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The Cashflow Quadrant For Entrepreneurs & Internet Marketers

Are you ready to move to the next phase in your life and business career?

“Yes Miles, but I don’t know what I’m doing or where I’m going.”

Having a dream of where you want to go is fantastic, but it takes action to get there. And you’re right, you need to know what the next move is.

Only people glued to their cell phones take steps without looking first.

Years ago I ran across a book written by the Rich Dad Poor Dad guy, Robert Kiyosaki who created a model called the Cashflow Quadrant.

I have taken this concept and tweaked his model in a way that fits internet marketers and online business entrepreneurs. That system is what I want to share with you today.

I’m going to share with you my personal experience of moving through the different quadrants what comes with each quadrant and how I knew it was time to make each shift. I’m going to tell you how you can go from the lowest level of being an employee to actualizing your dreams.

Robert Kiyosaki Book Summary

Robert Kiyosaki Book Summary

Kiyosaki’s model that is made up of four quadrants that each of us falls into.

They are realms of career development which he explains in his book The Cashflow Quadrant.

According to this Kiyosaki there are four types of people making up the financial world.

As we move from top to bottom then upper right to the bottom, there’s the Employee, Solo-Practitioner, Business Owner, and Investors.

The solo practitioner doesn’t apply to you or me as an internet marketer so I’m going to call this the Self-Employed Quadrant and I’ll talk about more in detail below.

I’ve also made adjustments for the business owner. Robert Kiyosaki’s model talks about you as a business owner, having a few hundred employees. As an internet marketer and entrepreneur, your model is going to look much different.

But having an understanding of the Kiyosaki’s model is pretty cool because you’ll learn that hey, there’s actually a system that can take you from the lowest level all the way up to that point where you’re achieving your lifestyle design.

The Quadrant Model for Internet Marketers and Entrepreneurs


If you'd prefer to listen to this content from the video above, play it or download it from the podcast episode below.

Robert Kiyosaki first published his book in the late 1990’s. The internet was around of course but entrepreneurs and internet marketers follow the beat of a different drum.

Analytics has changed, how to get yourself known on Google has changed, a lot has changed, and it’s a whole different game now.

What I’ve done is taken the rich dad’s cashflow quadrant concept into a new light that is more applicable to internet marketers just like you and me. This way you can have a smoother transition and know what’s next for you on your path moving forward.

For now, let’s go ahead and jump in covering each of the quadrant sectors so you can figure out where you’re at and how to get from one quadrant level to the next.

Dreams Begin in the Employee Quadrant

Dreams Begin in the Employee Quadrant

The employee section of the Cashflow Quadrant is where we start out.

Before becoming an online business owner, I was an employee. I did the 8 to 5 daily grind, doing the 1 hour-plus commute to and from work.

This is where the majority of the population is within the model. You are literally trading your time for money.

I started building my online career as my side hustle while I was an employee. I wanted to “live the dream” build a successful business online and have the lifestyle freedom I wanted.

When you are an employee, you need a side hustle. In fact, it’s probably the only way you’re going to start growing any online business you’re looking at starting.

Here’s where I messed up, and I’m warning you to be careful, test and research before you make such a bold move. I decided to quit my job to focus on my internet marketing business, and that move backfired in my face…

I lost all my money, sold my car, kept trying to keep the dream alive but was barely staying afloat without a consistent paycheck and not enough cash coming in from my business.

Finances became extra tight, and at age 30, I had to move back to my parents’ house with my wife in tow. It was a very humbling experience for me…

So what did I do? I picked myself up and became an employee again! I was right back in that employee quadrant, but this time, I knew I needed to stay as an employee while I started another online business.

I had my day job, but I was doing a side hustle and trying to keep my internet marketing business going.

If you’re in this phase and trading your time for money, I highly recommend that you examine, are you ready to quit your day job and become an internet marketer?

Keep a Growth Mindset in the Rich Dad Poor Dad Quadrant

Keep a Growth Mindset in the Rich Dad Poor Dad Quadrant

This is the primary challenge within this Cashflow Quadrant of being an employee. You are living in two worlds. The employee world and the business owner world. However, all business owners had to get their start someplace.

In this stage of the model, you do your usual stuff, then you come home. This is the time to work on your content and growing your online business.

You'll need to figure out your niche, and start to really think about how you can add value to the world.

Or, if you want to start an affiliate business, this is the time to do the research. Learn, grow and start to pin down what you want your brand to look like.

