Before You Quit Your Job summary: Robert T. Kiyosaki gives us the fundamentals that create successful and prosperous entrepreneurs and through a simple and easy-to-read style, he explains how he has built several multi-million dollar international businesses and describes his successes and his many failures in the book.
By Robert T.Kiyosaki with Sharon L.Letcher, published in 2005, 336 pages
Note: this chronicle is written by guest writer Alex from the Des mentors pour entreprendre blog.
Book review and summary of “Before You Quit Your Job”
Lesson 1: A prosperous company is born even before it is created
According to the INSEE, 48.5% of companies disappear before their 5th anniversary (statistics for companies created in 2002).
Robert Kiyosaki explains that one of the reasons his company went bankrupt (a surfers’ wallet business) was that he had not paid enough attention to detail.
His company’s meteoric success made him arrogant and pretentious. He and his two associates thought they were geniuses, and they partied.
They were convinced that they had built a strong business.
They had cars. Success had blinded them.
However, this house of cards collapsed.
A poorly planned business is always at risk of going bankrupt, whether it is successful from the start or not.
Hard work masks a lack of planning :
A poorly planned start-up can survive as long as the entrepreneur works hard and holds everything together with sheer determination.
In other words, hard work can hide deficiencies and prevent the collapse of the business.
The world is filled with millions of small entrepreneurs who manage to maintain shaky companies through their hard work, doggedness, and bits of sellotape.
However, as soon as they stop working, the company falls apart and sinks.
Many entrepreneurs believe that by working even harder, they can solve their problems: problems like stagnant sales, grumpy employees, incompetent advisers, insufficient cash flow for growth, raised supplier prices and insurance premiums, etc.
Exhaustion is one of the main reasons why small businesses have such a high failure rate.
Consequently, it is very difficult to earn money and move forward when you spend most of your time on activities that do not pay off or require some spend with no financial reward.
One of his friends said, “I’m so busy running my business that I don’t have time to make money.”
Is hard work a guarantee of success? Of course not.
The most important part of an entrepreneur’s work starts even before the company is created or employees are hired.
The entrepreneur’s job is to plan a business. A company that will grow, hire a large number of people, offer added value to its customers, have a social presence, deliver prosperity to all stakeholders, do charitable work, and even get to the point where it no longer needs the entrepreneur.
Even before the business exists, the successful entrepreneur plans for the type of business he or she has in mind.
This is the real entrepreneur’s work.
The fundamentals of a company’s success depend on the planning
The majority of new entrepreneurs get inspired by a product or an opportunity that could help them make a fortune.
Unfortunately, many of them focus on the product or opportunity, rather than investing the necessary time to plan the business around the product or opportunity.
It is a good idea to study the activities of various entrepreneurs and the different types of businesses they have created. It might also be better to find a mentor who has been an entrepreneur.
Too often, people seek advice from those whose business experience is based on their time as an employee and not as an entrepreneur.
The author recommends that you keep your job while you set up a part-time business, not for the money, but the experience. So if this business doesn’t turn out to be profitable, you will have gained something more important than money itself: real-life experience. You will have learned to better understand the business world and also to know yourself better.
Lesson 2: Learn to take advantage of bad luck
Ironically, mistakes that make people smarter, because they learn from them.
At nine years old, Robert Kiyosaki started his first company, which quickly went bankrupt.
His second business, which he also started at the age of nine, failed to grow too.
Failure is essential to success.
There are two main reasons why entrepreneurs fail:
Firstly, anyone who has an entrepreneurial dream is so afraid of failing that it paralyzes and prevents them from moving forward.
They wake up in the morning and go to work, always full of excuses not to leave their job and start out on their own.
Broadly, these excuses are:
- Not enough money
- Too many risks
- Not the right time
- A family to feed,
Secondly, anyone who has an entrepreneurial dream has not experienced enough failures. Many small business owners and self-employed people succeed to some extent and then abandon all growth.
Their company hits a ceiling or starts to decline.
It reaches a certain size and then stops growing.
Fear of failure is the main reason so many people do not succeed or are not as prosperous as they would like to be.
“In today’s fast-paced world, it is people who do not take risks who are adventurous. It is those who do not take risks who are left far behind. »
An entrepreneur’s goal is to set new goals, develop a plan, make mistakes, and take on the risk of failure.
