A quadrant (quad) among other definitions, is “the area included between such an arc and two radii drawn one to each extremity.”
What quadrant do you belong to? Which quadrant are you presently operating in? And which should you truly be in?
Other terms have been used. Terms such as buckets, sections, structure, quarter, etc. But I like the term quadrants. It is the term used by Robert Kiyosaki, the Rich Dad, Poor Dad best-selling author, in his Cashflow Quadrant book. It is a good personal finance read if you choose to read it. I first read the book over a decade ago and it’s being more meaningful now than ever before.
Not everyone is cut out to belong in the same quadrant. The quadrants that I’m talking about are E (Employee), S (Self-Employed), B (Business), and I (Investor).
Over the weekend, I pondered on these quadrants. Most of us will start out as an Employee and progress through the “ranks” before finally settling in one. It is possible to operate in more than one rank simultaneously. But for maximum impact and benefits, it’s better to focus on one. Did I just say that? Scratch that. All Investors are Business folks and vice versa. Most Employees also operate as Self-Employees (Self-Ees).
We all know what it means to be an Employee; you’re at the mercy of your employer who has placed a cap over what you can make working for him or her and probably a ceiling on how high you can go. The “official” number of hours you signed up for was eight (8) per day or 40 a week. But the number of hours needed to get the job done or to impress the boss so that s/he can remember you (or your name) for promotion or the five percent (5%) annual salary increase, is 10-12 per day or 50-60 per week. Some “smart” Employees, who are aware (and woke) decide simultaneously to start a “business” with the hope of some day transitioning to it. The problem however is that the constant inflow of bi-weekly checks feel so comfortable and subsequently derails the courage to transition.
The few who do transition however are happy that they’re putting all those hours into “building” their “business”. The problem though is that they are building a Self-Employment. Happy that they are working for themselves and not another person. Happy that they have their own schedule; can choose to work their own hours, schedule doctors’ and dental appointments around their clock without feeling guilty asking someone for time off. And equally happy that they have no micro-mangers standing behind their desks or staring over their heads. But, is Self-Employment really better?
Self-Employment is still a one-man show (sole-proprietor). Well, before you shout me down – yes, you can employ an admin or receptionist. But you are still the major driver of the ship and without you, there’s no business or sailing. The problem also is that you do not get paid if you’re sick or hospitalized. You don’t get paid if you don’t work. If you have a family emergency or a sick child or spouse, you do not get paid for taking time off your work to care for them. And I hope that you do not leave them uncared for because of your work either.
So, which is better?
Self-Employment is good; better (or not necessarily better) than being an Employee depending on your variables and reasons for starting it in the first place.
The second-to-the-last quad is Business. Being in Business means creating everything that demonstrates that you are doing business. By this, I mean, a business name, business phone, business bank account (with a business debit or credit card) to avoid co-mingling which gets one in trouble with the IRS, a business website, and a business marketing strategy. Setting the business up is one thing, running the business is another. In business, you have (hire) folks who can do other segments of the business while you focus on your area of expertise. These are your team. The goal is to eventually create a system that can run on its own leaving you time to take a vacation, rest (that will be beneficial to avoid sickness), and probably start another business.
The last quadrant, an Investor, is one that a majority of people never aspire to. This does not mean that you become a stock trader. There are tons of commodities that one can invest in besides stock. You also don’t have to do the investing yourself. There are a few ways to get involve in investing. You can learn to understand the basics or engage the services of investment bankers or companies. It is in the Investing quadrant that you have your money working for you. You can roll the money made from being an employee, self-employed, and your business into Investing.
If everyone becomes a Business person or an Investor, who would be their Employees? This is where one’s purpose comes to play. Know yourself and decide accordingly. One can be an Employee and still be an Investor, though the income-generating capacity might be limited. While Income is limited as an employee, it is infinite in business and investing. You can make income in each quad, but one quad generates more than the other. Sure, other variables might contradict this statement. Please do your due diligence, bear in mind your life purpose, and choose your quad wisely.
There are also tax advantages in the B and I quads that are not available to the E and S. Again, do your research, consult a tax advisor.
This post is not saying that one quad is better than the other. It’s just an overview of all the quads.