Building the Better Biz

Is your company tough and tenacious or lithe and limber?
By Robert Kiyosaki
Entrepreneur Magazine - June 2006

There are two interpretations of "survival of the fittest." The first and more widely accepted is the idea of being competent and able--as in being physically fit. The first interpretation fits well with the saying, "Only the strong survive."

The second and less accepted interpretation is survival of the most adaptive or flexible--survival belongs to those that can fit in a new environment.

In January, General Motors Corp. announced it was seeking to cut costs by $11 billion. It plans to achieve these cost savings by reducing worker health-care benefits, letting go of 30,000 workers and closing or consolidating a dozen plants.

In that same month, Google opened an office in Phoenix. Suddenly, local companies were losing IT workers to the high pay and benefits Google was offering.

GM and Google are examples of the two definitions of "survival of the fittest." Suddenly, the biggest and strongest automaker in the world is finding it more difficult to survive, simply because it wasn't flexible or able to adapt. At the same time, Google, a young company, fits into the new economic environment and has become the new 800-pound gorilla of the business world.

The comparison of GM and Google holds valuable lessons for all entrepreneurs. What kind of fit do you and your company want to be? Do you want to be fit by being the biggest and the strongest, or by being adaptive and flexible? Are you building a company that looks like a muscle-bound bodybuilder, or are you building a company that looks like a yoga instructor?

As an entrepreneur, my company's growth and success are dependent on being strong as well as flexible. Adapting means keeping an open mind and not becoming too attached to yesterday's successes. It also means hiring strong and flexible people rather than bodybuilders bulked up with degrees and corporate titles. Though both types are strong, the question is: Which body type and, ultimately, which company type, is best designed for survival?

Common Cause

What's the key to finding the right team? Hire people with a passion for your mission.
By Robert Kiyosaki
Entrepreneur Magazine - May 2006

Entrepreneurs often ask me, "How do I find the right people?" Often my reply is, "First, get rid of the wrong people."

One of your toughest and most important jobs is putting the right team of people together. A friend of mine faced this challenge a year ago--his business had grown quickly but was stagnating. He had brought in a new CEO and CFO, yet sales stayed down and the staff was lethargic. When he asked me what I thought was wrong, I replied, "You hired the wrong people. They're smart and come with excellent business pedigrees, but they're used to the corporate world, not the world of entrepreneurs. More important, they're here for the paycheck, not for your mission. I recommend you let them go."

"I can't do that," my friend said. "I paid a fortune to the headhunting firm to hire and relocate them. And I would have to buy out their contracts. Any other ideas?"

"Sure," I replied. "If you can't fire them and make changes, maybe you're the wrong person in this company."

Years ago, my rich dad told me, "Hire people who are mission-driven--people who share your vision. If you don't, your business will struggle, or may never even get off the ground." He also said, "Big business can afford to hire managers and employees. Entrepreneurs need to hire missionaries."

One of the reasons Steve Jobs is the entrepreneur of the era is because he has missionaries inside his company as well as outside--Apple Computer's customers are missionaries, too. Jobs is successful because he is true to his personal mission and demands the same from his staff. Jobs' mission is at the core of Apple Computer.

I told my friend he was the wrong person simply because he and his staff only paid lip service to the company mission. I reminded him: "Mission comes from the heart, not just the mouth."

The word courage is derived from the French words le coeur, meaning the heart. It is unfortunate that my friend is brilliant in mind, eloquent of tongue, yet weak at heart. Today, the same CEO and CFO are still there. Sales, energy and morale continue to decline. The company is rotting at the core.

When I asked my rich dad for further clarification on hiring people with a passion for your mission, he simply laughed and said, "If you own a butcher shop, don't hire vegetarians."

In Control

Want to lead a happier, healthier and wealthier life? Start by practicing self-control.
By Robert Kiyosaki
Entrepreneur Magazine - October 2006

Most of us have heard the phrase “health, wealth and happiness.” But what actually brings health, wealth and happiness? Is it success, and success alone?

