The B-i Triangle | The Key To Great Wealth

The following is a diagram rich dad called the B-I Triangle, the key to great wealth.

The B-I Triangle was very important to rich dad because it gave structure to his ideas. As he often said, “There are many people with great ideas but few

people with great fortunes. The B-I Triangle has the power to turn ordinary ideas into great fortunes . The B-I Triangle is the guide to taking an idea and creating an asset.” It represents the knowledge required to be successful on the B and I side of the CASHFLOW Quadrant. I have modified it a little over the years.

I was about 16 years old when I first saw this diagram. Rich dad drew it for me when I started asking him the following questions:

I did not ask him all these questions at the same time, yet they were questions that came to mind as I studied his businesses. Rich dad was about 40 years old, and I was amazed at how he could run several different companies all in different industries. For example, he had a restaurant business, a fast food business, a convenience store chain, a trucking company, a real estate construction business, and a property management business . I knew he was following his plan to have his businesses buy his true investments, which for him was real estate, but it was amazing how many businesses he could run all at the same time. When I asked him how he could start, own, and manage so many businesses, his response was to draw the B-I Triangle.

Today, I own interests in several different companies in completely different businesses because I use the B-I Triangle as a guide. I do not own as many companies as rich dad did, but by following the same formula outlined in the B-I Triangle, I could own more if I wanted.

Obviously, the amount of material that could be written—and needs to be written—to cover the information represented by the B-I Triangle is more than this book could cover. However, we will review the basics.

Rich dad said, “A business needs both a spiritual and a business mission to be successful, especially at the beginning.” When he explained this diagram to his son and me, he always began with the mission since he thought it to be the most important aspect of the triangle and why it was at the base. “If the mission is clear and strong, the business will weather the trials every business goes through during its first ten years. When a business gets big and it forgets its mission, or the mission it was created for is no longer needed, the business begins to die.”

Rich dad chose the words “spiritual” and “business. ” He said, “Many people start a business only to make money. Just to make money is not a strong enough mission. Money alone does not provide enough fire, drive, or desire. The mission of a business should fill a need that the customers want, and if it fills that need, and fills it well, the business will begin to make money.”

When it came to a spiritual mission, rich dad said, “Henry Ford was a man driven by a spiritual mission first and a business mission second. He wanted to make the automobile available to the masses, not just the rich. That is why his mission statement was “Democratize the automobile.” Rich dad went on to say, “When the spiritual mission and business mission are both strong and in line, the combined power builds huge businesses.”

Rich dad's spiritual mission and business mission were closely in line. His spiritual mission was to provide jobs and opportunities for many of the poor people to whom he served food in his restaurants. Rich dad thought the mission of a business was very important although it was hard to see and to measure. He said, “Without a strong mission, a business is not likely to survive its first five to ten years.” He also said, “At the start of a business, the mission and the entrepreneur's spirit are essential for the business to survive. The spirit and mission must be preserved long after the entrepreneur is gone, or the business dies.” Rich dad would say, “The mission of a business is a reflection of the spirit of the entrepreneur. General Electric was a company founded from the brilliance of Thomas Edison, and it has grown by preserving the spirit of the great inventor by continuing to invent new and innovative products. Ford Motor Company has survived by continuing in the tradition of Ford.”

Today, I believe that Bill Gates's spirit continues to drive Microsoft to dominate the world of software. By contrast, when Steven Jobs was pushed out of Apple and a management team from the traditional corporate world replaced him, the company went downhill rapidly. As soon as Jobs was brought back into Apple, the spirit of the company returned, new products came forth, profitability increased, and the share price went up.

Although the mission of a business is hard to measure, impossible to see, and for all practical purposes an intangible, most of us have experienced it. We can identify the mission of someone who is trying to sell us something for a commission as contrasted to someone trying to help answer our needs . As the world becomes crowded with more and more products, the businesses that survive and do well financially will be businesses that focus on serving and fulfilling the company's mission and their customers' needs, rather than just increasing the company's revenues.

CASHFLOW Technologies, Inc. —the company that Kim, Sharon, and I created to bring you this book as well as our other financial-education products—has the following mission: “To elevate the financial well-being of humanity. ” By being clear and true to the spiritual and business mission of this company, we have enjoyed success that goes beyond luck. By being clear on our mission, we attract individuals and other groups aligned with a similar mission. Some people call it luck… I call it being true to our mission. Over the years, I have come to believe that rich dad was right about the importance of having the spiritual mission and business mission be strong and in line.

In all truthfulness, not all of my businesses have as strong a dual mission as CASHFLOW Technologies, Inc. does. Other businesses in which I own interests have stronger business missions than spiritual missions.

