Richdads-CASHFLOW-Quadrant-

CASHFLOW Quadrant
Most of the time I turn them down for one main reason: The people
raising the money don’t know the difference between a product and a
system. I’ve had friends ask me to invest money in developing a new
music CD, and others who want me to help form a new nonprofit to
change the world. As much as I might like the project, the product, or
the person, I’ll turn them down if they have little or no experience in
creating and running business systems.
Just because you can sing doesn’t mean you understand the systems
of marketing, finance and accounting, sales, human resources, and the
many other systems that are required to keep a business afloat and make
it successful.
For a business to survive and thrive, 100 percent of all the systems
must be functioning and accountable. For example, an airplane is a
system of systems. If it takes off and, let’s say, the fuel system fails, there
often is a crash. The human body is also a system of systems. Most of
us have had a loved one die because one of the body systems failed. The
same thing happens in business.
That is why building a tried-and-true business system isn’t easy. It’s
the systems you forget about or don’t pay attention to that cause you to
crash and burn. That’s why I rarely invest with an E or S who has a new
product or idea. Professional investors tend to invest in proven systems
with people who know how to run those systems.
If banks lend based only on tried-and-true systems and the person
who is going to run them, then you should do the same if you want to
be a smart investor.
3. Get involved in network marketing (also called multi-level
marketing or direct distribution systems).
Just as with franchises, the U.S. legal system initially attempted
to outlaw network marketing. It has been banned and restricted
in some countries. Any new system or idea often goes through
a period of being classified as strange and suspicious. At first,
I also thought that network marketing was a scam. But over
the years I’ve studied the various systems available through
network marketing, watched several friends become successful
at this form of B, and changed my mind.
87