The more mistakes the entrepreneur makes, the smarter they become, and, hopefully, the company grows with the lessons they have learned.
As babies, we cannot walk; we get up, falter and fall. And then one day, we do not fall and take our first steps. As soon as we can walk, we are no longer babies. From that moment on, we become children.
Learning from mistakes
Mistakes are like stop signs.
They say: “Hey, it’s time to stop…to step back…there’s something you don’t know. It is time to stop and think.
“An error is a signal that tells you that the time has come to learn something new, something you didn’t know before. “
Many people are too lazy to think. Instead of acquiring new knowledge, they repeat the same ideas day after day. Thinking is very demanding. Thinking allows us to increase our mental capacities.
And these increased mental capacities translate to greater wealth.
So, every time you make a mistake, stop and use the moment to learn something new. Something you need to learn. When something is not right, when you fail, take the time to think. And when you have discovered the lesson behind the problem, you will be happy to have made the mistake.
If you are upset, angry, or ashamed; if you blame others, or if you pretend you didn’t make the mistake, it means you haven’t thought it through. Your mental abilities are not sufficiently developed yet. You haven’t learned your lesson. In this case, keep thinking.
The entrepreneurial process
- Start a business
- Fail and learn
- Find a mentor
- Fail and learn
- Take some courses
- Continue to fail and learn
- Stop if successful
- Celebrate its success
- Calculate your gains and losses
- Repeat the process
If you are the kind of person who always wants to look good, seem smarter, never make mistakes, and have all the right answers, then employee or self-employed status is probably best for you.
Lesson 3: Make the distinction between your employment and your
Why work for free
What is the difference between employment and work?
We are paid to do a job. But you don’t get paid to do something like your homework.
Work is what prepares us for employment.
The more homework we do, the higher our employee salary will be. People who do not do their homework earn less money, whether they are employees or contractors.
Many entrepreneurs leave their jobs without doing their homework. That is why so many small businesses go bankrupt or get into trouble.
Too many people confuse work and employment. Too many people expect to receive free on-the-job training.
And when they have a job, employees expect their employer to offer them this training and pay them a salary at the same time.
And that’s why these people are poor. It is not just about money, but about the attitude to the value of education, training, and the acquisition of skills, which others would be prepared to pay for.
Example: doctors work for free
Doctors spend a lot of time and money on their education before they are paid for their work. That’s why they earn more money than most people. Doctors do their homework before they earn their salary.
Even the Beatles worked for free before they became rich and famous. Like professional doctors and athletes, they paid their dues.
They did their homework. They didn’t ask for a guaranteed record contract or a regular paycheque.
Lazy people with no personal discipline are often the most exposed health-wise and financially vulnerable.
Before you quit your job, you must understand that a company is based on a combination of different tasks.
If an employee is very successful, for example in sales, this does not mean that he will succeed in business.
Selling is essential, but it is only one of many aspects of a company’s activities.
And if a company is in difficulty, it is probably because one or more jobs are not being performed or have been badly recruited.
An entrepreneur may work hard, but they can never do more than one task at a time.
That’s why so many small business owners run out of breath or eventually give in to exhaustion.
They may work hard, but they cannot fill all the necessary roles.
The entrepreneur’s responsibilities
Before leaving their job, the future entrepreneur must do their homework.
That is to say, they must ensure that the five functions of the P-I triangle P-I must be fulfilled
- Legal considerations
If the entrepreneur is not competent in one or more of these areas, the company runs the risk of either going bankrupt, experiencing financial difficulties, or stagnating.
Raising funds, a matter of communication:
Every entrepreneur needs to be able to sell, it is a basic requirement.
The majority of entrepreneurs are bad salespeople. Which means they won’t be able to raise money. This incapacity might well be the main reason that most of them give up and go back to employment.
I don’t know how to sell, you’ll never be an entrepreneur.
Learn to sell and continue to learn.
What clearly distinguishes a small business owner from a large business owner is understanding of the importance of systems or networks.
Lesson 4: Success unveils your failures
Street intelligence versus academic intelligence
Sometimes it’s when we have little to lose, that we gain the most.
For most people, the biggest difficulty is getting to this “little”.
