cash flow quadrants

8/6/2019 Cash Flow Quadrants

1/40

Rich Dad -- Poor Dads

Cash Flow Quadrants


2/40


3/40

Rich Dads

Cash Flow Quadrant


4/40

Rich DadsCash Flow Quadrant


5/40

Rich Dads

Cash Flow Quadrant

You have ajob.Someone else is the boss.

Security before money.


6/40

Mgmt vs Non-Mgmt Jobs

Mgmt/Exempt Considered aprofessional

At least 50% oftimeusing intellect, directing,creativity

Has discretion with

decisions Sets own work schedule

Receives a salary

No overtimepay

Non-Mgmt/Exempt Considered non-professional

Upto 100% doingroutine,non-thinkingtasks

Does only what is told todo

Has a pre-set schedule Punches a timeclock

Paid hourly

Receives overtimepay


7/40

Rich Dads

Cash Flow Quadrant (modified)

You have a job.Someone else is the boss.


You own ajob. Loner/boss.Perfectionists. Small bus.

owners: Drs. Restaurateurs.

Independence before money.


8/40


You have a job.

Someone else is the boss.


You own a job. Loner/boss.

Perfectionists. Small bus.

owners: Drs. Restaurateurs.Independence before money.

You own a system others operate.Coordinator. Delegator. Franchiser.

Use other people's time and money.


9/40


You have a job.

Someone else is the boss.


You own a job. Loner/boss.

Perfectionists. Small bus.

Owners: Drs., restaurateurs.

Independence before money.

You own a system that others operate.

Coordinator. Delegator. Franchiser.

Use other people's time and money.

Your money works for you.Make money with money.

Others liabilities are your assets.


10/40


Job Security

Financial Security

Financial Freedom

Ultimate FinancialFreedom

Wealth

Side

Rat

Race

Side


11/40


Job Security

Financial Security

Financial Freedom

Ultimate FinancialFreedom

CreateCreate

Money

Spend

PayTaxes

EarnMoney

PayTaxes

Spend

Earn

Money

Spend

Pay

Taxes

No

Paychecks


12/40

Sample Paths To FinancialFreedom

Wealth

Side

Rat

Race

Side

Start

EndorStart


13/40

Sample Paths To FinancialFreedom

Wealth

Side

Rat

Race

Side

Start

End


14/40

Sample Paths To Financial

Freedom

Wealth

Side

Rat

Race

Side

Start

End


15/40

Rich Dads

Financial Mindset Comparison

Es and Ss Job Model

Job

Savings

Get Out of Debt

Personal Residence

Mutual FundsEquities/Stocks

401Ks, IRAs, SEPs

Bs and IsAssetModel

Businesses

Real Estate

PaperMunicipal Bonds

IPOs,PPOs,


16/40

Niches and Perfect Customers


17/40

The Market/Customer/Niche

Decide

Customers

Select

Media

Decide

MessageMake

Product/Brand

Whats my

favorite fish?Whats myNiche?Am Ipassionate?Do I haveexpertise?

Whichponds havemy favorite fish?FindBig,Addictedfish--high probabilityprospects.

Whatbaitaremy fish eating?

Find a CompetitiveAdvantage.

Start fishing.

Build

Database

Stock your

Private Pond

Test


18/40


19/40

Types of Niches

Occupation: Small biz owners,garbagemen,police,executivechefs,x-raytechs,magicians,realtors.

Demographics: Gender, weight, disease,car-owned,type ofhouse,college attended,marital status,retired,memberships,crime levels,education,

renters,politics,religion,hospitals, drycleaners, lawfirms, small airports,pre-schools,pet stores,manufacturers.

Geographics: Neighborhoods, school/votingdistricts, suburb,city, states,resort areas,climate.

Psychographics: Passions,hobbies, dislikes. ThinkLove-Hate

Combinations ofthe above.


20/40

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 importantto the niche?

Is the niche large enough to make my desired profit?


21/40

Niche Example for a Bible Biz

Church-Goers

Protestant

Asian

Korean Decent

RecentImmigrants

Christian

Media

Message

Product

FindPerfect

Customer


22/40

Who Is YourPerfect Customer?

Perfect Customers are:

AffluentAddicts

with Big Mouths who Love You to Death!

And, You only deal withthosePerfect

Customers who wantto deal withyou.So, Leave a trail wherethosePerfectCustomers can find you.


23/40

Crafting aWinning

Business Plan


24/40

Rank in order of

importance.


