Cashflow Quadrant Analysis

Most entrepreneurs would have heard about the cashflow quadrant by Robert Kiyosaki. If you are an employee and you have yet to expose your mind to the cash flow quadrant, then I suggest you get a copy of Rich Dad, Poor Dad.

Coming from an MLM background, I’ve seen and heard people champion the cause of true entrepreneurship in their MLM meetings. They display the quadrant above and claim that everyone needs to move out from the E and S quadrant over to B and I quadrant, otherwise, you are a loser and a negative person who will never succeed as long as you are in a J.O.B. (Just over broke)

This is pure B.S. Many MLMers I know are broke today not because the ‘business’ didn’t work out for them, but because many did something wrong or they failed to do something right. Let me explain.

What I’m doing now requires me to play the roles of 3 of the quadrants at the same time. I’m working as an apprentice for Sen Ze so you can consider me an E quadrant at the moment. I also offer freelancing services as a writer so I guess I fall into the S quadrant as well. I also run Internet businesses, building up my assets at the same time so I fall into the B quadrant. (You don’t need to invest thousands or millions to be considered as a B quadrant person - an autoresponder, blog, sales letter, website or even an affiliate link makes money for you because you own a system and they are the ‘people’ who work for you)

My dad worked hard all his life. I look up to him not because he works hard but because he totally owned the E quadrant! To me, I considered my dad to be the best employee I’ve ever met. He totally thrived in the E quadrant and no, he wasn’t just over broke. His boss didn’t own his time, his holidays or even his future as he was totally in control of his time, money and direction.

Another man who excelled well in the E quadrant is Jack Welch.

I don’t believe you must be in the B or I quadrant to make it in life. Just take a good look at  Jack Welch. Anyone who says that the E quadrant sucks should re-examine their direction in their career and remember that Jack Welch was part of the E quadrant and is hailed by many as he CEO of the (20th) century.

The E-quadrant doesn’t suck - most employees believe that the grass is greener on the other side or have escapism mentalities.

Working for Sen Ze is very challenging and very rewarding. He places a strong emphasis on discipline and punctuality (none of these are my strong points) and after 2 months of working closely with him, I realized the importance of employee discipline  - You may be in charge when you are in the B/I quadrant, but without discipline and persistance, you won’t get anywhere in life.

At one point, I actually told myself that I will never get back to a 9-5 job. Looks like I was wrong. I work 6 days a week for Sen Ze and I’m loving everyday of it.

You can make it in life as long as you excel in any of the four quadrants.

The E quadrant, however, is not my strongest quadrant and neither is it the B quadrant. My favorite quadrant is actually the S quadrant.

My freelance work serves as a stepping stone for my B quadrant because it helps me to pay the bills and work closely with other Internet marketing experts. Although I’ve only been writing for less than 6 months, strangely it has paid off well for me and I consider myself fortunate that I tender for jobs that pay me higher than the normal job market rate (in my country). It is not easy to handle so much work as I only do my freelance work after my 9-5 routine and I have more clients than I have time to spare.

Here is a diagram from this website that talks about the correct cashflow quadrant perspective.

As for MLM, joining an MLM program doesn’t automatically make you a B quadrant guy. You don’t own a business or a system and until you have people under you who can act on their own. Furthermore, the operations of the company is out of your control so MLMers, please don’t fool yourself into thinking you are automatically in the B quadrant.

If you don’t recruit new downlines, you are not in the B quadrant. You are not even employed! Your work doesn’t pay you until you produce sales for the company (it is like being a slave employee without even getting paid like an employee!) Most MLMers are actually in the S quadrant because they are the ones doing the recruiting (not your downline and certaintly not your upline…) the MLMer is also the sales person for the product. The only time you cross over into the B quadrant is when your downlines start producing income for you when you are not directly supervising them.

I am not saying that MLM programs are deceptive. No matter what business you are in, you have to look at things totally from a business and financially feasible point of view. REMEMBER what Kiyosaki said, “Anything that produces a negative cashflow is a liability (houses, cars, boats and in this case - MLM programs that are not making you money).

So which quadrant do YOU think you can excel? Feel free to share your thoughs