Most cling onto the little they have rather than let go and face nothing.
Robert Kiyosaki explains that for 2 years, he was the worst salesman at Xerox.
So he asks his rich father what was wrong:
His rich father then tells him: “You don’t fail fast enough”.
To stop failing, you have to fail faster.
His rich father, whom he talks about extensively in his groundbreaking bestseller Rich Dad Poor Dad, goes on to suggest that he kept his day job and found a night job in sales. But this time, so that he could fail faster.
Failures pay off
As a result, he was consistently ranked as one of the top salesmen in his third and fourth years at Xerox.
The four business schools
- Traditional business schools
- Family business schools
- Business schooling in the workplace
- The street business school. This is the school that entrepreneurs attend when they leave the cocoon of the traditional or family school
Success reveals your failures
Your strengths highlight your weaknesses.
Robert Kiyosaki’s company had been a success at two of the five areas of the P-I triangle: Communications, and Products.
But as soon as his company became too successful, it collapsed.
Its strengths were overshadowed by its weaknesses.
He and his partners had forgotten to consolidate the “legal, systems and cash flow” areas of the P-I triangle.
What is more important?
Academic intelligence or street intelligence? Actually, both.
To succeed as entrepreneurs, you and your team must have academic as well as street intelligence.
We can see why if we look at the P-I triangle.
Although the five stages require street intelligence, some, such as “legal aspects” and “cashflow”, require the contribution of a formally educated professional.
The entrepreneur must have team intelligence, in other words, be able to surround themselves with people who will perform the required tasks successfully. In the end, in business, team intelligence is the key to success.
The difference between academic and street intelligence
Thinker A Thinker B
Analytical skills/critical thinking Creative skills/ Flexible logic
Thinker T Thinker P
Technical skills/Personal skills Personal skills/Leadership
On the left-hand side are the characteristics that are generally associated with academic intelligence.
On the right-hand side, are those generally associated with street intelligence.
“If you want to become an entrepreneur, you will have to develop these four aspects of your personality,” said Robert Kiyosaki’s rich father.
Each kind of thinker will be attracted to a different kind of entrepreneurship.
All four types of thinkers are important to a company.
Small businesses remain small or fail because they lack one or more of these types.
An expert in all areas
Some self-employed workers do not do as well as they could because they feel they need to master all five functions.
They are intelligent and are often able to do this to a certain extent, but never really excel at it.
That’s probably why they never leave the T-quadrant.
If you want to succeed in the P quadrant, you must excel at one of the levels of the P-I triangle, and then gather a team of specialists around you who will perform all the other functions.
Before you quit your job, be aware that you must first work on your self-development. If you do everything necessary to be a great entrepreneur, it will be easier to find competent people to build up your team.
If you can put together a good team, you will succeed more easily, wherever you are.
Lesson 5: Money is king
Most people set themselves goals, which is good. But the most important thing is not so much the goal, but the process we use.
This is why the process is more important than the goal; it shapes what you will become when you achieve your goal.
Here are some examples:
- You can become rich through a legacy
- You can become rich by marriage
- And you can get rich by being a crook
- You can get rich if you’re cheap
- You can get rich with luck
- And you can get rich by becoming an intelligent entrepreneur
In my view, the entrepreneurial process is, therefore, the best one to adopt to enrich yourself, because it is also an educational process that allows you to achieve great prosperity if you have the necessary courage, mind, and stamina.
Why is cash flow at the bottom level?
The majority of individuals who want to become entrepreneurs tend to focus on the “product” level, the level at the top of the P-I triangle.
The product is important of course, but if you look at the triangle you will see that cash flow is at its base and that it is the level that occupies the most space in the diagram.
Before you leave your job and start a business, it is helpful to sit down with an experienced accountant to develop a budget with them that illustrates the costs required to launch and run your business.
Individuals who want to become entrepreneurs and who are looking for funds, fall into two categories:
- Those that have a business plan and financial backing
- Those that have nothing
If an individual arrives empty-handed, it means that they have just begun the planning process for their business, or that they have no idea what they are doing or both.
A good business plan, well presented, will allow you to raise the funds you need. A poorly presented business plan can result in nothing raised at all.
Essentially a good business plan allows the potential investor to better understand the entrepreneur’s thinking. It also allows them to work out if the person is serious.
