Cashflow Quadrant Network Marketing – The 4 Quadrants of an MLM Business

 By Mike Klingler

Robert Kiyosaki, author of the best selling book, Rich Dad Poor Dad, is a New York Times bestselling author. Even though you may have read that book, you might not have read his second book, Cashflow Quadrant.

Cashflow Quadrant is about a concept that he introduces to us in Rich Dad Poor Dad. This concept is based on the 4 ways that people earn money. They are E for employee, S for small business owner or self employed professional, B for a big business owner and I for investor.

The Left Side of a Network Marketing Business Cashflow Quadrant

The first side of the quadrant, the left side, denotes people who earn money based on their own efforts. An employee makes money by working for a company. That employee is compensated based on working a set shift each week and is paid a salary based on the amount of hours worked and the job responsibilities.

A self employed professional or small business owner also earns money based on their efforts. They earn money by providing a service to clients and customers. They earn money based upon how many times they can offer that service and how much that service is worth in the marketplace.

When you first get started in a network marketing business, you start building your business on the left side of the quadrant. At the beginning you only get paid when you personally market your product. In that case, you might consider yourself as in the E quadrant in network marketing.

Eventually you build an organization where you are not only getting paid for your own efforts but you also get paid on helping members in your organization produce. When this happens, you might now consider yourself as a member of the S quadrant in your network marketing business.

However, at this level you still have to do work to produce your income. The difference is you personally don’t have to market the product. For example, as an S quadrant network marketer, one of your distributors may introduce their prospect to you on a 3 way call and you in return will close that prospect out for your distributor.

The Right Side of An MLM Business Cashflow Quadrant

The second side of the quadrant, the right side, denotes people who earn money based on the efforts of others. A business owner makes money by owning a company that produces profits. These profits are produced based on the output of production made by employees in the company.

An investor makes money by producing a gain or return on investment based on money invested in some type of investment. For example, if an investor raises or invests capital in a real estate project and is able to rent out the units for a profit, the profit is the return on investment from the project.

Your goal as a successful network marketing distributor is to move from the left side of the quadrant to the right side of the quadrant. You want to move from having your income dictated based upon your own efforts to having your income dictated based upon the efforts of others.

When you reach the B quadrant in network marketing, you have an organization from which you can derive an income whether you are personally involved in the marketing process or not. For example, you may have leaders doing the 3 way calls and presentations for your team, yet you are still earning commissions from that production.

In the I quadrant of network marketing, you have the capacity to invest in an organization that someone else built and be able to enjoy an income from it. Sometimes successful network marketers decide to sell their distributorship for a variety of reasons. If you have the capital, you can buy their distributorship and earn a return off the commissions produced by that organization every month.

In his book, The Business School for People Who Like Helping People, Robert Kiyosaki explains why he feels network marketing is such a great business to help you get to the right side of the Cashflow Quadrant.

In Your Home Business Which Side Are You On?

The 4 parts of the cashflow quadrant not only apply to earning money in general. They also apply to earning money in network marketing as well. The goal is to go from earning money from the left side to earning money on the right side.

So ask yourself which side are you?

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