The business lessons I’ve learned have come not only from my own businesses but from working with thousands of small businesses in cities around the world.
Many business owners will have heard the terms:
Business Plan
But what do these words mean? Well, the definitions will mean different things to different people. My goal is to give you definitions that you can put into practice right away.
First we’ll define all three and then we’ll look at how to implement them in your business.
What is a vision? In my opinion, the vision of a company is the overriding future goal that you have for your business. This vision is clear, quantifiable and – if you communicated it to others, such as your friends or your staff – easily understood.
A vision is a clear future event or development that you can anticipate and plan for. For example, if you owned a hair salon your vision could be: To be voted the number one hair salon in my city, state or country by the Hair Industry Association and to have revenues of $500,000 by the third year of business.
What about a mission? I like to define a mission as your overriding direction – what you aim to achieve that is not quantifiable and does not have an end date.
For instance, Starbucks mission is: To contribute positively to our communities and our environment.
Another example of a mission is the Rich Dad mission which is: To elevate the financial well-being of humanity
While we can think that this mission could one day be achieved, more likely it will be on ongoing process that will never end.

Your Business Plan
A business plan sets out the future strategy and financial development of a business, usually covering a period of several years.
Every business person knows that every business needs a plan. However, too many companies spend a lot of time and money putting together a business plan that then sits on a shelf and is never seen again. What’s the point of that?
A business plan should be a working document that you revisit at least once a year – preferably twice – and that outlines all the actions you need to take to move the business toward its goals – or its vision – and is in line with its mission.
A typical business plan will have three components.
Marketing Plan
Operations Plan
Financial Plan

Marketing Plan
What marketing activities are you going to implement in a set period of time to help achieve your sales goals? Will you use direct mail, telemarketing, email marketing, strategic partnerships or advertising to achieve your sales targets?

Operations Plan
Review the resources you have and the way the business operates. Is the business running efficiently? Did you have any issues or challenges with delivery or service? If so, what new resources or systems need to be put in place to ensure that the business is able to deliver its products or services in an efficient way to enable the sales targets to be met?

Financial Plan
This is the most crucial of all. Your financial plan, or cash flow, should be projected monthly, if not weekly, with clear details on what funds are expected in, what will go out, and what will be left. It should be reviewed at the end of each period to discern the differences between the expected result and the actual result. If you’ve fallen short of expectations, you can determine how to change that.
A business plan doesn’t have to be dozens of pages long. In fact, the longer it is the less likely you will be to want to look at it.
So, start with a document that is just a few pages long, but most importantly: refer to it often!
To review: First outline your Vision – what is it that you want to achieve and by when? Remember: keep it simple.
Then, define your mission – you may not know right now what that is, but keep in mind that when you started your business there very likely was a reason (other than money) that you had in mind. If you’re unsure… brainstorm with others to come up with something. I know that for me, our company mission ‘to provide transformational business education that improves the lives of our customers’ gets my staff excited.
Finally, put together a short-term plan. If you’ve been in business for while, you are more likely to be able to see into the future three to five years, or longer. If you’re new in business, then maybe six or 12 months is as far as you can plan. And that’s just fine.
Each piece plays a vital role…and a clear vision, mission and plan are at the heart of every successful business.
By now you have a sense of how Rich Dad thinks…so it’s time to get started and DO IT. As you lay the foundation for your financial journey you will ask yourself many questions. Your honest answers will help you visualize Your Dream, set Your Goals and craft Your Plan of action that will deliver the rewards you seek.
Getting started requires two action steps: First, you need to determine your general financial goal and, second, you have to become financially literate so that you learn to think like the rich.

