrepreneurs do. Most people go to school to learn how to work for money, for a regular salary. Few learn to create money so they never need a salary. If you've read Rich Dad Poor Dad, you might remember my rich father's first lesson, "The rich don't work for money." * Entrepreneurs understand this lesson and they find ways to make the money for them to work and build wealth that provides both cash flow and an asset.
David, Goliath and Schumpeter
There are three different types of entrepreneurs in the world: Davids, Goliaths and Schumpeters.
- The Goliaths are entrepreneurs like Steve Jobs, the founder of Apple Inc., one of the richest companies in America. Other Goliaths include Larry Ellison, founder of Oracle, Henry Ford, founder of Ford Motor Company, Bill Gates, founder of Microsoft, Thomas Edison, founder of General Electric, Richard Branson, founder of Virgin, and Walt Disney, founder of Walt Disney Company. It is important to remember that all of these Goliaths started out as Schumpeters, that is, they were innovative entrepreneurs doing creative destruction in their industry.
- And we shouldn't forget that at some point they were all David - Davids who contested the Goliaths' top position. There is a film about the young Bill Gates and Steve Jobs, Pirates of Silicon Valley, how they attacked the Goliaths IBM and Xerox. The film describes how Bill Gates "stole" the PC business from the mainframe giant IBM; and Steve Jobs "stole" what later became the Xerox concept of what would be the mouse and the Macintosh. Watching Pirates of Silicon Valley is a must for the Schumpeters and Davids of the world, the brave little ones who declare war on the giants ... and eventually become giants themselves.
- The story of Richard Branson has a similar theme: a rock 'n' roll entrepreneur became a David when he had the nerve to fight the world-famous airline British Airways with his start-up company Virgin Airways. Today, the Virgin companies are "giant killers" who chase the fat, lazy, bloated and expensive giant companies. Not all Davids are Goliath killers. Some Schumpeters become Goliaths by inventing products that change the world.
- Thomas Edison, for example, developed from a Schumpeter to a David and then to a Goliath when he invented the light bulb and eventually founded General Electric. Mark Zuckerberg started as a Schumpeter in his student home at Harvard University when he was working on Facebook. He became a David when he expanded Facebook to other college locations. And when he expanded all over the world, he became a Goliath. Elon Musk developed from a Schumpeter to a David and then to the Goliath when his company SpaceX competed with NASA. Then Elon, with his company Tesla, turned to automotive giants like General Motors when he made electric cars sporty and sexy.
You don't have to be David or Goliath to change the world. Schumpeters can also change the world by acting like trim tabs on an airplane.
Bad advice is expensive
A few months ago, I spoke to my doctor, who proudly told me that he had become a millionaire. "I finally made over $ 1 million." I congratulated him, and since we're friends too, I didn't have to be afraid to ask, "How much tax did you pay?" "About $ 700.000," he replied embarrassed. "That's a lot of money," I said, gasping for breath. "And how much do you pay in taxes?" He asked. "I know you earn more than I do." "I pay a lot less than $ 700.000," I said. "And I earn more than you do. Much more ... but what I pay Father State is by far less." "What should I do?" He asked. "Fire your accountant."
I have had to fire many tax advisors, lawyers, CEOs, presidents and other so-called professional advisers over the years. I have had tax consultants and lawyers from reputable, reputable companies that were hopelessly bad. So I meant it when I said to my doctor, "Fire your accountant." If you've read my other books, you know that I often write about the importance of having a team. In this book you will hear from my team. True honor is due to him. The Rich Dad Advisors, along with other entrepreneurs on the Rich Dad team, will share their expertise as well as the successes, challenges, and failures that entrepreneurship brings. My team is much more important than money, because without them I probably wouldn't have money.
Why networks are important
According to many social scientists, the social and professional network is the most important thing in a person's life. In other words, the people around you, your team and the people you work with. If you are surrounded by poor people, you will likely be poor. As the saying goes: "Like and equal likes to join." The CASHFLOW Quadrant represents the four different personalities in the business world. Keep in mind that entrepreneurs can be found in three of the four quadrants: in S, in B and in I.
