Wisdom of Rich Dad

MANHATTAN (CN) – Companies behind the Rich Dad financial self-help brand cannot avoid paying a $14.6 million judgment to The Learning Annex over abandoned plans for a lecture and PBS series, a federal judge ruled.

Based on a book by Robert Kiyosaki, “Rich Dad, Poor Dad” ostensibly draws from the author’s upbringing and outlines a philosophy of financial independence through investment, real estate, business ownership and other ventures.
It spawned a series of books, games, lectures, and other audio and visual materials.

Critics have said, however, that the Rich Dad brand simply hawks dubious tips through a wide variety of products.
John T. Reed, who secured his MBA at Harvard Business School, has blasted the book for dispensing “much wrong advice, much bad advice, some dangerous advice, and virtually no good advice.”

In September 2005, The Learning Annex and the companies behind the Rich Dad brand met to discuss potential marketing and expansion through a free seminar program, a PBS show and introductions to potential business partners.

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Entrepreneurs are well-known as risk-takers. Some of them are going all out while some others walk their journey based on calculated-risk. Considering the volatility of the business world today, here is why entrepreneurs should pursue the calculated-risk path.

 “Do or die” situation often brings out huge success because I believe people will generally exceed expectations when they are faced in a difficult situation (of course, some would crumble and flee from challenges…)

Aggressive risk-takers pursue “high risk, high gain” business opportunities, with a hope of striking a gold vein and being showered in riches. Some made it, but unfortunately, many fall deep into financial troubles – that almost always includes personal finances.

Why? Because aggressive risk-takers are going all out, including sacrificing their personal finances – in short, they put everything at stake. That is not really entrepreneurship – that’s more like gambling with “winners take all” principle.

In my opinion, when you are single responsible to nobody but yourself, you could take the all-out approach. However, if you have a family to support and/or are the primary bread winner of your family, going all-out is probably the biggest business mistake of all.

A story of a friend

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What he did: Actor Dan Aykroyd gained fame as a member of the original cast of Saturday Night Live, where some of his characters were known for their dubious business ideas (think: Irwin Mainway and his Bag-o-Glass kids’ toys). But in real life, Aykroyd has a profitable venture on his hands Crystal Head Vodka, a boutique spirit packaged in a bottle that resembles a human skull. Since the brand launched in 2008, sales have exceeded $50 million, with more than a million bottles sold.

How he did it: Many celebrities have gotten into the booze biz others include Justin Timberlake and Sean “Diddy” Combs. But Aykroyd’s brand has earned some admiring attention within the liquor industry.

While he boasts about his vodka’s ingredients, observers say he’s also been a relentless marketer, appearing at dozens of promotional events and overseeing the design of the eye-catching packaging, inspired by his interest in the supernatural. “It’s not like he put his name on it and left it at that,” says Eric Schmidt, a director of the Beverage Information Group, which tracks the spirits business.

Why he did it: Aykroyd’s first foray into the booze biz was as cofounder of a distributor. Launching his own vodka brand was a logical way to extend the enterprise, though Aykroyd had to tap the college fund for his three daughters to create Crystal Head. “It was all the cash I had lying around,” he says, “so I said to the girls, ‘We’re going into the vodka business!’” But he hopes that in addition to paying dividends now, the project will become a business his kids can take over one day a meaningful alternative, financial pros say, to simply leaving them a large inheritance.

In his book Games Indians Play, V Raghunathan writes about a farmer whose maize crop won top awards year after year. When a reporter asked the secret of his success, the farmer attributed it to the fact that he shared the seed with neighbours. Why, the reporter wondered, would the farmer want to share his seed when those neighbours where also competing with him for the prize?

The farmer’s reply was, “The wind picks up pollen from ripening maize and swirls it from field to field. If my neighbours grew inferior maize, cross-pollination would steadily degrade the quality of my crop. If I am to grow a good crop, I must help my neighbours do the same.

A lot of small business owners fail to act like this Indian farmer. By thinking of short-term benefits and looking out only for themselves, they fail to maximise on the abundant opportunities available to grow their businesses.

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John Horn, a consultant with McKinsey & Co., thinks “war games” have much to offer business decision makers.

First, to be clear: Business war games don’t involve playing war. They’re analytical exercises that put a business through the paces of planning a strategic response to a worst-case scenario — anything from a devastating recession to the entrance of an aggressive competitor into the same market.

Admittedly, Horn makes his living in part by designing these war games. He thinks they can help us learn by simulating — albeit to a limited extent — real-world environments. The key to their effectiveness, however, lies in their design. There’s a difference between using a game to teach, and trying to learn from a game that’s designed to entertain.

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1. Start small. Business schools like to tell you that you need to “go all in” when you start. Not true. You have a much better chance of succeeding if you start small. Plus, always have a fallback in case your new venture takes a while to get going, or simply doesn’t work. When I started out, I kept my full time job and started my business on the side.

2. The best business partner is no partner. When you have a partner or even an investor, you spend more time discussing and negotiating and less time in action. Business is serious and operates best with one clear leader. Your energy should be spent building the business, not worrying about the needs and feelings of a partner.

3. Solve your own problems. Don’t automatically look to outside resources. Try to solve the issue within. By training yourself to solve your own problems, your solutions will be uniquely suited to your situation, business and industry, and will quite often provide you with breakthrough advantages. You will not succeed by simply following others.

4. Don’t fight fate. Once you’ve immersed yourself in your business, you’ll start to see opportunities you never knew existed. Be ready to act on new and different opportunities when they arise. Do things differently than the other guy.

5. Do you feel lucky? Business schools teach strategy and business planning, but most entrepreneurs will tell you that at least half of what they’ve accomplished is due to luck, not strategy. Skill comes by having the talent to spot lucky breaks when they arise and being willing and nimble enough to take full advantage of them.