25/40

In theory, ifeveryonetakes the same approach.

Ifeveryone follows the samecourse, uses the

sametools, and plays bythe samerules. Then,

in theory,everyone should end up withthe

sameresults. (But they dont.)

Um,guess execution is a pretty importantpart of

thegame.

What Makes Us Special?

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

Execution


26/40

The Essential Functionsof the Business Plan

A roadmapthatguides thecompany bycharting 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 ourassumptions aboutthe businessidea.

Helps us makethe Go/No Go decision.

Helps us managerisk:

Makes us quantify ourthe situation. Seehow much wecan gain/lose.

Helps us formulatecontingencyplans.

Provides standards to measureperformance against.

Helps us describe our ideas to others Lenders, investors,

and family.

If You Fail to Plan, You Plan to Fail.


27/40

KeyElements of a Business Plan

Executive Summary

Mission Statement

CompanyHistory

Business and IndustryProfile

Business StrategyDescription ofProducts/Services


28/40

KeyElements of a Business Plan

Marketing Strategy

CompetitorAnalysis

Description ofManagementTeam

Plan of Operation

Forecasted FinancialStatements

Loan or InvestmentProposal

(continued)(continued)


29/40

Tips for Preparing

a Business Plan

Remember:No onecan createyourplan foryou.

Yourplan mustprovethatthe business will make

money (not necessarily immediately, buteventually).

Remember,youretelling a story with words and

numbers.Make it interesting.

Potential lenders wantto see financial projections(and the assumptions behind them), butthey are

more interested in thestrategies forreaching

thoseprojections.


30/40

Tips on Preparing

a Business Plan

Identifyyourtargetmarket, and offerevidencethatcustomers arehungry foryourproduct/service.

EmpathizeyourCompetitive Advantage.Show how you plan to setyourbusinessapart fromcompetitors; don't fall into the

"metoo" trap.Always includecash flow projections, not justwords.

Tell thetruth always.

(Continued))


31/40

Tips on Preparing

a Business Plan

Keepyourplan crisp between 25 and 50 pages

Include a table ofcontents to allow readers tonavigateyourplan easily.

Looks counts as much as content.

Make sure yourplan has an attractivecover.

Rid yourplan of all spelling and grammatical

errors. Makeyourplan visually appealing.

Prepare a dynamic/confidentplan presentation thatcan be done in as little as 20 minutes.(10 minutes

forourend-of-class presentations.)

(Continued))


32/40

The Perfect Business


33/40

MarketNeed Competency

Passion

The Perfect Business

Created by Alan Weiss

The ideal business

is where these lines

converge.


34/40

More on the Perfect BusinessEasyto get into: You alreadyhavetheexperience and capital and theres notmuchred tape.

Easyto get out of: No longterm legal,

financial,ethical commitments. Yourrightsare liquid.

Meaningful and fun: Success comes fromplayinghard, not workinghard. Bill Cohen

Supports your lifestylechoices: Yourwork iscompatible withyourdesired lifestyle.

Forgiving: Theres a fairly largemargin oferror. A few mistakes wontkill you. Theresroomto evolve.


35/40

More on the Perfect Business(cont.)

Protected fromcompetition: You have a littlemonopoly. You efforts/rights areprotected by strongbrand,contracts,patents, secret formulas,etc.

Limited financial exposure: Someoneelsecarries the

majorfinancial risks with little orno recourseto you.Youreprotectingyour future.

Fastresults: You can quickly determine success orfailure.

A cookiecutter: You can multiply/leverageyourefforts/rewards by bringing in others wholl do it foryou orwithyou.

A cash-out value: You can create and maintain salablvalue forwhen you mustexitthe business. Its an

investment.


36/40

Prof. Whites Perfect Business

Only start/buy/invest in businesses

that work harder for you than you work for them.


37/40


38/40

Sample Autonomous Web Models

Content-Based

DatingExpert.com/

Yes No Maybe.com Newsvine.com

Fundable.org

Product-Based Caf Press.com

Zazzle.com


39/40

Mid-Term PresentationTopics and Order

Whos My

Customer?

Whats My

Product?

Whats My

Competitive

Advantage?

Whats My

Business

Model?MyNiche?Passion? Talent?

Values? Destiny?

Cover the following:


40/40

Mid-Term Presentation

Notes

5 minutes maximum

Rehearse

PowerPoint includingthe following: Slide foreachtopic

Business Model Chart

Visuals oftheproduct, location,customers,etc., if available.

Only onepresenter

cash flow quadrants

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