- E stands for employee
- S stands for self-employed
- B stands for big business (more than 500 employees)
- I stands for investor
My doctor is an entrepreneur in the S quadrant ... and S can also stand for specialists, small entrepreneurs, smart and star, such as professional athletes and film stars. Before parting with his accountant, he asked, "Who should I talk to when I fire my accountant?" I gave him three names: Tom Wheelwright, my accountant, Garrett Sutton, my attorney, and Ken McElroy, my partner for real estate investments. "Why do I have to call all three?" He asked. "Because corporate management is a team sport and they're all part of my team," I replied. »We have been working together for years. We made millions together. I entrust my life to them. ”“ But why three? ”Asked the doctor.
Because you need three different advisors to make money, protect that money from taxes, and from our enemies. If I didn't have these three partners, I would be like you: I would make millions but pay too much in taxes and worry that money sharks want to steal my wealth through the legal system. "Do you mean lawsuits?" He asked. I nodded. »Processes and taxes. You see, if you're planning to get rich, you need to know how to protect yourself before you get rich. ”My doctor had another question:“ Why didn't my accountant give me this advice? ”It really is the million dollar question, right? And the answer is, "I don't know." My friend would have to ask his accountant.
How to protect wealth as an entrepreneur
But what I do know is that my former tax advisors didn't really know how to protect my wealth either. They were smart and expensive. When I realized that they didn't know or understood why I was investing in real estate, I let them go. When another accounting firm suggested I sell all of my property and invest in mutual funds, I fired it immediately. They may be smart tax advisors for E-quadrants, but they were not smart tax advisors for I-quadrants.
Almost everyone can be an entrepreneur. There was a young girl in my neighborhood who offered a babysitting service. Her parents allowed her to look after toddlers of different ages in the family home in the evenings. The parents gave up their children and gladly paid her a fee to enjoy an evening without the children. As soon as her protégés fell asleep, the young entrepreneur did her homework, earning $ 10 an hour per child. On Saturday nights, she was most concerned with caring for seven children, earning $ 70 an hour, plus a tip. Not bad for a 15 year old girl. With her income she mainly financed her tuition fees. In other words, she reinvested her money and became a wealthier entrepreneur.
I don't know if she paid taxes. It only concerns them, their conscience and the tax office. The point is that everyone can be an entrepreneur. The problem is that very few entrepreneurs get rich. Statistics show that most entrepreneurs don't get rich. In fact, many small business owners earn less than their employees. Small business owners earn less because they continue to work when the business is already closed and their employees have gone home after work. If you count the number of hours the small business owner works and how much they get paid, many have a lower hourly wage than their employees.
Being an entrepreneur is a full-time job
About a friend, an entrepreneur, recently became a newspaper article released. The newspaper said it earned $ 80.000 a month. I'm sure a lot of people gasped when they read that amount. Later, when I was having a cup of coffee with her, I asked, "How much of that $ 80.000 a month do you keep?" Smiling, she said, "None of this. I reinvest every penny to advance the company. We live on my husband's salary. ”You are an entrepreneur around the clock, seven days a week. Even if they don't work physically, most of them work mentally or have emotionally disturbing worries. Employees can go home or go on vacation. Most entrepreneurs cannot. I heard that Bill Gates didn't take a day off for eight years when he built Microsoft. I emphasize this because many employees think being “boss” is easy. Many employees think they do all the work, and the boss has it easy and gets all the money.
Many employees think that the boss doesn't work as hard as they do because employees and entrepreneurs do different types of work, work that requires different skills. Statistics show that nine out of ten small businesses fail in the first five years because most employees, even college graduates with higher degrees like MBAs, do not have the essential skills an entrepreneur needs. Even worse, nine out of ten companies that survived the first five years failed again in the next five years. I know that for sure. I also went into these statistics. I had a lot more failures than successes. I'm pretty sure that most employees don't become entrepreneurs because the thought of failing - and not getting regular wages - scares them off. Those who cannot control this fear are best advised to keep their jobs and enjoy the advantages of being an employee: the opportunity to drop the pen at 17 p.m. to eat and watch TV with the family in the evenings, and have four weeks of paid vacation every year.
What is an entrepreneur?