My poor dad was a successful man. He had a Ph.D. and was well-respected and accomplished. But he had poor health, very little wealth and was rarely happy. He smoked two packs of cigarettes a day, eventually dying of lung cancer. He made a lot of money as a government official but never invested it. He wasn’t happy with his success. In his mind, he needed to accomplish more.

So, my thought for you this month: Are you becoming healthy, wealthy and happy? Or are you sacrificing these ideals for success?

Most of us know what to do when it comes to our health and our wealth. Health is primarily about diet and exercise, and wealth is about earning and investing. But happiness is a bit more mysterious. We know to think positively, but thinking positively instead of realistically can have tragic consequences. For example, positive thinking won’t prevent you from going bust if you’re foolish with money, and it won’t reduce your percentage of body fat.

In fact, it’s often the pursuit of happiness that causes the most problems with health and wealth. Many people are obese because they eat and drink to feel happy. And others shop to feel happy, even if it means maxing out credit cards.

Many books discuss the subject of being happy and the factors that affect happiness. One factor in particular helps entrepreneurs lead happier, healthier and wealthier lives: self-control. I’m happier if I have the self-control to do the right things even if I don’t want to do them. In business, sometimes that means studying more instead of working more.

Sometimes we make business decisions because they make us feel happy in the short run. But in the long run, we become less healthy and less happy. Sometimes doing the right thing might not make us happy temporarily, but we feel better later.

To me, doing the right things, even if I don’t want to do them, is one of the keys to being truly happy. Today, whenever I feel unhappy, I simply ask myself, “What am I not doing?” or “What am I avoiding?” Then hopefully, I have the tenacity to do what I know I need to do. That’s the only way we won’t forfeit our health, wealth or happiness in our pursuit of success.

Hear This

Are you in tune with your front line?
By Robert Kiyosaki
Entrepreneur Magazine - September 2006

As a Marine lieutenant in Vietnam, I learned some important lessons--lessons that apply directly to business. One of those lessons was on speaking out, even if what I say may be wrong or unpopular.

Serving as a helicopter pilot, I looked down on many battles and saw the enemy--Viet Cong and the North Vietnamese Army--fighting with more ferocity than the South Vietnamese. One day, after sustaining terrible losses, I asked my commanding officer, “Why do their Vietnamese fight harder than our Vietnamese?” Needless to say, that comment nearly got me court-martialed. It bordered on treason. In the military, you are not to ask why?

Today, some young officers question their leaders. If you haven’t been in battle, you have no idea how frustrating it is to take orders from a civilian thousands of miles away and fight a war.

When we first begin a business, we’re on the front line. If successful, we tend to retreat to the ivory tower and lose touch with the front line--our employees and customers.

Can you take criticism from your workers, customers and associates? Entrepreneurs I’ve met believe they’re in touch with the front line and take criticism well. Still, I have not yet met one entrepreneur who has agreed with the criticism and said, “I can improve in those areas.” That is the real problem.

My commanding officer in Vietnam was a great guy, but he had his hands full. The last thing he needed was a young lieutenant asking questions. But it was an important question, worthy of being pushed up the chain of command. I believe the reason he did not relay the question up the chain of command was simply because they were deaf.

Don’t be deaf to what’s really happening in your business. Entrepreneurs are leaders and should constantly ask themselves questions such as “Can we do something better?” “Are we fulfilling our mission?” “Am I listening to my customers and my employees?” “Am I being told the truth?” As an entrepreneur, your job is to get your workers to work harder than your opponent’s workers. That’s what leaders do.

Top of the Heap

However hard high oil prices hit the economy, you can be prepared.
By Robert Kiyosaki
Entrepreneur Magazine - August 2006

There's an old joke that goes, "A friend of mine told me to cheer up, because things will get worse. So I cheered up, and things got worse."

