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Tuesday, June 30, 2009

Successful Business Ideas - Are You Building a B Or an S?

Is your new business designed to work for you or are you just creating a new job? In the book "Cash Flow Quadrant" by Robert Kiyosaki, he shows how many successful business ideas can be severely constrained if operated from the wrong paradigm. He compares these two models using B to signify a business and an S to signify self-employed.

Some of the most common and visible examples of the self-employed paradigm include skilled professionals like a lawyers, doctors and chiropractors. In many cases people in these professions operate out of offices where they are the only professional on staff. When the doctor goes on vacation, no one else is available to see patients. While doctors are certainly well-compensated for their efforts the point here is that the way this example is operating, there is only cash flow when the doctor is available.

In an example of what Robert Kiyosaki refers to as a true business, a doctor's office may have multiple doctors on staff. If one doctor is out another doctor will see those patients. The owners of a business like this will experience much more stability in the cash flow of the operations. A doctor being sick will not bring things to a grinding halt. 
In this model a business operates like a machine. If you were to examine the inner workings of this machine you would find it filled with a series of interconnected parts. When all of these parts are functioning together, the machine functions correctly. The terminology of business refers to these parts as processes and procedures. In a doctor's office consistent procedures around filing of patient records ensure proper billing and retrieval for later. When a new employee is hired they only need to be taught the current procedures and processes in order to support the larger business/machine and operate as one of the many parts.

Any self-employed establishment can operate as a true business. It simply requires a new way of thinking. One of the most common reasons for people to continue operating in Robert Kiyosaki's "S Quadrant" is ego. That ego tells us "no one else can do this job. I have to do it myself." Meanwhile someone else is operating the same type of service as a true business. It can always be done.

As you begin to work through your brainstorming list of successful business ideas, always think to yourself how you can create something as a business by outsourcing some of the work, bringing in other professionals, and creating systems that can be sustained even when you are not available. In this line of thinking lies the true path to wealth.


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