Entrepreneur is a big word that means something different for everyone. Barron's publishes a book entitled Finance and Investment Handbook, which provides the definition of an entrepreneur: “A person who takes the risk of starting a new business. Many entrepreneurs have technical knowledge to help them produce a marketable product or develop a new service. ”
Nice try, Barron's! On the surface, their definition fits exactly. But the meaning of the word "entrepreneur" goes much deeper. As mentioned earlier, most entrepreneurs fail in the first five years because they lack the skills an entrepreneur needs. My neighbor, the young babysitter, has the technical skills to be a successful babysitter. Compared to other peers, she earned a lot of money and was able to finance her studies. But even after graduating from college, she lacks the skills to start a business and become a rich entrepreneur. Today she is a highly paid employee in a large medical company.
Those of you who have read my books already know that I always criticize that our schools teach young people to become employees and not entrepreneurs. Therefore, we are all trained to memorize and then reel out the admonition "learn something and find a place", similar to a Pavlovian dog trained to excrete saliva every time the bell rang this was the signal for dinner. We don't learn: "Go to school to start a business and create jobs." A young friend of mine recently did a Masters in Entrepreneurship. He said many lecturers spent a lot of time teaching their class how to write a resume ... to get a high-paying job. Are you kidding? Real entrepreneurs don't focus on resumes. Real entrepreneurs continually evaluate resumes and hire employees whose resumes reflect the skills the team needs.
Serial entrepreneurs and world changers: There are different entrepreneurs
Entrepreneurs come in many, many different shapes, sizes, and styles. Another of my neighbors is a doctor and runs a private practice. He is an entrepreneur. Another man, in the same neighborhood, is also a doctor and quit his job in a large hospital to start a company working on a new drug to cure brain disease. He and his wife had financial difficulties for six years when their new drug went through the state approval process. Three other neighbors are great real estate developers.
Another neighbor is a real estate agent who does not develop real estate but sells it. She is an entrepreneur and owns a medium-sized real estate company. Two other neighbors own professional sports teams, baseball and basketball. They are sports entrepreneurs who employ professional athletes and coaches and pay millions of dollars a year to some of the athletes. A couple of my neighbors are the coaches of these teams, employees of the sports entrepreneurs. Artists tend to be entrepreneurs. Many artists are professional painters, musicians and actors. The Beatles were entrepreneurs: they made a fortune in the music industry. Many choose the path to becoming an entrepreneur because they hate being hired. They want to be their own boss, they want to do their own thing, and they don't like to be ordered around. Many became entrepreneurs because they cannot get a job or cannot keep a job permanently.
There are many people called "serial entrepreneurs". They found a company and then sell it. They then found another company and also sell it. They are like people who buy real estate only to sell it again as soon as possible. And a few entrepreneurs choose this path to change the world. I include Henry Ford, Thomas Edison, Walt Disney, Steve Jobs, Bill Gates, Oprah Winfrey, Sergey Brin, Jeff Bezos, Richard Branson and Mark Zuckerberg in this category. They affect the world for decades. Regarding this book, it is important to note that Henry Ford, Walt Disney, Thomas Edison, Steve Jobs, Bill Gates, Oprah Winfrey, Mark Zuckerberg and Richard Branson have not completed their education. These entrepreneurs may have dropped out of training because they didn't want to "go to school to get a job." They wanted to be entrepreneurs who change the world, and that's exactly what they did.
Are we born as entrepreneurs?
The question many people ask is: »Are people born entrepreneurs? Or will they become entrepreneurs first? ”I think we are all born entrepreneurs. So at the beginning of the chapter, I told the story of the high school student with her own babysitting company. We saw all the kids with lemonade stands or the groups of girls who sold Girl Scout Cookies. Anyone can become an entrepreneur - young or old, highly educated or dropout. During the agricultural age, most of the farmers were entrepreneurs. They had a small piece of land, worked on it, planted it, harvested it and fed their families. What they didn't need was sold. Then came the industrial age. Millions of farmers left their farm, moved to the cities where the factories were, and became employees. Today our schools continue to train young people as employees.
