Are You on the Right Side of the Cash Flow Quadrant?

In my last article I talked about how the "number 1" is the most dangerous number in business and touched on the pitfalls of putting all of your eggs in one basket. Unfortunately I found this to be true through bitter experience. Starting in 2005 I took a direct sales company from zero to a turnover of £2.5 million in just 15 months, pretty impressive by anybody's standards.

The downside however, was that all of my eggs were in one basket. You see my main client was a Swedish telecoms provider who had aggressively entered the UK market with a major television advertising campaign and somehow, I had managed to convince them that my company was the right choice of business partner to take their product to market on the ground.

The campaign grew so quickly that all my management resources were completely dedicated to meeting the needs of just this one client, which would not have been a problem had they had the same agenda as us, which was to grow the business to the max in the UK and then work with them to develop other markets.

What they actually did was take the huge customer base that my company had diligently built up on their behalf, and sold it to their biggest competitor in the UK, before promptly decamping back to Sweden.

Naturally I had lost my main source of income almost over night, which was a bitter pill to swallow in itself. But even worse, having made the transition from my former position as a self employed contractor living entirely off the sweat of my own brow, to that of a business owner with all the leverage that comes with it, I was now back on the wrong side of what Robert Kiyosaki calls "The Cash Flow Quadrant".

Those of you who are familiar with Robert Kiyosaki and his 'Rich Dad Poor Dad' series of books, will know that in the "Cash Flow Quadrant" shown in the illustration above, Employees and Self Employed Contractors reside on the left hand side of the quadrant, whilst business owners and investors reside on the right hand side.

In future articles I will be exploring the different componants of the "Cash Flow Quadrant" and explaining why I have made it my primary mission to study those entrepreneurs who have successfully transitioned permenantly to the right hand side of the quadrant and enjoy the leverage of being a true business owner and subsequently an investor as defined by Robert Kiyosaki. I hope that you will continue on the journey with me!

To your success!

Grahame