You can build your first sales funnel, your first opt-in page, but the most essential concepts in the employee stage of the cashflow quadrant to remember is research, learn, and take action.

Take steps every day that’ll move you out of this quadrant - this is all about the side hustle.

Unexpected Opportunities in the Employee Quadrant

There are a bunch of things in your side hustle that qualify as tax deductible.

Once you start to have that authority site, the money you’re making is going to be taxed so things like your cell phone, internet connection, web hosting, Thrive Themes, etc., can be deductible to your taxes.

You can make a bit more money to add to your income plus benefit from these deductibles. You definitely want to have a great CPA on your team.

Next Up: Self-Employed People

It All Changes in The Self-EmployedQuadrant

After the hard work you put into your side hustle, eventually you’re going to shift into the next quadrant going from employee to being self-employed.

The Cashflow Quadrant of the self-employment realm does come with some challenges.

Self-employed people don’t have a boss, but you have clients. Dealing with clients can be tough sometimes and if this is where you’re at in this cash flow quadrant model, then you know what I’m talking about. They can require a lot and even expect too much from you, and it’s important you learn how to say no when you need to.

Clients can be in then out, they lose contact, they pay you and some don’t. Sometimes you have to chase down the money, and all of these aspect bring its own kind of stress level.

Another potential challenge is that in the self-employment realm, your taxes will go up significantly, however, more of your life and home business will be tax deductible so you have to make good financial choices.

Make connections with smart people, gain the experience and continue to strive towards the next phase.

I was earning about 50% of what I needed to live working online and I was documenting the process and sharing that data on social media.

My Experience Becoming Self-Employed

My Experience Becoming Self-Employed

I was sharing the analytics from my website on my personal Facebook page and what happened was pretty interesting.

People learned about the stuff I’d been doing on my side hustle and I had a couple of friend’s who’s websites weren’t doing very well reach out to me for help.

I decided to begin selling digital marketing services doing WordPress development for clients while still building my information product business.

Those long hours on nights and weekends spent learning those WordPress skills paid off. I was able to offer to my clients services between $25 and $75 per hour.

The higher income I was making self-employed gave me enough traction to move away from being an employee since 50% of my income was coming from my side hustle while the other 50% was from doing client work.

You’re One Step Closer in the Self-Employment Realm

You’re One Step Closer in the Self-Employment Realm

I stayed in the self-employed realm of the cashflow quadrant for about 2 years. I was building WordPress websites and selling marketing services.

Personally, I’m grateful for being in that role. I learned new skills internet skills in a condensed period of time that I still use today.

And what it really did was to free up several hours in my day. My commute time was gone, I worked from my home, I could even log in anywhere I wanted with an internet connection.

My lifestyle value went up significantly because I could work anytime and anywhere I wanted to and made a higher amount without any fixed paycheck to deal with.

Where Business Goals Are Actualized

The Cashflow Quadrant For Entrepreneurs & Internet Marketers

From the self-employed quadrant we move to the business owners level. Kiyosaki defines business owner, as BIG business, meaning about 500 or so people working in the company that you own.

This is where I’ve made the biggest change.

The business level for entrepreneurs and internet marketers is to have a business with systems over a ton of employees. I’m all about no employee businesses.

This means that you’ve got systems in place, and your business, which once was your side hustle continues running with or without your input.

You know I believe that you need to go after what you really love, find a niche that excites you and go after endeavors that you’re passionate about. If you do that, you’re going to love getting up in the morning, stoked to do what you do, put out more content and have some fun.

However if you want to take a month off, vacation, or go after another project, the virtual team that you build will enable you to do that.

Moving From The Left Side To The Right Side

Keep in mind that your goal is to move from the left side of the quadrant (where you are an employee or self-employed) over to the right side of the quadrant - where your income is earned from owning a businesses or being an investor.

The hardest challenge you'll face as a would-be entrepreneur is actually getting to the right side.

You have:

  • Limited income,
  • Limited time,
  • And limited resources.

However, after a few years of living in two worlds you'll eventually break past that wall and begin earning your income from businesses and investments.

How to Get Your Systems to Work For You

How to Get Your Systems to Work For You

I have hire virtual assistants who works alongside me.

I have a customer service representatives, web developers, graphic design memberships, etc.

What’s fantastic is my wife and I can literally walk away, go on a vacation for 6 months to a year, and our team will still be there to keep the everything running without much or any negative impact at all in our cash inflow.