I now realize that my nylon and Velcro wallet business had a very different mission than I first thought. The mission for building that business was to give me a fast education about building a worldwide business. That business fulfilled that mission rather painfully. In other words, I got what I wanted. The business grew very quickly, success was fast and furious, and so was the crash. Yet, as painful as the experience was, I realized that I had achieved my mission. After I dug myself out from under the rubble and rebuilt the business, I learned what I set out to learn. As rich dad said, “Many entrepreneurs don't really become businesspeople until after they lose their first business.” In other words, I learned more by losing the business and rebuilding it than I did by being successful. As rich dad said, “School is important, but the street is a better teacher. ” So, my first big business venture after leaving the Marine Corps was expensive and painful, but the lessons I learned were priceless. And the business had fulfilled its mission.

A company's mission helps it maintain focus. In the early stages of development, many factors can cause distraction. The best way to get back on track is to revisit your mission. Does the distraction affect the achievement of your mission? If so, you must deal with the distraction as quickly as possible so that you can re-focus your efforts on the overall mission.

Today, I notice many people becoming instant millionaires, even billionaires, just by taking a company public through an IPO. I often wonder if the company's mission was just to make money for owners or investors or was the company really formed to fulfill a mission or some kind of service? I am afraid that many of these new IPOs will ultimately fail because their only mission was to make money quickly. Besides, it is in the mission of the company where the entrepreneur 's spirit is found.

“Investing is a team sport. ” He would also say, “The problem with being in the E and S quadrant is that you play the game as an individual, playing against a team.”

One of rich dad's strongest criticisms of the educational system was: “In school, they train students to take tests on their own. If a child attempts to cooperate at test time, it is called ‘cheating.' ” Rich dad would also say, “In the real world of business, business owners cooperate at test time, and in the world of business, every day is test time. ”

For people considering building a powerful and successful business, I think this lesson on teamwork is crucial. It is one of the primary keys to my financial success. Business and investing are team sports, and remember that every day in business is test time. To be successful in school, you had to take tests alone. In business, success comes from taking tests as a team, not as an individual.

People in the E and S quadrant often make less money than they could or would like to because they attempt to do things on their own. If they work as a group, especially those in the E quadrant, they form a union instead of a team. And that is what is happening to medical doctors in America today. They are forming a professional union to combat the power of a team, the business team known as the health maintenance organizations (HMOs).

Many investors today are trying to invest as individuals. I see and read about thousands of people who are doing online day trading. This is a perfect example of an individual trying to trade against well-organized teams. That is why so few of them succeed as well as why many lose their money. I was taught that when it comes to investing, you should invest as a member of a team. Rich dad would say, “If people want to become sophisticated investors and above, they must invest as a team. ” On rich dad's team were his accountants, his attorneys, his brokers , his financial advisors, his insurance agents, and his bankers. I use the plurals here because he always had more than one advisor. When he made a decision, it was with input of the team. Today, I do the same.

On television today, I see commercials of a rich couple, sailing their yacht in some warm tropical waters. The ad seems to draw in all the individuals who are trying to get rich on their own. Whenever I see that commercial, I often think of rich dad saying to me, “Most small-business people dream of someday owning a boat or a plane. That is why they will never own that boat or plane. When I was first starting out, I dreamed of having my own team of accountants and attorneys, not a boat.”

Rich dad wanted me to aim to have a team of accountants and attorneys working only on my business—before I dreamed of a boat. To drive his point home, he had me go to an accountant in town with my meager little tax return. As I sat across the table from Ron, the CPA, the first thing I noticed was a stack of manila folders sitting on his desk. Immediately, I got rich dad's lesson. This CPA was minding about 30 other businesses on that day alone. How could he pay full attention to my business ?

Returning to rich dad's office that afternoon, I saw something I had never noticed before. As I sat in the reception area waiting for rich dad's personal secretary to let me in, I could see a team of people working only on rich dad's business. In the working area of his office was a row of bookkeepers, about fourteen of them. There were also five full-time accountants, and a chief financial officer (CFO). He also had two full-time attorneys working in his main office. When I sat down in front of rich dad, all I said was, “They're all minding your businesses and no one else's.”

Rich dad nodded. “As I said, most people work hard and dream of getting away on their own boat. I first dreamed of having a team of full-time accountants and attorneys. That is why I can now have the big boat and the free time. It is a matter of priorities.”

In my seminars, I am often asked, “How can you afford to pay for this team?” That question usually comes from someone in the E or S quadrant. Again, the difference goes back to the different laws and rules for the different quadrants. For example, when a person in the E quadrant pays for professional services, the transaction looks like this:

There is also a difference between the B quadrant business owner and the S quadrant business owner. The B quadrant business owner does not hesitate to pay for these services because the business system, the entire B-I Triangle, is paying for the services. S quadrant business owners are often paying for the services out of their own sweat and blood, so most of them cannot afford to hire a full-time staff because they often do not earn enough to cover their own financial needs.

