Mind Your Own Business

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LukeLewis

LukeLewis

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I've made it to chapter four, lesson three of Rich Dad Poor Dad. This section is called Mind Your Own Business. The chapter starts out talking about Ray Kroc, the founder of McDonalds. I actually learned about Ray Kroc back when I was in college. Business professors love to discuss him in class because, every semester, without fail, they get to ask a big gotcha question. The question is, what business was Ray Kroc in? If you answered fast food, selling hamburgers, or something similar, you'd be wrong. Ray always said that he was in the real estate business. Sure, he'd sell fast food and franchise his stores, but what he was really doing was getting individuals around the country to buy prime real estate for him. They'd pay all the taxes and all the bills, but Ray would own the buildings. It's genius, actually. The thing is, lots of businesses operate this way. Perhaps they don't franchise like McDonalds does, but they still purchase a building or various pieces of real estate and allow their business operations to pay the costs. When the business closes down or is sold, it's got a lot of worth due to all of the accumulated real estate. Even mom and pop shops operate like this. They'll purchase a building to house hardware, a restaurant, gas station - whatever. And when the owners want to retire, they'll sell it all and run off to Florida or Arizona. That real estate really boosts the price of the sale.

Did you know that at one point, McDonalds owned the most real estate in the world? Now, I'm not sure if that's "owned the most valuable" real estate or "owned the most square feet" of real estate, but it's a lot. Do you want to know who also owns a lot of real estate? The Roman Catholic Church. And after them, Rina Rinehart from Australia and then Mudanjiang City Mega Farm, a Chinese dairy farming company. Today, it's tough to find out who owns what because of all the asset management companies, but needless to say, real estate is a big deal. It's like the thing we average little people don't like to discuss. It's risky, can cost a lot, and we simply don't know about it. Anyway...

By the way, if you'd like to learn more about the Catholic Church and its real estate, check out these links:

https://archive.curbed.com/2017/10/18/16483194/catholic-church-gis-goodlands-esri-molly-burhans

https://www.walksofitaly.com/blog/art-culture/catholic-church-real-estate

In previous posts, I discussed how a typical American works for many other people besides himself. He first works for his boss (to make the company money), then he works for the government (to pay taxes), and then he works for the bank (to pay his mortgage). After a lifetime of work, he may very well have little to show for all his efforts. Little compared to what he should have. If the average American only knew one tiny secret, which is, mind your own business. Yes, he'll likely have to work for someone else during his life; everyone does in one way or another. The trick is to acquire assets that'll work for him and fill his coffers. I mean, if you think about it, the boss figured out how to do it. So did the government and the banks. Why shouldn't the average American? There are business owners all over this great land making fortunes. What's stopping everyone from doing so? Perhaps it's risk. Many people simply don't want to take the necessary risk. Others are just lazy. Your guess is as good as mine. It's not the lack of knowledge - that's for sure. Anyone, and I mean anyone, can buy a book on business and finance from Amazon today and have it read by tomorrow. There are zero barriers to entry. There are no excuses.

Have you ever asked someone what their business was? If you were to ask someone who cooks what their business is, they'd likely say that they're a chef. Do they own the restaurant? No, they just work at one. If you were to ask someone who banks what their business is, they'd likely tell you they're a banker. Do they own the bank? No, they just work at one. One of the greatest misconceptions has to do with the difference between what someone's business is and what someone's profession is. I'll be honest with you though - I'm not sure it's entirely the fault of the worker - not being a business owner, that it. From a very early age, kids are taught to be workers; employees. I've gone through a lot of schooling in my life and all throughout business school, never was I offered a course on how to operate a small business. Everything I've ever learned was theoretical. It was almost as if high schools and colleges didn't have any faith in their students to take the bull by the horns. They played it safe and left the business owning and operating for their graduates to figure out for themselves. People start businesses every day though, so I guess something is working. I just wish it was more streamlined. So many mistakes and tragedies (bankruptcies) can be avoided.

Ray Kroc had it figured out. His profession was a salesman. He sold like no one else. His business was real estate though. Two different things. If a restaurateur owns the land and building in which he operates, he's a business and real estate owner. He also sells, manages, and perhaps cooks. If he doesn't own the land and building, he only sells, manages, and cooks. He's like the rest of us.

I think there's a secret sauce to making money and taking hold of your own financial destiny through life. It has to do with taking the "next step." For instance, if you're taught how to become an electrician, half way through your training, you should begin thinking about how to manage people, sell, and acquire financing for a company. If you're taught how to be a dentist, half way through your training, you should be thinking of the same things as the electrician. So instead of relegating yourself to a lifetime of working for someone else, you'll at least have the itch to make some real money. Don't think that taking business classes at a college is going to help you out in this regard though. Trust me. I've taken plenty of those. They teach you how to be a good employee, just like all the other classes out there do. Really though, find someone who can teach you how to build and run a company. Maybe work for someone else with the goal of buying them out someday. Learn the ropes and when the time is right, begin having conversations with the owner. Invest in assets that'll make you money. Show how responsible and ambitious you are. The last thing you want to be is another complaining union worker waiting for your next raise. Blaming "the man" for your terrible life. Take accountability for yourself and your actions. Don't become one of those people who waits for others to make it happen. They likely never will. Mind your own business.