When things get worse--when the economy takes a downturn--will your business suffer, or will it do better? I say when rather than if because 1) the economy continuously experiences up and down cycles, and 2) the price of oil will stay high.

In 1973, 1974 and 1978, the high price of oil sent shock waves through the economy. Stagflation destroyed many businesses, big and small. So when the economy goes down, will you be prepared?

One of the great things about being an entrepreneur is that you have control of your company. You're the captain--you can tell the helmsman which way to turn your ship and what kind of weather to prepare for. Some questions to ask yourself:

1. With high oil prices, will my business do better or worse?
2. With high oil prices, will my customers do better or worse?
3. How many employees will stay with me, even with a 20 percent pay cut?
4. Can I afford to take a 50 percent pay cut?
5. What can I do so my business will benefit from high oil prices?

If your answers frighten you, it's time to take action. For example, if your customers will do worse with high oil prices, strengthen your relationships with your best customers-and start looking for new customers who will do well with high oil prices.

These five questions are important because wealth and energy have a simple inverse relationship. Generally, when energy prices are low, wealth increases. As energy prices increase, wealth for many decreases. If your customers live in suburbia and commute to work, their wealth will go down as oil prices rise. I'm concerned that high oil prices will severely contract the U.S. economy, which is why my two previous columns were about preparing for tough times ahead.

My company is underwriting two initiatives to prepare for a high oil price economy. We're building a franchise system to reach our customers where they live. And we built Rich Dad TV, a broadcast-quality station that currently operates through our website, so we can stay in touch with our customers on a more personal basis.

In other words, instead of our customers coming to us (or us physically going to them), we're making it easier and less expensive to stay in touch.

Benefit from Boom and Bust

How to profit in a fluctuating economy.
By Robert Kiyosaki
Entrepreneur Magazine - July 2006

As I write, the economy is strong. Yet, as we all know, every boom is followed by a bust. Every up cycle is followed by a down cycle. So when things are good, that's the time to prepare for when things will be bad.

Over the years, I've seen entrepreneurs make three mistakes during boom-and-bust cycles. The first mistake is made when times are good: Entrepreneurs begin to spend. With increased confidence, they expand their businesses, hire more people, buy bigger houses, lease new cars or have more kids.

The second mistake occurs when the economy shifts and business slows down. Suddenly, confidence is shaken, and entrepreneurs begin to save. Cutting back only causes the business to fall faster.

One of the best secrets my rich dad taught me was to save when times are good, and spend when times are bad. In other words, do the exact opposite of what everyone else is doing.

When times are good, save money by paying off bills and improving income-to-expense and asset-to-liability ratios. Make the business financially stronger. Be careful about taking on more debt, especially ego debt, like bigger offices.

When times are bad, don't cut back on sales-generating activities like advertising and promotion. Instead, increase your sales, promotion and marketing budgets. Hire more salespeople and increase sales training. An aggressive outbound sales campaign reverses your fears--it gets energy flowing out and then flowing back to you in the form of sales.

When the economy recovers, a business that has saved money often emerges smaller and weaker. A business that has spent money emerges bigger and stronger, able to expand rapidly.

The third mistake is failing to understand the sales and promotion cycle. My rich dad taught me that it is a six-week cycle, meaning if I do some promotion today, my sales will increase in six weeks. One reason entrepreneurs fail: They're impatient. They do some promotion, but when nothing happens immediately, they think advertising is a waste of money.

Never stop promoting, advertising and selling, whether business is good or bad.

The Sky's the Limit

Flying into the wind, entrepreneurs climb to great heights.
By Robert Kiyosaki
Entrepreneur Magazine - April 2006

A lesson I was taught early in Navy flight school was always to take off and land into the wind. Often, we do not learn a lesson until we test it. When I was a child and my mother said, "Don't touch the stove," it had no meaning until I touched the stove. The same is true with the lesson of taking off and landing into the wind.

