So what exactly is the difference between an asset and a job and how do you make sure your small business is an asset? Rich explains it all today…..
I like to make money while sleeping, golfing, sitting in church, playing with my kids, and, yes, even while working at the office. You may think that sounds too convenient to be true. All businesses have obstacles to overcome, but certain businesses are much more attractive simply because they can become long-term assets. If you have to go to work every day and you don’t make money unless you’re there, what you’ve got is a job. What you need is an asset.
Robert T. Kiyosaki, in Rich Dad, Poor Dad, defines an asset as “something that puts money in my pocket” and a liability as “something that takes money out.” After reading this book, I decided to teach my children the difference between assets and liabilities. Their asset of choice: candy machines. After buying a few candy machines using their Dad’s “venture capital,” my kids had to go around and find businesses that were willing to let them put the candy machines by their front doors. Once they felt the exhilaration of harvesting quarters from their venture, they never asked for money to stick in a candy machine again. They had learned that it’s much more rewarding to take the money out than to put the money in.
One afternoon, I found myself craving a snack. After going through the cupboards, I remembered one of the candy machines in the garage. As I opened one up and dug in, my nine-year-old son Matthew walked by. When he saw what his father was doing, he stopped in horror, exclaiming, “Dad! Stop eating the profits!” Matthew knew he needed to protect his assets! He had learned through experience that he could put a little candy in a machine and let it sit while he went to school, played with friends, and did all the things that he really wanted to do. Later, he could return to the machine and enjoy the rewards of his asset.
You’ve probably read books or heard presentations on using real estate to create wealth and assets. Rental properties are a continual asset. Sure, it’s a pain to get called out on the weekend to unplug a hairball in the bathroom sink. However, fixing a drain once in a while is a very small price to pay for having an asset that pays for itself every month and brings in positive cash flow without your having to be there. Maybe it’s worth getting a rental agency to take care of the daily work of managing the apartments, which can still keep the cash flow positive while you find other ways to enjoy your time.
Whatever your business or venture, you can ensure that it becomes an asset. It all starts with your knowledge and awareness. Do you always have to be in the office in order to make money? Can your company breathe without you around? Once you’ve figured out if you have an asset, or just a job, you can plan accordingly.
Maybe you’ll need to hire some employees or look into better technology that keeps things going even when you’re not in the office. There are as many ways to get out of a liability as there are ways to get into one. If you’re just beginning your venture, now is the opportune time to make choices that will help you avoid being stuck with a “job.” If you’re already in deep, I’ll bet there’s wiggle room in there somewhere. You simply have to pinpoint the opportunities that will turn your job into an asset.
Porter’s Points – Is it an Asset or Just a Job?
- Until it starts putting money in your pocket, it ain’t an asset.
- The more money it puts in your pocket with the fewer resources, the better an asset it is.
- No matter what your current “job” is, you can find a way to turn it into an asset.
Up next week is a section on entrepreneurs and their ‘secret recipes’. I think you’ll enjoy it!
 Kiyosaki, Robert T. Rich Dad, Poor Dad (New York: Warner Business Books, 1997), 61.