Questions you need to ask yourself in setting your financial goal:
What do I want to attain?
Do I want to be financially secure?
Do I want to be comfortable? Or…
Do I want to be rich?
The answer to this question is important because it will determine which quadrant you stay in or enter and how you go about making money inside that quadrant.
Keep in mind that a ‘goal’ is different from a ‘wish.’ You may wish to be rich, but that doesn’t mean you’ve taken any practical steps to make that ‘wish’ come true.
If you’ve ever earned enough money to put some aside, like most people you’ve probably invested it with an eye toward security – since, perhaps, you can’t imagine yourself ever getting rich.
Be honest with yourself about the things that are important to you.
“Most people dream of becoming rich, but it isn’t their first choice,” Rich Dad said. That’s because the effort and uncertainty of becoming rich disturbs them and they seek refuge in the easier goals of security or comfort.
People who make security and comfort their first and second choices are often seeking a single ‘hot investment tip’ – a simple, risk-free way of getting rich quick. Some people do get rich on one lucky investment, but all too frequently the money they amass is later lost.
Examine Your Long-Term Goals
If you’re really serious about achieving financial freedom – about moving from the left to the right side of the CASHFLOW Quadrant and staying there – it’s time to examine closely how you prioritize your long-term goals.
Determining what you value most will save you many agonizing decisions and sleepless nights later. A good way of getting started in goal-setting is to write down what you perceive as the pros and cons of each possible goal.
Depending upon how the pros weigh in against the cons, you may actually find yourself putting your goals in a new order. This exercise suggests possibilities that you might not have imagined and can be priceless in terms of the impact that it can have on your financial future. Often times when people try to live frugally – scrimping and saving – they think they’re being financially smart. In truth, they’re limiting themselves.
Most people spend their lives imprisoned by financial ignorance. It shows in their faces and in their attitudes, especially as they grow older. They begin to look like wild lions trapped in their cages, pacing back and forth while they mull over what happened to the life they once knew.
How can you escape this fate? Draft a series of personalized financial plans: One for security, another for comfort, and a third for rich. This will help you visualize the possibilities.
Step 1 – Write a Plan for Lifetime Financial Security
What does security mean to you? The absence of stress and worry? Few, if any, sleepless nights?
Determine exactly what you need to do to achieve your vision of security.
If you’ve decided that your first priority is to be rich, this step may seem mechanical and boring – even unnecessary. Because when you plan for security, you’re planning for a world of ‘not enough.’ One of the goals of this step is to motivate you to reach beyond a goal that might limit your potential.
Step 2: Write a Plan for Lifetime Comfort
What does comfort mean to you? A big house and two cars? A house, a vacation cottage and three cars? Obviously, this plan will be a little more aggressive than the first one. And it will be less boring because when you plan for a world of ‘enough,’ there are more choices open to you. Your challenge will be to choose.
Step 3: Write a Financial Plan for Becoming Rich
This will be your most aggressive plan – and the most exciting. For, now, you are anticipating a world of ‘more than enough.’ You’ll be faced with a myriad of choices, for opportunities to make money are all around you.
As with the previous plan, your challenge will be coping with the abundance of possibilities. You don’t want to wander through life like a kid in a candy store, so distracted by choices that you can never make one.
Think this plan through carefully and thoroughly.
This exercise illuminates the fact that you have choices – more than you’ve ever imagined and that you need to make decisions about those choices. Too many people go from job to job or business to business without getting where they want to be financially. They wander through life without a plan and all the while their most precious asset – time – is fleeting.
This doesn’t have to happen to you.
As you read rich dad’s plan, we recommend paying close attention to your internal dialogue, which is the conversation you have with yourself. Notice if you are saying, you can or you can’t and if you’re saying that if it sounds too hard and you want an easier answer. If you find yourself saying “I can’t” too often and want easier investment answers, then mutual funds may be the answer for you.
Rich Dad’s Power Investing …
a plan for people who want to afford anything they want. This is the basic plan that the richest investors in the world follow. The Rich Dad’s Power Investing Plan cosists of, starting a business, investing the cash flow from the business into real estate, and then balancing your asset classes with investing your excess cash flow in paper assets.
Your own personal business is by far your best asset because, if successful, you can generate the most income with less work and with the least taxes.
The drawback: Of course, if you are not successful in building a profitable business, a business can be a very big liability and loss of money, which is why we often recommend starting a part-time business before quitting your daytime job.

Accelerator #1: Other People’s Money
The first accelerator in starting a business is to use other people’s money. As you become a better businessperson, this will become easier because investors like winners.

Accelerator #2: Entity Selection
Choosing the proper entity in which to hold your business is critical. You absolutely do NOT want to hold your business as a sole proprietorship or general partnership.
Review the various requirements and benefits of a C Corporation, S Corporation, Limited Liability Company (LLC), or Limited Partnership (LP) with your attorney and tax advisor to see which entity will provide the best protection for your business and result in the best tax advantages, thus maximizing your cash flow.

Accelerator #3: Other People’s Time
If you are a good business owner, you have the leverage of other people and systems doing your work. In other words, if you are a good businessperson, it is the same as earning money for nothing, once the business is up and running. Most people will have to work for money for much of their lives because they work for a business rather than work to build a business.

Accelerator #4: Tax Laws
The taxman is on your side as a business owner. Review Chapter 5 of the book Rich Dad’s Who Took My Money on how the tax laws were written to benefit business owners and investors.

Accelerator #5: Charity
My rich dad always reminded me of the saying, “Give and you shall receive.” Being generous and giving back to the community are essential elements in growing your business. You may not know how the returns on your charitable giving will be realized, but they will be. The more people you serve, the richer you will become.


Accelerator #6: Other People’s Money
My banker is on my side for investing in real estate.

Accelerator #7: Entity Selection
Entity selection is again critical in understanding the secrets and strategies that the rich have used for generations to protect their real estate assets.

Accelerator #8: Tax Laws – Depreciation and Real Estate Paper Losses
The tax man offers great accelerators in your real estate income and cash flow in the form of depreciation. You will want to get competent advice from your tax strategist, as the choice may also be important based on your state/local laws.

Accelerator #9: Tax-Exempt
The tax man offers even greater leveraged advantages to investors who invest in projects the government needs financial assistance in.

Accelerator #10 – Hedge Funds
Hedge funds allow me to invest with insurance. They have the benefits offered by mutual funds in that they are “easy,” but without the downside risk. There are many different hedge fund strategies but their primary goal is to reduce volatility and risk while preserving their investors’ capital and delivering positive returns under all market conditions.

Accelerator #11 – Options
Investing in stock options allows me to leverage my investments in paper assets. Instead of buying the stock I can still control it through the purchase of options for a fraction of the cost.

Accelerator #12: PPMs (Private Placement Memorandums)
A private placement memorandum, however, is an offering of stock in a company that is exempt from federal registration. In March 1982, the SEC adopted Regulation D to coordinate the limited offering exemptions and to streamline the existing requirements applicable to private placements and sales of securities. Again, the documentation and legal requirements of this type of investment are critically important. You need competent securities legal advice as well as tax advice to select the funding tool appropriate for your situation.

Accelerator #13: IPOs (Initial Public Offerings)
An initial public offering (IPO) is a company’s first sale of stock to the public. Typically, an IPO involves the stock from a young, new, and not usually well known company. An IPO is highly regulated and costly to prepare, as it requires tremendous legal and accounting professional time.

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