One gusty day in Pensacola, Florida, my flight instructor had me taxi my aircraft onto the runway. Instead of taking off into the wind, he had me take off with the wind at my back. I pushed the throttle forward and began rolling down the runway. Soon, I realized my plane did not want to lift off the ground. It dawned on me that we were not going to clear the trees at the end of the short runway. Terror took over, and I froze at the controls.

"I've got it," my instructor said calmly as he popped the aircraft over the trees.

There was a long silence as the little aircraft bounced around the sky. "OK," said my instructor, "now land downwind." Once again, the experience of having the wind at my back was terrifying. After that day, I have never taken the direction of the wind for granted.

I mention this flying lesson because I've noticed that many entrepreneurs never get their businesses off the ground, or successfully take their businesses to the next level, because they don't keep their noses headed into the wind. The same is true when they land, and it often causes them to sell their businesses for less than they are worth.

One of the differences between small-business owners and entrepreneurs is that entrepreneurs keep their businesses headed into the wind. They do not take the easy road. They take on the tougher challenges that small-business owners avoid. They demand their companies deliver better products and services. They do what their competitors won't. They elevate performance standards. And they are always watching for a change in the direction of the wind rather than hoping things will stay the same.

In contrast, many small-business owners like the status quo. Most are content being small. They look for a tail wind and seek the paths of least resistance.

A true entrepreneur is focused on taking off, climbing to higher altitudes and landing. They seek more opportunities, higher valuations and greater returns for their investors and themselves. That is why true entrepreneurs keep the wind in their faces, while small-business owners like the wind at their backs.

Asking For It

Collecting for a good cause may be the sales training your company needs.
By Robert Kiyosaki
Entrepreneur Magazine - March 2006

A number of years ago, I was asked to host a telethon to raise money for PBS. Priding myself on being pretty good at raising money from investors and customers, I accepted the position.

When the first part of the program was over, the cameras were turned on the hostess and me, and we began asking viewers to donate money. We smiled, we talked and we tempted viewers with great bonuses. We did our best... but the phones sat silent.

Cold sweat began trickling down my back, and it wasn't from the bright lights. It was from terror--a terror I had felt before in business and was feeling now because the phones were not ringing.

On the second pledge break, I abandoned my cockiness and began to speak heart-to-heart to the viewers. Slowly but surely, the phones began to ring, and by the third break, we had raised a small but respectable sum of money for PBS.

The ability to raise money is the best skill an entrepreneur can have. If a business is struggling, it's often because the entrepreneur cannot sell or has stopped selling. It's possible the entrepreneur has hired sales staff who claim they can sell, but can't. As my rich dad often said, "Just because someone has the title 'sales executive' or 'vice president of marketing' after their name does not mean they can sell."

When I was starting my career as an entrepreneur, my rich dad suggested I take a job in sales. When I asked him why, his reply was, "Because that is what entrepreneurs do. Never forget: An entrepreneur's success is not measured in college degrees or corporate titles. An entrepreneur's success is measured in OPM [other people's money]."

In 1974, I took my first sales position with the Xerox Corporation. For two years, I could not sell. I asked my rich dad for advice. He suggested I volunteer to raise money for a nonprofit group. For the next year, I worked at Xerox by day, and three nights a week, I dialed for dollars for a charity. Asking for OPM for a worthy cause was my best sales training. There was no exchange--I was asking for money without offering a product or service. I needed to become stronger in my sales and communications skills, and selling over the phone is tougher than selling face-to-face.

If you want to increase sales, donate your sales talents to a worthy cause. If you have salespeople who need to improve, suggest the same to them. After all, a business' success is measured in OPM.

Fear Factor

Think big, and muscle your way into success on a grand scale.
By Robert Kiyosaki
Entrepreneur Magazine - February 2006

While preparing to go to Vietnam in the early '70s, I received some of my best business training. In war, management of fear is constantly the issue. In actual combat, I noticed that fear created cowards out of some, and heroes out of others. Fear made some Marines smarter, while others became fools.