If you learn nothing else from this section, learn this; most of the stuff you buy throughout your life is like jewelry. It costs a heck of lot more than it's really worth and you'll see pennies on the dollar if you try to sell it. Buying houses and cars is a trap. It's a trap that'll keep you poor and that will hold you back from taking the necessary risks to make real money and to become wealthy. If you're constantly worried about not having enough money to pay your bills, you'll never quit your job. And if you get fired, you'll be forced into scurrying to find another one. You'll feel no freedom to make your own choices. You'll always live under the burden and debt and taxes. And that's no way to live.

I want you to imagine having a 18 year old son right now. Can you imagine that? What's he doing at this very moment? Most likely playing video games and eating all your food. He didn't do his homework last night and he just mouthed off to you. If he's got a girlfriend, that's an even tougher situation. You've had countless conversations with your husband or wife about your son and you really don't think he's got a bright future. He's spoiled rotten. That's the problem. It's bad parenting. The best you can do is try to force his way through high school and then try to get him into a trade school or a college. Everything will work out once he's out of the house, right? Sure, until he fails out, moved back home, and begins asking you for money.

Now imagine having a different kind of son. Imagine having a son who is a good student and who behaves himself. He's respectful, but still eats all your food. That's to be expected. He doesn't mouth off and he tries to get the best grades he can. He's looking forward to getting into a great college so he can one day get married and get a good job. He'll make his parents proud. This is what many Americans would consider a dream son. The only problem with him (that will likely be overlooked) is that he doesn't have much of an entrepreneurial spirit. He's become so accustomed to fitting into the "system" that he rarely thinks outside the box. He doesn't try to make any extra money mowing lawns and shoveling snow. He simply studies to one day become that doctor, banker, or salesman.

The final son I'd like you to imagine having is one of a rare breed. He's quiet and spends a lot of time working alone in his room. He gets marginal grades in school, but he works very hard trying to make as much money as he possibly can. He's mowed neighbor's lawns and has shoveled snow from their sidewalks from a very young age. He was bitten by the money-making bug early on and reads tons of books on business, entrepreneurship, and passive income. One day, you ask him how much money he has and he tells you that he's worth $300,000. You're shocked and you ask him what he's done to acquire all that money. He tells you that he's done very little other than learn about how money is made while he's asleep. You're just floored. Since he's more wealthy than you are, you ask what types of things he's invested in and he tells you that while you're still paying all of his bills, he's been investing in stocks, bonds, ETFs, mutual funds, IOUs from friends and family, and getting licensing fees from some software that he's written. He also has a web based business that he worked hard to set up, but now that it's up and running, he doesn't have to do much to it at all. You can't believe your ears. Basically, your son has built a small empire that will pay him regardless of what he's doing. He can take a trip to Tahiti for a month and when he comes home, he'll have made the same exact amount of money than if he had stayed home.

Which type of son do you want? If it's the first type, good luck. Stop buying him things and head to the book store in search of a book that will teach you how to be a better parent. If it's the second type, that's fine. He'll make a great worker bee. These are the types of people who keep the world turning. We need them. If it's the third type, just get out of the way. He probably hasn't needed you ever, other than to give him the room to succeed. You may want to ask him to teach you a few things though, so you can teach other parents what they should be encouraging their children to do with their spare time. Video games won't help. Reading, learning about money, and working will.

If I had one piece of advice to give parents, it would be to encourage your children to get good grades, go to college (community college and then a state school), graduate, and then get a good job. While working this good job, invest in ETFs like crazy and begin building an online business that will one day offer passive income. Don't encourage them to stay with their job all of eternity. That's a terrible thing to do. It's miserable and everyone hates working like that. You know it, I know it, everyone knows it. No one can be a happy corporate drone or government employee. No one. The trick is to build as large an investment portfolio and passive income business as possible. One day, you'll be making your own decisions with very little stress.

There is one rule to follow though: once a dollar goes into an investment, it never comes out. Every dollar you invest you should treat as an employee. That dollar is working for you, no matter where you are or what you're doing. Plus, if you keep it invested, you won't have to pay tax on it. But that's a story for another time.

This post is part of a series: Rich Dad Poor Dad by Robert T. Kiyosaki
 
Mind Your Own Business was posted on 06-06-2021 by LukeLewis in the Finance Forum forum.

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