Even if the company never sees the light of day, the process of reflection and ahead of the company’s creation, and the development of the business plan with actual numbers tells the same story; it is all a remarkable learning tool and an excellent way to confront the facts.
This is the start of a balance between academic and street intelligence.
His rich father often said: “There is no such thing as a bad investment, but there are bad investors”. He also said, “There are no bad business opportunities, but there are plenty of bad entrepreneurs.”
The world is full of opportunities that can make millions of Euros in profits. The problem is that there are more opportunities than there are entrepreneurs capable of exploiting them. This is why the cash flow level of the P-I triangle is so important. It does not say much about the opportunity, but it does of the entrepreneur. This is particularly true in the start-up phase of the company.
Good spend and bad spend :
The reason so many people are poor is that they are poor consumers.
In other words, there are good and bad expenditures. He also said: “Rich people are rich because they have expenses that enrich them”. Poor people are poor because they have expenses that impoverish them.
About entrepreneurship, he said: “Most people are not good entrepreneurs because they save don’t spend”.
Robert Kiyosaki gives the example of his company:
He wanted to save $7,000 in legal fees. It cost him a multimillion-dollar company.
He then realized that he had to learn how to spend money that would make him money.
Money is king
“There’s a difference between doing business and looking after it. If most people don’t become good entrepreneurs, it’s because they’re busy and work hard, but don’t make money. An entrepreneur must earn money. The cash flow level of the P-I triangle is a measure of its success.”
An employee can be paid to be busy. A contractor is compensated based on their performance.
These results are often expressed in terms of net benefit.
Lesson 6: The three types of salary
There are 3 types of salary and three types of income:
- Working income
- Investment income
- Non-operating income
Entrepreneurs can gain all three types of income and need to know how to distinguish them, as tax rates can have a significant impact on their bottom line.
There are also 3 types of salary:
- Competitive salary
- The symbiotic salary
- The spiritual salary
In the business world, companies compete with each other for customers, market share, contracts, and good employees. Competition is the survival of the strongest who defeat the weakest. The majority of people work for a competitive salary.
The symbiotic salary
The richest and most powerful entrepreneurs have built the world’s largest companies through cooperation. These companies have become even more competitive due to the cooperation of their team members. Most large business owners are great leaders.
The spiritual salary
This is about doing a job not because we want to do it, but because it must be done, and we know deep down that it is up to us to do it.
One of the secrets to attracting magical and invisible forces is to consistently donate our gifts.
“Why are so many people below average? ”
His rich father told him: “Because to find, develop and donate your gift is not easy. Most people can’t be bothered with the effort. “
Great doctors study for a long time and then develop their skills over many years. Great golfers train for years to perfect their talent.
Why it is not enough to do what we love
Very often I hear people say, “I do what I love”. And also: “Do what you love and the money will follow.”
Although this is good advice, it is not the best.
The most obvious problem is the use of the word “I”.
An individual’s true goal is “who he loves”.
It is not to do with him or herself. It is not about working for yourself.
Before you quit your job, remember that your journey begins in your heart and soul, that it is reflected in the actions you take, not just in the words you use.
Our heart and experience have taught us that if we put our partners and goal first, financial rewards follow.
“The more people we serve, the richer we get.”
Lesson 7: The scope of the project determines the product
Our task is not only to make money but also to make this world a better place.
The more people we serve, the more efficient we become.
If you want to become rich, just serve more people.
It is the scope of the task that determines the product.
It is very difficult to earn a lot of money or serve a lot of people just by working hard. If you want to serve a lot of people or make a lot of money, you will probably have to withdraw from the scene and go through the eye of the needle (basically so that your business works for you without you having to be involved. I wrote an article on this subject).
The most successful companies have adopted one of these mandates:
- Solve a problem
- Respond to a need
A mandate to solve a problem or satisfy a need, combined with the desire to serve as many people as possible, is the foundation of all successful companies.
You Don’t Have To Save The World
The goal of these companies is to find solutions to a problem or address a need.
Typically, if a company whose goal is primarily to “make money” or to be “the largest and best supplier of a particular product or service” rather than to solve a problem or meet a need, they will not have a solid enough foundation upon which to build a stable and sustainable P-I triangle.