The problem is, we are now in the information age and new technologies are replacing people. When workers go on strike and demand higher wages, jobs are moved abroad, to low-wage countries, or new technology replaces the employee. The excitement about the "rise of the robots" is real. In our supermarkets, checkout employees are now being replaced by automated check-out stations. Since lifelong job security is at risk, entrepreneurs are the new job. Many forecasters predict that the S&P 500 will be reduced to S&P 300 because the new entrepreneurs will make 200 of today's 500 companies obsolete. This means more unemployment for millions of employees who started the wrong company.
You may remember that it was Steven Sasson, an Eastman Kodak employee, who invented digital photography in 1974. Less than four decades later, in 2012, Kodak, a 131-year-old company, filed for bankruptcy. It was their own technology that pushed them out of business and cost thousands of Kodak employees the job. Today the mantra of "go to school to get a safe job" is an outdated idea. New technologies and global competition will one day make us all redundant as employees. That could be the reason why at so many universities around the world, student dormitories are becoming "incubators" for student entrepreneurs who hope to invent the next Facebook, the next new thing ... the next company that will change the world becomes. The problem is: Most entrepreneurs never get rich, even if they start a business. In fact, most entrepreneurs are little different from employees who live from paycheck to paycheck. The challenge is to become a rich entrepreneur.
How important is studying for entrepreneurs?
The following is an excerpt from Forbes magazine about the importance of higher education and being an entrepreneur:
“Although 69 percent of business owners surveyed attended college (well above the national average), only 68 percent of this group of college graduates said they believed that education made a difference in their success. Compare that to 86 percent of the general population who think college graduation remains a good investment - albeit an increasingly expensive one. Only 61 percent of all business owners believed that a college degree was very or quite important for economic success today. This number is in stark contrast to the general public opinion about the value of a university degree. «
This means that if you want to be an employee or a self-employed doctor or lawyer, traditional training is important.
Taxi drivers as entrepreneurs: from dishwasher to millionaire
In 1907, Harry N. Allen, entrepreneur and founder of The New York Taxicab Company, imported 600 internal combustion engine taxis from France. He coined the word "taxi cab" and millions of people became entrepreneurs, better known as taxi drivers. Today Uber replaces the word "taxi" and many independent entrepreneurs become Uber drivers. The question is, how long will it take for taxi drivers and Uber drivers to become redundant? How long will it take for innovations like Google's self-driving car, a car that doesn't require a human driver, to replace both Uber drivers and taxi drivers? In 2014, I attended a meeting of pilot colleagues from the Marine Corps in Pensacola, Florida. We did pilot training in Pensacola in the 1970s before going to Vietnam, and we all flew in the same squadron. It was not surprising that the discussion between the old pilots and the young pilots focused on the question:
"Do we still need pilots at all?" Many of the young pilots learn to control drones, not planes. If the Google car can replace the need for Uber drivers, will drones eliminate pilots? As a former pilot, I know that pilots fly less and less themselves today. Today, modern aircraft can take off, fly and land without human pilots. Human pilots are reserve pilots that only serve to give passengers the feeling of safety if the technology fails. In medicine, robots are able to do better work in the operating room than human surgeons. We should ask ourselves: Who else will be replaced?
Why become an entrepreneur?
These are some examples of why more and more people are becoming entrepreneurs. Technology and foreign competition make workers obsolete. The ideas of a high paying job and a lifelong salary are very old - even outdated - ideas. Today millions recognize that an entrepreneur can be better protected than an employee. Andy Grove, one of the founders and CEO of Intel Corporation, is known for his motto: "Only the paranoids survive." This book is written for the paranoids, for those who are committed to training and for those who are richer as entrepreneurs want to be.
During the industrial age, entrepreneurs were known for creating jobs and companies. In the information age, entrepreneurs are cried for destroying jobs and businesses. One example is the book industry. The book trade used to flourish in shops. Then Amazon came and many bookstores from the industrial age, such as Borders, disappeared. I was in a grocery store a few days ago, and one of the women who put goods on the shelves stopped me and asked, "Do you remember me?" When it became clear that I didn't remember, she said, " I was a manager at the Borders bookstore near your house. I used to organize your readings and book signings. «
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