Foundations of a Solid Business


In continuation of my financial education from the famous Robert Kiyosaki, I recently learned about the foundations of a solid business.

What does it take for a business to last long? What does it take to build a solid business that is strong enough to survive for at least 50 to 100 years? I would like introduce to you my readers one of the lessons I’ve learned from Robert Kiyosaki and this is about the B-I Triangle.

Why did Robert used the triangle to portray the shape of a solid business? It is because triangle is the most stable among all shapes.

OUTSIDE THE B-I TRIANGLE:

The MISSION

At the base of the triangle is its most important component: the mission. As the world market becomes ever more glutted with products and competition becomes increasingly fierce, the businesses that thrive will be those that use their mission as their beacon.

What does mission mean? The best way to define mission is by example. Henry Ford’s mission—one he fulfilled with messianic fervor—was to make the automobile available to the masses. Hence his mission statement, “Democratize the automobile.” It was Ford’s ability to maintain his focus on this mission that helped fuel his financial success.

The mission came first, not the lure of profits. Too many would-be business owners are driven by the desire for profit alone. Unfortunately, money alone won’t provide the entrepreneur with sufficient stamina to weather the storms his or her young company will inevitably face. A glaring example is the owner who becomes an instant millionaire by taking the company public through an initial public offering (IPO)—then watches as the company falls apart. The problem with the profit-only mission is that it doesn’t take into account customer need. After all, without customers there can be no profits. The mission of a business should be to meet customer need by providing a product or service. If customers are well satisfied, then profits will follow.

Rich Dad Tip: “If the mission is clear and strong, the business will weather the trials every business goes through during its first ten years. When a business gets big and it forgets its mission … the business begins to die.”

The TEAM

The second side of the B-I triangle is the team. In school, students are taught to take tests as individuals, and they bring home individual report cards. But in business people are measured by their ability to perform teamwork. If there is no teamwork—if every person is an island—then the business will fail.

A team is not a group of people with the same skills. Employees and small-business owners often make less money than they would like because they try to do things on their own. When they grow frustrated with the powers that be, they form a union. A business team, however, is not like a union. It is a collection of specialists—accountants, bankers, attorneys, insurance agents and so forth—with differing skills.

The LEADERSHIP

To keep the company focused on the mission, and the company’s different personnel working as a team, you need leadership—the third and final side of the B-I triangle.

Kiyosaki mentioned qualities of true leader: visionary, cheerleader, pit boss and listener.

Rich Dad Tip: “A leader’s job is to bring out the best in people, not to be the best person.”

As visionary, the leader conceives the mission and keeps all eyes focused on it. As cheerleader, he or she heralds the successes of the team as it strives to fulfill the mission. And as pit boss, this person makes the tough calls regarding issues that distract the team from its mission. The leader is able to take decisive action while focusing and inspiring the troops.

INSIDE THE B-I TRIANGLE:

With the right mission, team, and leader, you’ll establish a stable triangle for your business. But there’s more to business than just the framework. Prudent management is the ongoing activity that fulfills the promise of mission, team, and leader.

Cash Flow Management

Cash flow management, the bottommost tier, is also the most fundamental to business success. Cash flow management means financial literacy—the ability to read and make sense of financial statements. Many small-business owners go under because they can’t tell the difference between profit and cash flow.

Communications Management

Communications management is the next tier up. Much communication is devoted to activities external to the company, such as raising capital, sales, marketing, customer service, and public relations. Most entrepreneurs spend too little time improving their external communication skills. This can be risky, not least because communication is essential to raising capital, the life of any business. Internal communication is also important—sharing the company’s successes with the entire team, staying in touch with advisors, and having regular meetings with employees. Investors, advisors, and employees can get away with speaking the language of their specialized areas, but the entrepreneur—leader of the flagship—must speak the language of all.

Rich Dad Tip: “All great leaders are great public speakers.”

Systems Management

Systems management is the third tier up. A business is a web of interlocking systems. For it to grow, a general director must be in charge of making sure all systems operate with maximum efficiency. The director is like a pilot in the cockpit reading gauges from all the plane’s systems; if one gauge indicates a malfunction, emergency procedures must be implemented to prevent the plane from going down. The pilot isn’t part of the system—he or she is merely managing it.

Systems managed in a typical B-quadrant business include:

Product development
Office operations
Manufacturing and inventory
Order processing
Billing and accounts receivable
Customer service
Accounts payable
Marketing
Human resources
General accounting
General corporate
Physical space
Computer systems

Legal Management

Legal management, one tier from the top of the triangle, is too often neglected. Legal fees may seem expensive at first, but it is much more expensive to lose the rights to your property or to get embroiled in litigation down the road.

Lots of businesses go under because they fail to protect their intellectual property. Never underestimate the power of patents, trademarks, copyrights and contracts. Bill Gates became the richest man in the world by buying an operating system, protecting his purchase, and selling it to IBM. A single legal document can be the seed of a worldwide business.

Here are some areas of the law where attorneys can prevent problems:

Contracts
Intellectual property
General corporate
Shareholders
Labor
Consumers
Securities and debt

Product Management

Finally, on the very top tier, rests product management. Product is at the top because it embodies the business’s mission, and because success in selling product depends on all the tiers below. The product can be a tangible item like a hamburger or an intangible idea such as consulting services. Whatever it is, in one sense the product should be viewed as the least important part of the business. Take away the rest of the B-I triangle and the product has no value. Most of us can cook a better hamburger than McDonald’s, but few of us can build a better business system than McDonald’s.

The difference between people in the E and S quadrants and people in the B and I quadrants is that the E and S side tend to be too hands on. They stay busy in their busyness and never build anything. You don’t have to become imprisoned in busyness.

Source: Robert Kiyosaki’s Coaching Program

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Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

5 responses on “Foundations of a Solid Business

  1. I am trying to read this post over and over again…and in the end it told me that business making or even starting it is really a serious stuff. only those with brave hearts and right mental framework will succeed with this one.

    • You’re right Elmot. I particularly like what Robert Kiyosaki told about the Product – “In one sense the product should be viewed as the least important part of the business”.

      A lot of businessmen are concentrating in their products. Little do they know that products are always changing. There’s always new products that are out in the market. It’s their capability to adapt to these changes that will propel them to succeess and that capability will depend on the B-I Triangle above.

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