Of course, there is nothing wrong with wanting to make money or being “the biggest and best”.
However, the nature of the goal does not provide real direction to a company, nor does it provide the aspiring entrepreneur with the mentality required to build that company.
If you are committed to a goal that aims to solve a problem or meet a need, the money will follow.
“If you want to become rich, just serve more people”.
Lesson 8: Create a company that will offer a unique product or service
What is the business chief’s role?
The most important tasks of a company director are:
- Clearly define the company’s mission, goals, and vision
- Finding competent employees and building a team
- Consolidate the company from the inside
- Ensure the expansion of the company
- Improve results
- Invest in research and development
- Invest intangible assets
- Be socially responsible
One mission and nothing else
Although their intentions are commendable, many of these big-hearted people are unable to accomplish their mission because they have only one mission and nothing else.
Many people spend years in school or work to develop skills that are unimportant or unrelated to the P-I triangle. A teacher who, despite their education and years of teaching experience, will it difficult to transfer their knowledge into the P-I triangle and become an entrepreneur.
They simply lack business skills.
The company director’s role
The role of the company director is to ensure the growth of the company and to serve as many people as possible. If they do not rise to the challenge, their company stagnates and may even deteriorate.
How to grow a company
Company growth can be achieved in different ways:
- An exact reproduction of the P-I triangle
In many cities, it is not uncommon for the same owner to operate three or four restaurants
- The franchise
- Public offering
- Concessions and licenses
(In my opinion, Robert Kiyosaki overlooks other ways to grow a business such as buying other businesses. This is what an entrepreneur that I interviewed did, allowing him to increase his business from 0 to 100+ million turnover.)
A low-risk idea
- First lesson: Always have a low-risk idea and a backup strategy
- Second lesson: Create a company around a unique tactical advantage
Do something no other company does
The easiest way for your company to stand out is to obtain intellectual property and competitive advantage.
Review your mission and the components of your triangle P-I. Examine each component and ask yourself how your company can excel or stand out from the competition. Then think about how you can multiply this competitive advantage to ensure the growth of your business.
Complementary reading: Robert Kiyosaki’s Teach to be Rich
Lesson 9: The lowest price isn’t necessarily best
SALES = REVENUE
- An entrepreneur must be the best salesperson in their company.
- An entrepreneur must be the best marketing person in their company.
- Marketing must generate sales and not only result in attractive and seductive advertisements.
The lowest price is not necessarily the best.
Low prices only attract cheap customers.
Before you quit your job:
- There are three price levels in any market.
The highest, the average, and the lowest.
Remember that the average price is perhaps the most appealing, but it is also the most common.
- “If you choose to move down the price scale, you will have to be a better businessman than those at the top of the price scale. “
- If you think you offer a product at the highest price in your market niche, you should offer your customers something that your competitors do not.
Be aware that the higher the price, the fewer customers you will have, and the more effective your marketing campaign will have to be.
- Do not try to meet all customer needs in every respect. If you want a high-end product and a low-end product, create two brands.
The purpose of marketing is to respond to the desires, needs, and ego of the customer. In many cases, it is the ego that holds the purchasing power.
- Instead of offering discounts, improve your product.
Rather than lowering prices and reducing your profit margin, try to find ways to maintain your prices and increase the product’s value to the customer, and thus have happy customers.
- Instead of selling new products, look for new customers.
A smart entrepreneur focuses on the satisfaction of existing customers and seeks a new customer base to offer existing products to.
- Look for strategic partners who are already selling to the desired customers.
- Look after your best customers.
Always try to satisfy your best customers, because not only will they buy more of your products, but they will tell their friends about you, and there is no better advertising.
The product price must satisfy the needs, desires, and ego of the customer.
When it comes to ego, we all like a good deal.
Many of us like to say that we have paid a very high price for a product that few people can afford.
The ego plays a role at all levels of the price scale.
Only first-place matters. If you are not first in your category, then invent one where you can be.
A competitive advantage based on product quality will result in a higher profit margin and a better quality customer base.
One mistake that new business leaders often make is to target too large a target audience. They assume that anyone is a potential customer.
Customers must be pre-selected.
It is often better not to have customers than to have bad customers. Not only will you fail to make a profit with a bad customer, but you could also miss opportunities, and sometimes even lose money.
