Cashflow Quadrant ESBI by Kiyosaki
Back nearly a decade ago I read about all 20 of Robrt Kiyosaki books at the time, and one of the most important concepts and frameworks that Robert taught was the idea of the cashflow quadrant. He uses the 4 letters ESBI which stands for Employee, Self-Employed, Business, and Investors. The idea is that an employee works for someone else, doesn’t have freedom, and often doesn’t have the entrepreneur mindset. The Self-Employed person wants to be an entrepreneur many times, but they don’t yet have the full knowledge, so often they still work 50 plus hours per week.
The goal is to be a business owner who makes more passive income and builds systems. With enough cashflow and income one can take that money and invest it, and become an investor where their money works for them. I’ve provided a video so that you can understand how this cashflow quadrant works. This is why I work with businesses with systems consulting, so that they can also scale a business.
The left side of the quadrant is the employee and Self-Employed type of income and that gets taxed the most and is the hardest with often the most hours and lowest pay. Often people work too hard in these categories, and don’t yet run a business like they want.
Most people fit into these categories, and it can take years or maybe never until people learn the mindset of business or investor, a more passive and scaleable mindset. I’ve spent time in all of those quadrants and anything more passive or where your money makes money for you is the goal.
Business and Systems
I invest my time running my business like a system and consulting for others as I believe so much in systems for great habits, predictive analytics, peace of mind, less stress, and being able to not only stay in business, but scale a business. With the right team, using the right habits and systems you can survive even if a key person were to leave.
I believe most marketing and most businesses work based on great systems. Like the emyth talks about I decide to work on the business vs. in it. This helps me to see my hours worth more, and makes me observe my business from a broader point of view.
If you are going to start reading Rich Dad Poor Dad and much of the series I recommend understanding the cashflow quadrant and how each component is much different than the others and how much the mindset is different. Don’t just be busy being busy, learn to outsource, and learn to systematize your business. I often work with Minnesota businesses for now, but am open to working by phone consulting for others who want to scale with systems.
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