The same is true in business. Whenever I realize I did something stupid in business, it is either because I was too fearful, or not fearful enough. I was either acting too much like Pee-wee Herman or too much like Rambo.

One of the reasons many entrepreneurs stay small is because they act more like Pee-wee Herman. Looking back on my own career as an entrepreneur, I know I would have been far more successful if I were more like Rambo--if I had dreamed bigger dreams, taken on more impossible tasks and had a bigger vision of the possibilities. Too much of the time, I played it too safe.

My rich dad often said, "You cannot see the size of a person by looking at the person. You need to look at their reflection... what surrounds them."

Last November I was in New York City for a meeting with Donald Trump. Walking into his office building took my breath away. His reflection in his building is very big.

Later that day, I was on my way to the CNBC studios. Suddenly, off to my right, I noticed several tall, brand-new buildings with the name "Trump" on them. "Holy Cow!" was all I could say. I could only begin to guess how much work it had taken to clear so much land and erect so many buildings in Manhattan. Just dealing with the unions, city bureaucrats, environmentalists, the media and neighborhood committees would slay mere mortals. As the limo passed the rows of Trump Condominiums, I said to the driver, "Can you believe what Trump has done here?"

The driver smirked and said, "So what? You know he went broke once, so he's not that smart." I realized I was riding with Pee-wee, looking at the work of Rambo... and I was somewhere between the two of them.

As a Marine, I learned that fear, when it takes the form of self-doubt, kills more men than the enemy. The same is true in business--especially in entrepreneurship. Given the choice, I would rather be Rambo.

Minding Your Business

Secure your financial future by thinking like an entrepreneur, not like an employee.
By Robert Kiyosaki
Entrepreneur Magazine - January 2006

In October 2005, I was in New York City, speaking on the business of real estate and real estate investing. One of the other keynote speakers was Donald Trump. After my talk, a young man came up to me and said, "Nice talk, but you can't do what you talk about here in New York City."

Doing my best to be polite, I replied, "Well, Donald Trump is doing it."

"Yeah, yeah," said the young man. "You guys talk about it, but I know you can't do it."

Having heard this wimpy argument often (no matter where I was in the world), I shot back, "You're right. You can't do that here. But I can, and I would if I lived in New York City. And Donald Trump is definitely doing what you say can't be done."

One reason that young man and people like him say, "You can't do that" or "I would, if I had the money" is because they are thinking like employees, not like entrepreneurs.

Simply put, entrepreneurs focus on opportunity, while employees focus on resources such as money, people and time. For example, a person who thinks like an employee will say "I can't do it, because I don't have the money." A person who thinks like an entrepreneur will say "Let's tie up the deal and find the money later."

Even though you're an entrepreneur, you may still be thinking with an employee mind-set. And you can't change your business--and the results you get from your business--until you change your way of thinking.

For those of you who are unfamiliar with Rich Dad Poor Dad, it's my story of growing up with two "dads"--and two perspectives on money, finance and investing. My real dad--who I call my poor dad because, ultimately, he died broke--was a hardworking, well-educated man who was Hawaii's super-intendent of education. He believed you should get a good education, find a good job with good benefits, and let the government take care of you once you retired.

My rich dad, the father of my best friend, had little formal education but the spirit of an entrepreneur, and he became one of the richest men in Hawaii. My rich dad forbade his son and me from saying "That's impossible." He said, "In business, when you say 'That's impossible,' your competition is saying 'We can do that.'" So he had us ask ourselves, "How can I do it?"

My rich dad's point was that changing our thoughts would change our lives. He said, "Whenever you say 'I can't,' that means you are at the boundary between what you can and can't do. When you ask yourself 'How can I do something?' you open your mind to new ideas and expand the possibilities of your life."

So the next time you hear yourself saying "I can't" or "That's impossible," remember that you are thinking like an employee and need to begin thinking like an entrepreneur.