I answer, “My team.” My team consists of my accountants, attorneys, bankers, brokers, etc.

When people say, “Building a business is risky,” they often speak from a point of view of doing it alone, a habit they learned from school. In my opinion, not building a business is risky. By not building a business, you are failing to gain priceless real-world experience, and you are failing to get the best education in the world, the education that comes from your team of advisors. As rich dad would say, “People who play it safe lose out on the best education in the world and they waste a lot of precious time.” He would also say, “Time is our most valuable asset, especially as you get older. ”

Tolstoy said it a little differently. He is quoted as saying, “The most unexpected thing that happens to us is old age.”

I am often asked, “What is the difference between a B quadrant business and an S quadrant business?” My reply is “The team. ”

Most S quadrant businesses are either structured as sole proprietorships or partnerships. They could be teams , but not the kind of team I think of. Just as people in the E quadrant often bind together as a union, people in the S quadrant often organize as a partnership. When I think of a team, I think of different types of people with different skills coming together to work together. In a union or partnership (e.g., the teachers' union or a law partnership) , the same kinds of people and professions often come together.

One of my greatest teachers was Dr. R. Buckminster Fuller. Dr. Fuller set out years ago to find what he called “the building blocks of the universe.” In his search, he found out that squares and cubes do not exist in nature. He would say, “Tetrahedrons are the basic building blocks of nature.”

When I look at the great pyramids of Egypt, I understand a little more about what Dr. Fuller was talking about. While tall skyscrapers come and go, those pyramids have withstood the test of tens of centuries. While a skyscraper can come down with a few well-placed sticks of dynamite, the pyramids would not budge with the same blast.

Dr . Fuller was looking for a stable structure in the universe, and he found it in the tetrahedron.

The prefix “tetra” means four . In other words, it has four points. After studying with Dr. Fuller , I began to see the importance of having structures be in a minimum of fours. For example, when you look at the CASHFLOW Quadrant, it has four parts. Therefore, a stable business structure would look like the following diagram:

A well-managed business will have excellent employees. In this instance, I say the E stands for both “excellent” and “essential” because the employees are

responsible for the day-to-day activities of the business. The E also stands for “extension” because the employees are the extension of the business owner and represent the business to the customer .

The specialists are typically from the S quadrant. The S stands for “specialized” because each specialist will guide you based on his or her trained area of expertise. While specialists may not participate daily, their guidance is invaluable to keep your business moving in the right direction.

The structure has a better chance of being stable and enduring if the four points are working in alignment. While the investors provide the funding, the business owners must work with the specialists and employees to develop the business and make it grow so there will be a return on the investors' original investment.

Another interesting tetra-relationship I came across is the four fundamental elements that make up this world we live in, which the ancients believed to be earth, air, fire, and rain (water) . In a sole proprietorship as well as in a partnership, in order to be successful, the individual needs to be all four, which is difficult.

While most of us have all four elements in us, we each tend to be weighted predominantly to one of the elements. For example, I am fire, born under the sign of Aries and the planet Mars. That means I am good at starting things but not completing them. By having a tetrahedron, I am better able to be successful than if I were on my own. My wife, Kim, on the other hand, is earth. She and I have a good marriage because she has a grounding effect on me as well as on the people I upset around me. She often says, “Speaking to you is like speaking to a

blowtorch.” Without her , I would have nothing but angry and upset people around the company. Sharon, on the other hand, fulfills the role of air in this company. She feeds the fire, moves the company in the right direction, and keeps all systems running smoothly. As CEO of our company, Sharon ensures that all four of us stay in alignment and work toward our mission. When Mary, our operations manager, joined us, the company suddenly took off. Mary completed the company by making sure that we delivered what we promised. It's important to note that it took two years for this team to come together . People came and went until the right tetra-team finally locked in place. Once this model stabilized, the company began to radiate out, growing rapidly and with stability.

I am not saying this is a hard and fast rule for a successful business. However, all one needs to do is look at the pyramids of Egypt and a sense of strength, stability, and longevity comes to mind.

I often jokingly say that if you put only two elements together , as in a partnership, you get some strange phenomena. For example:

One of the first things I look at as an investor is the team behind the business. If the team is weak or lacks experience and a track record, I rarely invest. I meet many people who are running around trying to raise money for their new product or business. The biggest problems most of them have are that they personally lack experience and they have no team behind them, a team that inspires confidence.

Many people want me to invest in their business plan. One of the things most of them say is, “Once this company is up and running, we're going to take it public.” That statement always intrigues me, so I ask what all of you should ask: “Who on your team has experience taking a company public, and how many companies has that person taken public?” If the answer to that question is weak, I know I am listening to a sales pitch more than to a business plan.

