Page 77 - Midas Touch

Problem: Unfortunately, entrepreneurs who build a business in the S
quadrant find it difficult to raise capital. They often don’t speak the
language but, even if they do, true I-quadrant investors do not invest in S-
quadrant businesses unless the S-quadrant business is ready to expand into

the B quadrant. Then, I-quadrant investors love to lend money or become
equity partners. But if an S-business isn’t ready, which is most often the
case, the entrepreneur has no other choice than to borrow money from
friends, family, and the Small Business Administration (SBA). Their
ability to really grow is severely limited.

In contrast, where do you think the investment managers of 401(k) and
IRA plans invest the billions they bring in through the retirement plans of

the E’s and S’s? You guessed it. They invest in the businesses and the
projects of the B’s and I’s. In other words, E’s and S’s save money in the
bank or with an investment company. B’s and I’s borrow the money from
the E’s and S’s via the banks and investment companies to make
themselves richer. The same is true with traditional pension funds. Pension
funds of the E’s finance many projects for the B’s and I’s.

Once you understand the implications behind the CASHFLOW Quadrant,
it’s easy to see why making the leap to the B and I quadrants is something
every entrepreneur should aspire to. It is the opposite of what we are
taught to believe in school.

Focus on Capitalism

America prides itself on being a capitalist economy. The model has served
our country well for a long time. When you focus on the skills of the B and
I quadrants, you are focusing on gaining the skills of a capitalist. True
capitalists do not work for money. They focus instead on using OPT and
OPM to make more money. By using OPT and OPM, the tax laws give
capitalists tax breaks while taxing the E’s and S’s. This means that the
harder the E and S work for money, the more taxes they pay. The more the

B and I use OPT and OPM to make money, the less taxes they pay. This is
not a loophole. It is the way our government incentivizes people to create
businesses that create jobs.

You might be thinking, “Wait a minute. I know some pretty high-paid
employees, and that plastic surgeon down the street is rolling in the