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Monday, September 29, 2008

Something to think about today...

As the worlds finances approach free-fall, it got me to thinking about a book I read by one of my finacial mentors, Robert Kiyosaki. Kiyosaki wrote the Rich Dad books, and his thinking has been been adopted by businesses like mine that are starting to help people get finacially off-grid.

A few years ago, Kiyosaki wrote a book called Prophesy. In it he pretty much spells out what we are in for and what people can start doing about it: Including what will happen to our "safety net," Social Security when the Boomers hit critcal mass in 2012 (don't go all Mayan on me now).
With today in mind, I'm cutting a slice of Kiyosaki's writing for you to think about:
In 1979, I was up to my ears in learning experiences. I was over my head in
mistakes, buried by my own personal incompetence, and I did not want to learn
anything more. I had more than enough stupidity to learn from, yet rich dad had
more to point out to me. In the spring of 1979, I walked into his office for our
regular meeting and showed him my company's financial statement. Looking over
the statement, rich dad shook his head and said, "Your company has financial
cancer. . . and I'm afraid it's terminal. You boys have mismanaged what could
have grown into a rich and powerful company." Mike, rich dad's son, was not a
partner in my business, yet he did sit in on most of the mentoring meetings I
had with his dad, the man I call my rich dad. Mike and I had been best friends
all through high school, but after I returned from college and the Vietnam War,
it was difficult maintaining a close friendship since we were in completely
different business and financial leagues. In 1979, Mike was in the process of
taking over his father's multimillion- dollar empire and I was in the process of
losing a multimillion-dollar business. As Mike looked over my company's
financials, I felt shame and embarrassment when Mike also shook his head.

"What is this?" asked rich dad, pointing to a section of my financial

Looking at where he was pointing, I said, "It's the amounts we owe the
employees and the government for the employees' payroll and payroll taxes." "Now
look at your cash position, there isn't any money there," said rich dad sternly.
"How are you going to make payroll, and pay the taxes?" I sat there quietly
saying nothing. "Well . . ." I began feebly, "well, when we collect on some of
our back accounts receivables we'll have enough to pay them."

"Oh come on," said rich dad. "Don't give me that jive. I'm not your
college professor. I can see from your financials that much of your accounts
receivables are over 120 days delinquent. You and I know that these people you
have sold product to are never going to pay you. Tell me the truth. Tell
yourself the truth. You're broke. You're broke and now you're about to default
on paying your employees and their taxes. You're using your employees' money to
keep your company afloat."

"But it is only a short-term credit problem. We have money coming in.
We have sales coming in from all over the U.S. and the world," I replied in my

"Yes, but what good are sales if you cannot build product and cannot
deliver on those sales? I can see from these financial statements that people
owe you money and you owe money. You owe money to the people that supply you the
materials to produce your products. What makes you think that your suppliers
will give you any more credit?"

"Well—" I began but was cut off again by an angry rich dad. "Your
suppliers won't give you any more credit. Why should they?" "Well, I'll go talk
to them again."

"Good luck," said rich dad. "Look, why don't you face the truth? You
and the three clowns you call partners have mismanaged your business. . . you
don't know what you're doing. . . you're incompetent . . . and worst of all, you
don't have the guts to admit any of this. You guys are pretending to look like
businesspeople. . . but when I look at your financials, you boys are either
crooks or clowns. I hope you're clowns. . . but if you don't make some changes,
you clowns will become crooks." Rich dad said this pursing his lips and slowly
moving his head from side to side. "Borrowing money from your employees is bad
enough. Just look at the back taxes you owe. How are you going to pay

Rich dad had been my teacher since I was nine years old. He was a very
loving and caring man, but when he was angry. . . he was not a polite man. This
particularly heated lesson in business management went on for hours. Finally, I
agreed to shut the business down, liquidate the remaining assets, and use the
money to pay the taxes and the employees.

"There is nothing wrong with admitting you're incompetent," said rich
dad. "But there is plenty wrong with lying and pretending you know what you're
doing. Lying and pretending you know what you are doing is a bad habit. . . and
I want you to stop that habit now. If you want to be rich and successful, you
need to learn to tell the truth quicker, ask for help quicker, and be more
humble. The world is filled with arrogant poor people, educated and uneducated.
. . people who cannot admit they do not know something. The world is filled with
people who go through life pretending they are smart. . . and that makes them
stupid. If you want to learn quickly, the first step is to admit quickly you do
not know something.

"Remember the lesson from Sunday school, the lesson that goes, 'Blessed
are the meek for they shall inherit'? The passage does not go blessed are the
weak or blessed are the arrogant, or blessed are the well educated. It says
blessed are the meek for the meek shall learn and if you learn you shall inherit
the abundance of life that God or nature has placed in front of us. You boys are
arrogant, conceited, cocky, and ignorant. . . not meek. You think that just
because your product is a success you are also a success. You boys are not yet
businessmen. You boys got lucky but you do not have the skill and experience to
turn your luck into a business. No one becomes a successful businessperson
overnight. You have a lot more to learn. And the lesson you must learn today is
that if you owe money, pay the bill. People hate people who do not pay their
bills. Friends, families, and businesses have broken apart because money owed
was not repaid. From your company's financial statements, I can see that you owe
money to the government, your suppliers, your landlord, and most importantly to
your employees. Pay those bills and pay them now. Don't do anything else until
those bills are paid. Don't come back here until you've paid your taxes and all
your employees. You're becoming a sloppy businessman and sloppy businesspeople
do not become rich and successful businesspeople. Now get out of here and don't
come back until you have done what I have just told you to do."
As I said,
rich dad had chewed me out many times over the years, but this lesson from rich
dad was especially memorable. As I closed the door behind me, I could feel this
particular lesson sinking into my soul . . . becoming a lesson I would never
forget. Although I hurt, I knew that the lesson was an important lesson. . . for
if it was not important, rich dad would not have gotten so angry or so brutally
forthright. Being thirty-two years old, I was old enough to take this strong,
emotionally charged lesson and wise enough to know that I had something
important to learn.

Over the years, rich dad had a lesson on truth and honesty he
repeatedly taught. He often said to his son and me, "Many people ask young
people, 'What do you want to be when you grow up?' When they ask that question,
they are usually asking what profession the child wants to pursue. Personally, I
don't care what you do when you grow up. I don't care if you become a doctor,
movie star, or janitor. But as you grow up, I do care that you grow up to become
more and more truthful and more honest. Too many people grow up becoming more
polite, but not necessarily more truthful, or worse, they tell lies as kids and
become bigger liars as adults." As I walked down the street to where my car was
parked, I knew it was again time for me to become more truthful. . . more honest
with myself, my partners, and my employees. Climbing into my car, I could hear
rich dad saying, "Any coward can tell a lie. Telling the truth takes courage. As
you boys grow up, grow up to become people who have more and more courage to
tell the truth quicker. . . even if the truth hurts. . . even if being honest
makes you look bad. It is better to look bad telling the truth than to be a
good-looking lying coward. The world is filled with good-looking lying cowards."
As the engine came to life and I put my car into gear, I felt terrible and I
knew that I probably looked as bad as my financial statements. Driving away, I
also knew that I had two choices. One was to continue lying to myself and never
see rich dad again. The other was to begin finding the courage to face the
truth, to clean up the mess I made, and then look forward to seeing rich dad

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