Most people starting out as self-employed in a small or home based business, find themselves working more hours than when they used to as employees, feeling overwhelmed with responsibility, with total luck of time and money freedom.
There is gab most entrepreneurs need to overcome between this ‘self-employed’ stage and the stage when you reach financial and time freedom. According to educational entrepreneur Robert Kiyosaki, best known as the author of best selling book Rich Dad Poor Dad – considered as one of the most influential finance books of our time, there are four different mindsets that people have about money: Employee, Self-Employed, Business Owner and Investor.
By recognizing in which mindset you are right now, you can determine which specific steps you need to take, in order to reach the mindset of a successful Business Owner/Investor, who does not work for money anymore, but has their money work for them.
People in the ‘Employee’ Category dread economic uncertainty and have a strong need for security. For them, job security—which may be just an illusion—is often more important than money. They can be messengers or presidents of companies. It’s not what they do or how much they earn that puts them in the ‘Employee’ category, but rather the fact that they’re working for others—and earning salaries and benefits.
If you remain in the Employee category for life, without entering any of the other categories, you might never acquire true time and money freedom, except maybe when you retire.
Self-Employed types are do-it-yourselfers and their own bosses. When it comes to money, they have fiercely independent souls. They don’t like to have their income depend on other people. If they work hard they expect to be paid well.
This group includes professionals such as doctors, lawyers, and architects, who spend years in school. It also includes small business owners—for example consultants, therapists, travel agents, car mechanics and hair stylists—as well as direct-commission sales people such as real estate agents.
Self-Employed types tend to be hard-core perfectionists. That’s why others hire them. Because of their perfectionism, they often have a difficult time hiring other people to work with them. To their way of thinking, no one else can do the work as well as they can. They may also be hesitant to train other people out of fear that their trainees will wind up being competitors some day. So they usually create conditions for themselves that if they don’t work, they won’t get paid, thus never achieving true time freedom and wealth, to enjoy what they work so hard for.
Unlike the perfectionist Self-Employed type, the Business Owner type loves to delegate work. The motto of a true Business Owner type is: Why do it myself when I can hire someone better to do it for me? The true Business Owner type can leave his or her business for over a year and return to find it more profitable than before. That’s not usually the case with someone in the Self-Employed category. When a Self-Employed type leaves his or her business for over a year, chances are there is no business to return to.
So if you are stuck in the Self-Employed category, the next step is to develop the right mindset, strategies and tactics so that you can move into the Business Owner category, where true financial freedom and time freedom begins. Business Owner’s motto is ‘Other People’s Money’ and ‘Other People’s Time’.
To be a Successful Business Owner, you need to know how to build the solid network of business systems to sell your offering. You have to be skilled in the art of leadership and learn to delegate work to others. Successful Business Owners bring out the best in their people so that their people will carefully tend the network of business systems.
Regardless of which category people make their money in, if they hope someday to be truly wealthy they must ultimately move into the Investor Category, for it is here that money becomes converted to wealth. What is wealth? Wealth is measured in time, not money. It is the number of days you can survive without physically working and still maintain your standard of living. Investor types don’t have to work because their money is working for them. This should be your ultimate goal, either as a business owner or as an employee.
Of course not everyone in the Investor Category meets with financial success. You can be poor in any of the four categories and also go bankrupt in any one. Being good in more than one category is much better than being good in just one. For example, you can be an employee who has worked out a way to be a good investor, so that you can retire earlier if you wish and that’s great.
The path to financial freedom
What usually happens with people moving out of the Employee category in order to become financially free in the Business Owner category is that they end up getting stuck with a Self-Employed type of business. The result is that they are running and running but getting nowhere in their quest to move into the Business Owner and Investor Category.
The biggest lesson that Self-Employed people need to learn in order to move into the Business Owner category is to ‘Hire people who play at things they need to work at’. They need to learn to delegate, inspire and become true leaders.
As explained by Robert Kiyosaki in detail in his book Cash Flow Quadrant, the true path to financial freedom is entering the Business Owner category and then the Investor category.
Why? Because in the Business Owner category, people will be working for you, and in the Investor category, your money will be working for you. When you become good at those two categories is when you can have true time and money freedom and freedom from work.
So why is Robert Kiyosaki suggesting that people should enter the Business Owner Category before entering the Investor Category? Surely, you’d rather be an investor than a business owner, right? Here’s Kiyosaki’s answer: If you have plenty of money, financial intelligence, and free time, then by all means go straight to the Investor Category. But if you don’t the first suggestion is the safest.
Here’s why: Succeeding as a Business Owner you have a greater chance of developing into a powerful Investor. After all, investors invest in businesses. Also, if you have a business that’s up and running on its own—that doesn’t require your daily babysitting—then you’ll enter the Investor Category with two prerequisites: the free time to hunt for good opportunities, and the cash flow to support the ups and downs of investing.
You can get best selling book ‘Rich Dad Poor Dad’ on Amazon here: Rich Dad Poor Dad
The ‘Cash Flow Quadrant’ from Robert Kiyosaki analyzes in detail the four different categories described in the article and how to attain true financial freedom. Amazon link: Cash Flow Quadrant
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