The “B” level in the cashflow quadrant is where the magic happens.

We have a corporate structure going, so we’ve eliminated that massive self-employment tax, we have people and systems doing work for us…

A lot of my contractors are from the Philippines.

When you’re a business owner building your systems and employees, you want great quality of work but not at the point of spending more than you’re making.

That is why you must begin to hire cheap virtual assistants and bring them on full time.

My team knows when there’s a problem, and are able to take care of it on their end. This makes things very efficient for the business owner

Why These Systems Are So Important

I was invited to speak on a cruise where there was no internet connection. Melanie and I just said, “Alright, there’s no internet, we’re just going to relax and enjoy ourselves.”

There were people on the cruise who were freaking out, their businesses were collapsing. One woman had to refund $7500 to a coaching client because the internet wasn’t working and she couldn’t get in touch with them.

That’s a perfect example of what the grind is like in the self-employed realm. When you’re in that quadrant, you have to constantly be there on the ground for your business.

As fast as you can, move into the business owners quadrant and develop systems to have in place.

Then there’s no need to panic when there’s no internet connection and you can’t reach your clients.

This is the ultimate lifestyle design.

Once you have established the this point of the cashflow quadrant, there’s additional ventures you’ll be able to put your money, time and energy into.

How Your Money Can Work For You

How Your Money Works For You

When you’re making enough money from your business, that’s the time you can move onto the next phase where you can become an investor.

The great part about being in this quadrant is being able to leverage your investments for long term cash flow.

As an investor you put money into:

  • Rental homes
  • Index Funds
  • IRAs
  • Web Assets
  • Other projects or businesses you want to start

Buy profitable affiliate websites and build a portfolio of web assets with the money your making in your business.

If you make $400,000 a year you spend $100,000 of that on web assets and that comes off as an expense while getting long term income for buying the web assets.

Stick some money in your IRA to get slow long term growth.

Buy rental houses and put some money in up front, gain leverage from the banks, and you’re getting the long-term cash flow growth.

It’s all about taking the money you’re making from as a business owner and finding places you can leverage to generate long term cash flow.

Kiyosaki explains instead of working for your money, have your money work for you.

A Note About "Passive Income"

The term passive income seems to be a big thing on the internet today... People are selling the dream that you can make money without doing anything.

It seems all you need is the ability to capture someone's email address on your website, build a list, sell things to people and boom! You've got passive income!

But let me tell you that no matter what side of the quadrant you are on, the "make money while you do nothing" dream is very false.

Being on the left side of the quadrant or the right side you'll still need to work. Granted, yes, things do get much easier as you move toward financial freedom because ultimately you wont be trading time for money, but you'll face plenty of issues on your quest for that mysterious passive income.

Things may be passive for only one or two months because things are going perfect in your real estate business, but eventually something is going to mess with your income.

What if the people running your real estate property management suddenly change things that negatively effects the people renting your properties? You'll have to make changes...

What if the people you employed to research new properties turn out to fail in their searches?

You'll find the craziest problems! Here's a short list of things that have happened to me that put a grinding halt to anything "passive."

  • A snow storm hits and knocks out the power at home
  • A monsoon hits the Philippines and stops 1/3 of my team from working
  • The server your website is hosted on crashes
  • Your laptop dies
  • Your checks bounce
  • You have to relocate
  • You need to hire new designers
  • You loose a major client
  • and even more!

No matter if you're on the left side or right side of the quadrant you'll eventually have to step in and get your hands dirty.

Level Up

Level Up

There it is, the cashflow quadrant model specifically tailored to entrepreneurs and internet marketers.

There’s nothing that can stop you from jumping to the next higher level.

Know where you are in the different quadrants so you can determine what your next steps are.

Begin to move towards becoming self-employed and when the moment comes, start thinking bigger like the business owners do.

Challenge yourself. This is the best 90 day challenge to push you forward with your goals.

I’ve had setbacks, you probably will too. Get creative, and keep going.

“It’s not about you falling down, it’s about you getting back up again.”

This is what you’re here for; to live with a purpose, build and reach your dreams, and make your life and the lives of others better.

Let me know where you’re at in the Rich Dad Poor Dad Cashflow Quadrant and how you’re navigating the stages. Thanks for your time, chat soon!


Have a comment or a question?  Tweet me your thoughts @milesbeckler

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