What Type Of Entrepreneur Are You?

Dear Reader,

It’s been said that entrepreneurship isn’t for everyone. That’s one side of the coin. Here’s another. I’m often asked, “Can anyone become an entrepreneur?” And my answer is always the same: Yes. A person who cleans houses is an entrepreneur. A medical doctor in private practice is an entrepreneur. So was Steve Jobs, founder of Apple.

Entrepreneurs come in all shapes and sizes. Most entrepreneurial businesses are small, only one person or ‘mom and pop’ (often husband and wife) operations. A few people build mega-businesses and change the world. But the world is filled with people who have good intentions and great ideas. Many have a strong desire to change the world, to make the world a better place to live. But many people who start a business aren’t entrepreneurs at all. They’re desperate people who have turned to owning a job in order to survive. In essence, these people have rushed out to start a new business, moving from being an employee to being self-employed-moving from the E quadrant to the S quadrant

The problem is that there is a big difference between being in the S quadrant and owning a job and being an entrepreneur in the B quadrant.

While one is not necessarily better than the other, S-type businesses and B-type businesses have different strengths, weaknesses, risks, and rewards. Many people who want to start a B-type of business wind up with an S-type of business and become stalled in their quest to move to the right side of the CASHFLOW® Quadrant-the B for big business and I for investor side.

Many people attempt to move from the S quadrant to the B quadrant, but only a few who attempt it actually make it. Why? Because the technical and people skills required to be successful in each quadrant are different. You must learn the skills and mindset required by a quadrant in order to find true success there.

Those who are true B’s can leave their business for a year or more and return to find their business more profitable and running better than when they left it. In a true S type of business, if the S left for a year or more, chances are there would be no business left to return to.

So what causes the difference? Saying it simply, an S owns a job; a B owns a system and then hires competent people to operate the system. Or put another way, in many cases, the S is the system. That is why they can’t leave.

Small Business Owner

Many small business owners are loners. They like to get things done a certain way—their way. People in the S quadrant are often the lone wolves of business. They value independence. They do not have to be leaders. And people in the S quadrant pay the second-highest percentage in taxes.

Common phrases heard from people in the S quadrant are:

  • “If you want it done right, do it yourself.”
  • “I want to do things my way. I make the rules.”
  • “I am the best. No one can do it better than me.”
  • “I like my independence. More employees mean more problems.”

One problem with businesses in the S quadrant is that if the S stops working his or her income also stops.

Big Business Owner

A B-quadrant business is defined as ‘500 employees or more.’ If leadership is weak within a company of that size, the business suffers or goes bankrupt. If leadership is strong, people, teams, and the business will flourish, even in bad times. This is why leadership is essential in the B quadrant.

Common phrases heard from people in the B quadrant are:

  • “I’m looking for people who are smarter and more experienced than I am.”
  • “Do they work as a team?”
  • “Are they trustworthy?”
  • “Can he take feedback?”

A B-quadrant business depends upon people, teams, and leadership for its success.

Can You Make A Better Hamburger Than McDonald’s?

I’ll share a technique I use to determine whether someone is an S or a B when they ask me for advice on starting a business.

Usually, these people tell me they have a great idea for a new product or idea. I listen, usually for about 10 minutes, and within that time I can tell where their focus is, whether it’s a product or a system. In those 10 minutes, I usually hear words like these:

  • “This is a far better product than XYZ makes.”
  • “I’ve looked everywhere, and nobody has this product.”
  • “I’ll give you the idea for this product; all I want is 25 percent of the profits.”
  • “I’ve been working on this product for years.”

At this point, I usually ask one thing: “Can you personally make a better hamburger than McDonald’s?”

So far, everyone has said yes. They can all prepare a better, maybe even tastier, hamburger.

I then ask, “Can you personally build a better business than McDonald’s?”

Some people see the difference immediately…and some don’t. The difference is whether a person is fixated on the left side of the quadrant, the E and S side, which is focused on the idea of a better burger; or on the right side of the quadrant, the B and I side, which is focused on the business system.

I do my best to explain that there are lots of entrepreneurs who offer a better product or service, just as there are billions that can make a better burger than McDonald’s-but only McDonald’s has created a system that has served billions.

If people begin to see this truth, I suggest to them to visit a McDonald’s, buy a burger, and sit and observe the system that delivers that burger. Take note of the trucks that deliver the beef, the rancher that raised the beef, the buyer who bought it, and the TV ads that sell it. Notice the training and the employees. See the decor, the regional offices, and the whole corporation. If they can begin to understand the whole picture, then they have a chance of moving to the B-I side of the CASHFLOW Quadrant.

The reality is that there are unlimited new ideas, billions of people with products and services to offer, and only a few people who know how to build an excellent business system.

Baby Steps

Most of us have heard the saying: “A journey of a thousand miles begins with a single step.” Instead, I would say, “A journey of a thousand miles begins with a baby step.”

I emphasize this because I have seen too many people attempt to take a great leap forward instead of starting with baby steps. We have all seen people who are completely out of shape and suddenly decide to lose 20 pounds. They begin a crash diet, go to the gym for two hours, and then jog 10 miles. This lasts maybe a week. They lose a few pounds, and then the pain, boredom, and hunger begin to wear away at their will power and determination. By the third week, their old habits of overeating, avoiding exercise, and watching television are back in control.

To be successful in the B quadrant requires financial intelligence, systems intelligence, and emotional intelligence.

These things cannot be learned in school.


Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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