Cash Flow Quadrant
Mindset for Self Employment

The four ways you can receive income, as described in Cash Flow Quadrant, are employee, self employed, business owner and investor. Robert Kiyosaki is not particuarly saying that everyone should strive to shift into a particular income stream. Rather, he describes the sort of thinking needed if you want to make a shift.

EMPLOYEE

Kiyosaki says that the primary motivation of the employee is security. When you have a job, you generally have an agreement to receive certain benefits in exchange for your time and effort. You trust your employer to pay you an agreed amount and to comply with any legal obligations. There is a perception of certainty and security, though much less so these days.

SELF EMPLOYED

Someone who chooses to become self employed - maybe by starting a home based business - wants a great degree of freedom or independence. They want to become their own boss, to have greater control over their own life.

It's a very big jump to move from full time employment to full time self employment. However, you may be able to receive some of the benefits of both by starting a part time home based business while retaining a position of employment.

BUSINESS OWNER

Robert Kiyosaki makes the distinction between self employment and business ownership. When you own a business you tend to delegate tasks to other people - employees or outsourced sub contractors or suppliers. You are also more likely to make use of other people's money, outside investors perhaps.

Michael Gerber makes a similar distinction in The E-Myth. You come to realize that you can build a business that becomes a valuable saleable asset (whether you choose to sell it or not). This can only happen if you are no longer personally vital to the business. The business itself is based on systems or procedures that produce good results, and perhaps a team of people to carry out the various tasks.

In many ways this seems a million miles away from a simple home based business. However, it is possible to make a shift from self employment to business owner - if that is your goal.

INVESTOR

Investing is about making money with money.

WORK LIFE BALANCE

How does all this impact work life balance? For various reasons more and more people are setting up small part time businesses from home. There are a variety of different reasons for doing so. However, for many of us there is a desire for a greater sense of freedom or independence. It's a life choice.

What is really important about books like The Emyth or Cash Flow Quadrant is that they give useful information on how to combine this life choice with increased chances of small business success.

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