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Entreprenuer or Employee - Which Are You

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Cashflow Quadrant identifies four ways in which individuals can earn money: as an employee, as a self employed worker, business owner or investor. In Robert Kiyosaki's book, to be truly financially independent, people must operate as an investor and business owner rather than as an employee or self employed worker. This is because as a busines owner you are able to generate 'passive income' through your business, even when you are on holiday or taking a break. An employee has obvious tax disadvantages and a self employed person only earns money when working. Once they stop, so does the money.

Although many recognise the potential in this argument, individuals will often choose to stay working as an employee, even in jobs they hate. Some of this is to do with fear of the unknown or their capacity to deal with risk. Staying as an employee feels so much safer somehow. They like to identify those who have become business owners and failed miserably. The statistic that 9 out of 10 new businesses fail is enough to reinforce the message that being a business owner is hard work and full of risk.

There are many successful business owners and investors in the world – Robert Kiyosaki for one. So it is possible to succeed in these quadrants. What are the skills and attitudes necessary to be successful in each quadrant and how do they differ from one quadrant to the next? How can an individual determine whether they will be successful in making the leap across from employee to business owner or from self employed worker to investor?

First, the skills of the employee. These are fairly easy to define:

  • Teamwork and Co-operation – the ability to co-operate and work well with others
  • Problem Solving – ability to analyze issues
  • Initiative – dealing with the short and the longer term
  • Achievement Drive – a concern for high standards
  • Flexibility – ability to adapt to the situation at hand
  • Customer Service – responding to the needs of the customer

You need to have just enough of each without too much. If you have too much Achievement Drive, there may well be too much risk taking and goal setting which only have a 50% chance of success. That's far too ambitious for most organizations. Self Employed. The skills are similar to that of employee but with a slight but very important twist. The critical skills are likely to be:

Initiative - more than the employee as you need to work on your own and tackle problems such as IT issues. The self employed don't have ready access to a Help Desk

  • Achievement Drive – much more than the employee. Where the employee needs this to maintain high standards in their work, the self employed needs to set themselves goals, standards and measure their performance against it. After all, there is no one else who is going to do it for them.
  • Resilience – the ability to handle rejections and ‘no's'. Individuals who take feedback personally and require a lot of support on an ongoing basis need not apply for self employed status.
  • Confidence – communicating confidence in your offering.

In addition, if you are a highly extroverted individual who likes to take centre stage, working in a self employed capacity may feel draining, lonely and uninspiring.

Investor. The investor quadrant is interesting. This is as much about risk taking and attitude to risk as anything else. Becoming a successful investor requires:

  • Information Seeking – an underlying curiousity to know more about things.
  • Analytical Thinking – more than the employee or self employed as the investor needs to be able to spot trends and patterns in performance data
  • Resilience – an ability to ride the waves and ups and downs of investing

Business Owner. The skills required will be determined by the size and type of business in question. If we are talking about an entrepreneurial business then a research study conducted by the author back in 2001 identified the following skills:

  • Initiative – looking at the short and longer term
  • Self Direction – managing emotions
  • Integrity – working in a principled way
  • Confidence- willingness to act with confidence and conviction
  • Commitment – aligns themselves with the vision of their business – ‘they are the business'
  • Holding Other People Accountable – managing performance
  • Drive and Determination – a relentless drive to achieve world class results
  • Leadership, and
  • Selling Skills

To be a true business owner as defined by Robert Kiyosaki, you need to be able to grow your business so that it continues to make revenue, even in your absence. Most critical is that you must be willing and able to delegate. Potential business owners need to ask themselves "Could I delegate all or part of my responsibilities to someone else or would I be interfering on an hourly basis?" ‘Letting go' to grow is the big difference between self employed and business owner.

The skills and competencies outlined above are generalized and each organization, business or culture will have its own requirements. However, by looking at each of the quadrants and taking an honest view of each skill level for each competency an individual can begin to understand their likely success in each quadrant.

Copyright (c) 2007 WealthBeing


About the Author

Pam Kennett is a Director of WealthBeing. Pam has first hand experience moving from employee to self employed to business owner. She is the founder and CEO of WealthBeing. WealthBeing is a wealth education and coaching company which helps individuals develop practical skills and knowledge to build their wealth. Find out more by visiting http://www.wealthbeing.co.uk or contact Pam direct at mailto:pam@wealthbeing.co.uk


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Article Published/Sorted/Amended on Scopulus 2007-12-20 09:35:22 in Personal Articles

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