A simple way to ensure business profitability and healthy cash flow is to focus on what drives both. What drives revenue needs to be understood. How saleable is the product or service and what’s the market? What marketing is working and how much is it costing to acquire a customer? Is it profitable revenue? How [...]
Job Security is Dead
The collapses of Ansett and HIH Insurance, and the troubles at global companies like Andersen and Enron, reinforce what world leading financial educator and author Robert Kiyosaki has been saying for years: job security is an obsolete idea.
"Today, the most dangerous advice you can give a child is 'Go to school, get good grades and look for a safe secure job," Robert likes to say. "That is old advice, and it's bad advice. If you could see what is happening in Australia, Asia, Europe, South America, you would be as concerned as I am."
What's really disturbing about these corporate failure stories is how quickly they have happened. One day, employees believe they have steady jobs inside massive companies. The next, they've not only lost their weekly pay cheques but often financial entitlements and even a big chunk of their retirement savings. So, not only do you now have to worry about whether your company will look after you through good times and bad, you have to worry if it can look after itself!
Robert tells the story of a friend that he flew with in Vietnam who had just been laid off and wanted to know what to do.
'Jim and I went through flight school and Vietnam together. When we returned to the States, he got a job as a pilot with the airlines and I began building my business. Jim was absolutely in love with his work. He loved flying and the company he worked for. Unfortunately, the company was Pan American, which for those of you who are old enough to know that Pan Am went out of business, even though it was once the number one airline in America. After five years of taking odd jobs, he finally was rehired by an airline whose name I will not mention, because it is still in business today, but just barely. This is the airline he was laid off from.
'"I'm 53 years old," said Jim. "I still have two kids in school. I have nothing saved for retirement. And worst of all, how am I going to find a job that pays me $85,000 a year, especially when all I know is to be a pilot?"'
Robert's advice was for his friend to get another job but also start his own business on the side. This would make him less dependent on his employer and also give him more choices at a volatile time following September 11 and the global economic slowdown of the past year or two.
'Starting your own business gives back some control over your life. If you think your boss or company can protect you from the geopolitical forces that are at play today, I think you need to rethink that thought,' says Robert. 'My friend Jim the airline pilot is also a casualty of the September 11 event. The problem is, he is not willing to make changes. My prediction is that for employees who are well educated, well trained and ambitious, the next few years will be tough ones. Why? Because well-educated, ambitious, high paid employees are often the first to be downsized and once downsized, they often find it harder to find a job at the pay scale they were used to. In the Industrial Age, if you were well educated, hard working and experienced, you were desirable. In the Information Age, experience and age are liabilities, not assets.'
Beyond the immediate and dramatic threats of corporate collapses and terrorism, there are plenty of good reasons to try to move from being an employee or self-employed - what Robert describes as the 'E' and 'S' quadrants - to becoming a business owner or an investor. It is only by getting to these 'B' and 'I' quadrants that you can start to build up the sorts of assets you need to generate passive income and become rich.
As Robert explains in his latest book, Retire Young Retire Rich, the other problems with being an employee is that you pay a lot of tax and you can only do as much work as you have hours in the day. Even as a self employed or small businessperson you are still limited by your work capacity and can't generate the earnings of those in the B and I quadrants because you're unable to fully leverage your financial position or build networks to supercharge your earning capacity.
These are complex ideas but Robert has a way of making them very simple - as proved by the millions of people that have read his Rich Dad series of books and attended his thousands of seminars in Australia and around the world. If you would like to learn more about getting out of the employee trap and becoming financially free, then I would invite you to come and hear Robert speak during his upcoming tour of Australia.
In his compelling seminars, Robert explains the key fundamentals required to invest in real estate, businesses and paper assets. Learn how to work less, earn more and retire wealthy as early as possible.
As Robert's rich dad told him, the path to wealth is through education and challenging your beliefs: 'That is why so many people cling to job security and often assume investing is risky or that it takes money to make money. They do not question their assumptions... You cannot become richer if you do not first question the assumptions under your beliefs. That is why so few people become rich or ever become truly financially free.'
You might be interested in this upcoming event...
Understand the fundamentals of good financial management.
When it comes to business, money really does 'make the world go 'round'.
Managing your cash flow and your accounts properly is as important as getting new business. Even if you choose to hire a bookkeeper to manage your books, understanding the fundamentals of good financial management will put you ahead of the game.
This upcoming three-part online course will look at the critical aspects that underpin the financial management aspect of your small business.