More often than not I hear young entrepreneurs claim they are a business owner. In my honest opinion, being an entrepreneur is just a state of mind. As soon as you make a decision and declare yourself one, then you are one. In the case of actually owning a business, there are defining characteristics to determine where you fall. For example, you own a graphic design company. You are incorporated, so technically you own a business. But, if you are doing all the work to make the business operational, do you still see it in the same light?
Blogging everyday after work does not mean you own a business. When you start to think of your blog as a system that can produce you income without you having to do all the work, then you are thinking like a business owner. It reminds me of the time I started making a bunch of money in my real estate business. I felt as if I was doing all the work to make that money. That is because I was enslaved in my business. As soon as I stopped producing, I went broke. What kind of business is that? Now, I like to think of all the ways to replace myself and find people who are way smarter than me. I like to reference back to one of the first books I ever read called Cashflow Quadrant by Robert Kiyosaki.
The Cashflow Quadrant
The Cashflow Quadrant will help you pinpoint exactly where you currently stand. And more importantly, where you want to move into. If you look at the image above, there are four sections, or ways to make money in this world. You can be an (E) employee, (S) self-employed, (B) business owner and/or (I) investor. 80% of the world’s population falls on the left side of the quadrant and 20% remain on the right. The interesting fact is that conversely, 95% of the world’s wealth is contained on the right side of the quadrant. So, which side do you want to be on? The following are just examples. Obviously, if you are just getting started, your business may not be turning a profit. You must have something to strive towards.
(E) – Employee
You work for a landscaping company. You punch-in and punch-out. You have to ask your boss to go to the bathroom and when to take your lunch. You pay is usually determined by how much time you put in.
The Test: Don’t go into work next week. If you get a call saying “your fired”, you are an employee.
(S) – Self-Employed
You work for yourself as an independent landscaper. You own your job. You are not quite a business owner, because if you do not work, you do not get paid. You are free to set your own schedule. You can dictate when and how much you want to work. You can be paid based on time or by the job.
The Test: Don’t work for the next month. If you have clients calling you asking where the heck are you and your bank account is running on empty, you are self-employed.
(B) – Business Owner
You own a landscaping company where your employees do all of the landscaping. You have created systems to replace yourself. If you don’t go into the office, you still will get payed. You have employees that work for you. You outsource the tasks that you don’t want to do. You are free to set your own schedule. You spend your time building your systems. You can be paid based on the overall performance of the company.
The Test: Take a month-long vacation. If your company is running better and you still are making money when you come back, you are a business owner.
(I) – Investor
You provided the start-up capital for the landscaping company. You don’t have to work because your money works for you. You get to pick and choose investments and companies you want to sink money into for a return. This is the playground of the rich.
The Test: Don’t work for the next month, or even year. If you find that your money is making you more and more money each day, you are an investor.
Be Smart
If you are currently on the left side of the quadrant, leverage that fact. Keep doing what you are doing until you can afford to quit your job. Maybe you are making great connections that can help you in business or you are building up some reserve income. Be motivated be the fact that you are working to hard and by creating systems, you can make more money by working less. You always want to ask yourself, “Is what I am doing at this very moment moving me closer to where I want to be?” If you are in a job and the answer is yes, keep going. You will know when the time is right.
If you find this valuable, please share with any newbie business owners you think it will help.