The customer acquisition cycle is as follows:
- Attract the customer (this is the most difficult step)
- Make a sale
- Obtain the customer’s contact information
- Flatter the customer (thank them for buying your product)
- Stay in touch with the customer
- Respond to customer requests diligently and politely (transform a dissatisfied customer into a satisfied one)
- Create a club that customers can join (offer them a bonus when they register)
- Ask satisfied customers to recommend your company or product to their friends
- Make another sale
- Repeat the cycle
Lesson 10: Know when to quit your job
1. Analyze your attitude
You don’t become an entrepreneur just to make money. There are much easier ways to do that. If you don’t like the business world and the challenges of running a business, then entrepreneurship is probably not for you.
2. Gain as much experience as possible in the five areas of the P-I triangle
Instead of choosing a job based on salary, choose it based on the experience it will provide.
3. Never forget that Sales = Income
All entrepreneurs must excel in sales. If you are not a good salesperson, you should get as much experience as possible in this field before you leave your job.
4. Be optimistic, but also ruthlessly honest with yourself.
5. How do you spend your money?
Too many people experience financial difficulties because they do not know how to spend their money.
I have seen far too many entrepreneurs go bankrupt by saving money. For example, when the company fails, instead of devoting more financial resources to promoting it, the entrepreneur often chooses to reduce costs to save money.
As a result, his company continues to fail. It’s about making a bad decision at the wrong time.
6. Create a company to get a sense for it
7. Agree to ask for help
“Arrogance is the cause of ignorance”
8. Find a mentor
9. Join a network of entrepreneurs
10. Remain faithful to the process
Entrepreneurship is a process, not a job or a profession.
So stay true to the process and remember that even if times are tough, the process will give you a taste of the future that awaits you.
MISSION ==> PROCESS ==> GOAL
If you have a great goal, your mission must be strong enough to propel you through the process.
With a great mission, anything is possible.
Book critique of Before You Quit Your Job:
I loved this book. It is very easy to read. As with his other books, Robert Kiyosaki uses simple and direct language.
The PI triangle he describes in this book is an excellent basis for consideration for all entrepreneurs who are starting out.
As he explains very well in his book, “a successful company is born before it is even created”.
The PI triangle is used in the development of your business model.
Besides, although I had started my company a few years ago, after reading this book, I used the PI triangle to discuss what we could improve in our company with my partner
For example, we realized that we were not focusing enough on “systems” and that we were doing a lot of repetitive tasks without automating them.
Today, we have implemented several automated processes, including recorded video training, which allows all our employees to be trained to the same standard. It also saved us a lot of time in the development and search for new customers.
Although I am aware of many of the elements described by Robert Kiyosaki in his book, I appreciated (re)reading this book. Good practices are often easily forgotten, especially in the heat of the moment.
This book allows you to take a step back and look at your activity.
A criticism of this book is that there are some long stretches:
The author regularly goes overboard with his personal life. Over many pages, Robert Kiyosaki tells us his story, how he meets his wife Kim, his Vietnam War experience, his Formula 1 apprenticeship… etc.
In the end, in my opinion, an important element is missing from the PI triangle, which any entrepreneur needs to consider: The market
For example, I know two entrepreneurs who are active in the photovoltaic energy sector.
Since then, with state reforms on energy purchase, the first company has filed for bankruptcy while the second is struggling.
If the market (or regulation) is not (or no longer) favorable to a business, no matter how good the leaders are, their teams (and other elements of the P-I triangle), the company will have struggle to grow.
In my view, the P-I triangle must include the notion of a “market”, which all entrepreneurs must be aware of when they decide to launch.
Strong Points of Before You Quit Your Job:
- Easy to read
- The P-I triangle is a good basis for all entrepreneurs to think about
- Pragmatic and motivational
- Relevant and wise advice
Weak Points of Before You Quit Your Job:
- Too long in some parts
- The book focuses a lot on the “state of mind” and addresses the theme of entrepreneurship in its entirety without necessarily going into the details of each element of the P-I triangle (The book nevertheless provides a good basis for reflection when one decides to launch. I would have liked to read this book when I started out, I could have avoided some mistakes when I started).
My rating :
Have you read “Before You Quit Your Job”? How do you rate it?