Rich Dad -- Poor Dad’s Cash Flow Quadrants

1. Rich Dad -- Poor Dad’sCash Flow Quadrants

2. Two Beginning Thoughts “The Sooner You Imagine A World Without Paychecks, the Wealthier You Will Become.” Job Security = Financial Security = Financial Freedom

3. Rich Dad’s Cash Flow Quadrant B E I S

4. Rich Dad’s Cash Flow Quadrant Big Business Developer Employee Works with Body. Loves to Do. Works with Mind. Loves to Deal. Investor Self-Employed

5. Rich Dad’s Cash Flow Quadrant Employee You have a job. Someone else is the boss. Security before money.

6. Mgm’t/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 Non-Mgm’t/Exempt Considered non-professional 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 Mgm’t vs Non-Mgm’t Jobs

7. Rich Dad’s Cash Flow Quadrant (modified) Employee You have a job. Someone else is the boss. Security before money. Self-Employed You own a job. Loner/”boss.” Perfectionists. Small bus. owners: Drs. Restaurateurs. Independence before money.

8. Big Business Developer Rich Dad’s Cash Flow Quadrant Employee You own a system others operate. Coordinator. Delegator. Franchiser. Use other people's time and money. You have a job. Someone else is the boss. Security before money. Self-Employed You own a job. Loner/”boss.” Perfectionists. Small bus. owners: Drs. Restaurateurs. Independence before money.

9. Big Business Developer Rich Dad’s Cash Flow Quadrant Employee You own a system that others operate. Coordinator. Delegator. Franchiser. Use other people's time and money. You have a job. Someone else is the boss. Security before money. Self-Employed Investor You own a job. Loner/”boss.” Perfectionists. Small bus. Owners: Drs., restaurateurs. Independence before money. Your money works for you. Make money with money. Other’s liabilities are your assets.

10. Rich Dad’s Cash Flow Quadrant Big Business Developer Employee Job Security Financial Freedom Rat Race Side Wealth Side Investor Self-Employed Financial Security Ultimate Financial Freedom

11. Rich Dad’s Cash Flow Quadrant Big Business Developer Earn Money Pay Taxes Spend Employee Create Money Spend Pay Taxes Job Security Financial Freedom Earn Money Spend Pay Taxes Self-Employed Investor Financial Security Ultimate Financial Freedom No Paychecks

12. Sample Paths To Financial Freedom Big Business Developer Employee Start Rat Race Side Wealth Side Investor Self-Employed End or Start

13. Sample Paths To Financial Freedom Big Business Developer Employee Start Rat Race Side Wealth Side Investor Self-Employed End

14. Sample Paths To Financial Freedom Big Business Developer Employee Start Rat Race Side Wealth Side Investor Self-Employed End

15. E’s and S’s Job Model Job Savings Get Out of Debt Personal Residence Mutual Funds Equities/Stocks 401Ks, IRAs, SEPs B’s and I’s Asset Model Businesses Real Estate Paper Municipal Bonds IPOs, PPOs, Rich Dad’sFinancial Mindset Comparison

16. Niches and Perfect Customers

17. The Market/Customer/Niche Test Decide Customers Select Media Decide Message Make Product/Brand What’s my favorite fish? What’s myNiche? Am I passionate? Do I have expertise? Start fishing. Which ponds have my favorite fish? FindBig, Addictedfish--high probability prospects. What bait are my fish eating? Find a Competitive Advantage. Build Database Stock your Private Pond

18. 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.

19. 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.

20. 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 that’s important to the niche? • Is the niche large enough to make my desired profit?

21. Church-Goers Niche Example for a Bible Biz Christian Protestant Decide Customers Asian Korean Decent Recent Immigrants Niche Media Find Perfect Customer Message Product

22. 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.”

23. Crafting a Winning Business Plan

24. Rank in order of importance. Beginnings Planning Middles Execution/Implementation Ends Evaluation--Reaction

25. 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 don’t.) “Um, guess execution is a pretty important part of the game.” What Makes Us Special? -- IBM Commercial (Aired in the 2006 Masters Golf Tournament)

26. 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.

27. Key Elements of a Business Plan • Executive Summary • Mission Statement • Company History • Business and Industry Profile • Business Strategy • Description of Products/Services

28. 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

29. Tips for Preparinga 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, you’re 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.

30. Tips on Preparinga 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. • Alwaysinclude cash flow projections, not just words. • Tell the truth – always.

31. Tips on Preparinga 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.)

32. The Perfect Business

33. The Perfect Business The ideal business is where these lines converge. Market Need Passion Competency Created by Alan Weiss

34. More on the Perfect Business • Easy to get into: You already have the experience and capital and there’s 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: There’s a fairly large margin of error. A few mistakes won’t kill you. There’s room to evolve.

35. More on the Perfect Business (con’t.) • 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. You’re 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 who’ll 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. It’s an investment.

36. Prof. White’s Perfect Business “Only start/buy/invest in businesses that work harder for you than you work for them.”

37. An Autonomous Web Business Model Content Component: Key: P-Provider; W-Website; C-Customer Revenue Component Added: 5b 4 5a 1 2 3 Key: P-Provider; W-Website; C-Customer;A-Advertiser

38. Sample Autonomous Web Models Content-Based • Dating Expert.com/ • Yes No Maybe.com • Newsvine.com • Fundable.org Product-Based • Café Press.com • Zazzle.com

39. Mid-Term PresentationTopics and Order Cover the following: What’s My Competitive Advantage? What’s My Business Model? What’s My Product? Who’s My Customer? MyNiche? Passion? Talent? Values? Destiny?

40. Mid-Term PresentationNotes • 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