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How Do You Build a Strong Business
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Why Build a Business?

Rich dad said, “There are three reasons for building a business more than to simply create an asset” :

1. “To provide you with excessive cash flow .” In his book How to Be Rich, J. Paul Getty states that his first rule is that you must be in business for yourself . He goes on to imply that you will never get rich working for someone else.

One of the primary reasons rich dad started so many businesses was that he had excessive cash flow from his other businesses. He also had the time because his businesses required minimal effort on his part. This allowed him the free time and extra money to keep investing in more and more assets tax-free. That is why he became rich so quickly and why he said to “Mind your own business.”

“To sell it.” Rich dad went on to explain that the problem with

having a job is that you cannot sell the job, regardless of how hard you work. The problem with building a business in the S quadrant is that there is usually a limited market that would want to buy it. For example, if a dentist builds a practice, generally the only other person who may want to buy it is another dentist. To rich dad, that was too narrow of a market. He said, “For something to be valuable, there must be many more people than you who want it. The problem with an S quadrant business is that you are often the only person who wants it.”

Rich dad said, “An asset is something that puts money in your pocket, or it can be sold to someone else for more than you have paid for or invested in it. If you can build a successful business, you will always have a lot of money. If you learn to build a successful business, you will have developed a profession that few people ever achieve.”

In 1975, while I was learning to sell Xerox machines, I came across a young man who owned four quick-copy print shops in Honolulu. The reason he was in the business of making copies was interesting. While in school, he had run the university's copy shop and learned the business side of the operation. When he came out of school, there were no jobs, so he opened up a copy shop in downtown Honolulu doing what he knew best. Soon, he had four of these copy centers in four of the bigger downtown office buildings, all on long-term leases. A major copy shop chain came to town and made him an offer he could not refuse. He took their $750,000, a giant sum in those days, bought a boat, gave $500,000 to a professional money manager, and sailed around the world. When he returned a year and half later, the manager had grown his investment to nearly $900,000, so the young man just sailed off again, back to the islands of the South Pacific.

I was the guy who sold him the copy machines, and all I got was my small commission. He was the guy who built a business, sold it, and sailed away. I never saw him again after 1978, but I have heard that he pulls back into town every so often, checks his portfolio, and sails off again.

As my rich dad said, “As a business owner, you don't have to be right 51% of the time. You need to be right only once.” He also said, “Building a business is the riskiest road for most people. But if you can survive and keep improving your skills, your potential for wealth is unlimited. If you avoid risk and play it safe on the E and S side, you may be safer, but you'll also limit what you can truly earn.”

3. “To build a business and take it public. ” This was rich dad's idea of

becoming what he called the ultimate investor. It was building a business and taking it public that made Bill Gates, Henry Ford, Warren Buffet, Ted Turner, and Anita Roddick very, very wealthy. They were the selling shareholders, while we were all the buying shareholders. They were insiders, while we were outsiders trying to look in.

You're Never Too Old and You're Never Too Young

If anyone tells you that you can't build a business that others want to buy, use that small-minded thought to inspire you. It is true that Gates was very young when he started Microsoft but Colonel Sanders was 66 when he started Kentucky Fried Chicken.

In the next few chapters, I will be describing what rich dad called the B-I Triangle. I use this triangle as a guide to building a business. It outlines the primary technical skills that are required. Rich dad also felt certain personal traits were required to be a successful entrepreneur:

1. Vision: the ability to see what others could not see.

2. Courage: the ability to act despite tremendous doubt.

3. Creativity: the ability to think outside the box.

4. The ability to withstand criticism: There is not one successful person who has not been criticized.

5. The ability to delay gratification: It can be very difficult to learn to deny short-term immediate self-gratification in favor of a greater long-term reward.

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