Another line I look at in the numbers of a business plan is the line item called “salaries.” If the salaries are high, I know I am looking at people who are raising money in order to pay themselves fat salaries. I ask them if they are willing to work for free or to cut the salaries in half. If the answer is weak or a definite “No, ” I know the true mission of their business. The mission of the business is probably to provide them a job with a nice salary.

Investors invest in management. They look at the team within the proposed business and want to see experience, passion, and commitment. It is hard for me to believe there is a high level of commitment from people who are trying to raise money to pay their own salaries.

Many people have asked why we did not create our educational board games as electronic board games. One of the primary reasons is because we want to encourage cooperative learning. In the real world, being able to cooperate with as many people as possible and helping people without crippling them are very important human skills.

While we may release an electronic game of CASHFLOW in the future, for the moment, we are happy to encourage people to learn cooperatively—to teach each other—because the more we teach, the more we learn. Too much of our children's lives is already spent in isolation. They spend hours alone in front of a computer, alone watching TV, and alone taking tests. We then wonder why so many children are anti-social. To be successful, we all need to learn to get along with many different types of people. For this reason, CASHFLOW is still a board game that requires you play with other human beings. We need to learn to operate as individuals as well as members of a team—and we can always improve those skills.

Robert has often mentioned that “money follows management” in the world of business capital. To succeed, a business must have the proper expertise in key areas .

When you do not have the money up front to hire the talent you need, consider attracting the talent as members of an advisory board with the understanding that once sufficient capital is raised, your team will come on board. Your chance of success is much stronger if your management team has a track record of success in the business or industry of your proposed business.

Your team also includes your outside advisors. Proper guidance from your accountants, tax advisors, financial advisors, and legal counsel is imperative for building a strong successful business. If your business is real estate, your real estate brokers become an important part of your team. Although these advisors can be “expensive,” their advice can provide you with an incredible return on your investment by helping you structure a strong business while avoiding pitfalls along the way.

And that leads to the next part of the B-I Triangle: leadership, because every team needs a leader .

One reason I attended a federal military academy rather than a normal university was that rich dad knew I needed to develop leadership skills if I wanted to become an entrepreneur. After graduation, I went into the U .S. Marine Corps and became a pilot to test my skills in the real world, in a place called Vietnam. As rich dad said, “School is important, but the street is a better teacher. ”

I still remember the commanding officer of my squadron saying, “Gentlemen, your most important job is to ask your troops to risk their lives for you, your team, and your country.” He went on to say, “If you don't inspire them to do that, they will probably shoot you in the back. Troops do not follow a leader who does not lead.” The same thing goes on in business today and every day. More businesses fail from the inside than from the outside.

In Vietnam, I learned that one of the most important qualities of a leader is trust. As a helicopter pilot with a crew of four , I had to trust my life to my team, and they had to entrust their lives with me. If that trust was ever broken, I knew that we would probably not come back alive. Rich dad would say, “A leader 's job is to bring out the best in people, not to be the best person.” He would also say, “If you are the smartest person on your business team, your business is in trouble. ”

When people ask how they can gain leadership skills, I always say the same thing: “Volunteer more.” In most organizations, it is hard to find people who actually want to lead. Most people just hide in the corner hoping no one will call on them. I tell them, “At your church, volunteer to take on projects. At work, volunteer to lead projects. ” Now, volunteering alone will not necessarily make you a great leader, but if you accept the feedback and correct yourself well, you can grow into a great leader .

Through volunteering, you can get feedback on your real-life leadership skills. If you volunteer to lead and no one follows, you have some real-life learning and correcting to do. If you volunteer to lead and no one follows, ask for feedback and corrective support. Doing so is one of the greatest traits of a leader. I see many businesses that struggle or fail because the leader will not accept feedback from peers or the workers in the company. My squadron's commanding officer in the Marine Corps would often say, “True leaders are not born leaders. True leaders want to be leaders and are willing to be trained to be leaders , and training means being big enough to take corrective feedback.”

A true leader also knows when to listen to others . I have said before I am not a good businessman or investor, I am average. I rely on the advice of my advisors and team members to help me be a better leader .

As a visionary, the leader must keep his or her focus on the corporate mission. As a cheerleader, he or she must inspire the team as it works together towards that mission as well as herald the successes along the way. As the pit boss, he or she must be able to make the tough calls regarding issues that distract the team from achieving the mission. The unique ability to take decisive action while maintaining focus on the ultimate mission is what defines a true leader .

With the right mission, team, and leader you are well on your way to building a strong B business. As I said earlier , money follows management. It is at this point that you can start attracting money from outside investors. Five building blocks are essential to developing a strong business . Each will be discussed separately.