The Difference Between an Employee vs. Entrepreneur Is Mindset

UPDATED: May 20, 2024
PUBLISHED: July 29, 2021
The Difference Between an Employee vs. Entrepreneur Is Mindset

The power of our thoughts may never be measured or appreciated, but it became obvious to me as a young boy that there was value and power in being aware of my thoughts and how I expressed myself. I noticed that my poor dad was poor not because of the amount of money he earned—which was significant—but because of his thoughts and actions. As a young boy, having two fathers, I became acutely aware of being careful in deciding which thoughts I chose to adopt as my own and to whom should I listen—my rich dad or my poor dad.

I wasn’t born a natural entrepreneur. I had to be trained. When I was growing up, my poor dad often said, “Go to school and get good grades so you can find a good job with good benefits.” He was encouraging me to become an employee.

My rich dad often said, “Learn to build your own business and hire good people.” He was encouraging me to become an entrepreneur.

The Cashflow Quadrant explains that there are four types of people that make up the world of business, and they are often technically, emotionally and mentally different people.

E stands for employee; S stands for self-employed or small-business owner; B stands for big-business owner (more than 500 employees); and I stands for investor.

“I noticed that my poor dad was poor not because of the amount of money he earned—which was significant—but because of his thoughts and actions.”

For example, employees will always say the same words, whether they are president or janitor of the company. An employee can always be heard saying, “I’m looking for a safe, secure job with benefits.” The operative words are safe and secure. In other words, the emotion of fear keeps them boxed into that quadrant. If they want to change quadrants, not only are there skills and technical things to learn, but, in many cases, there are also emotional challenges to overcome.

A person in the S quadrant may be heard saying, “If you want it done right, do it yourself.” In many cases, this person’s challenge is learning to trust other people to do a better job than they can. This lack often keeps them small, since it’s hard to grow a business without eventually trusting other people. If S-quadrant people do grow, they often grow as a partnership, which in many cases, is a group of S’s coming together to do the same job.

B-quadrant people are always looking for good people and good business systems. They do not necessarily want to do the work. They want to build a business to do the work. A true B-quadrant entrepreneur can grow his or her business all over the world. An S-quadrant entrepreneur is often restricted to a small area, one that can be personally controlled. Of course, there are always exceptions.

An I-quadrant person, the investor, is looking for a smart S or B to take care of their money and grow it. In training his son and me, rich dad was training us to build a successful S-quadrant business that had the capability of expanding into a successful B-quadrant business.

One day I asked my rich dad what the difference was between an employee and an entrepreneur. His reply was, “Employees look for a job after the business is built. An entrepreneur’s work begins before there is a business.”

Many entrepreneurs do not realize that many of the problems their businesses face today began yesterday, long before there was a business. The entrepreneur’s most important job is to design a business that can grow, add value to its customers, bring prosperity to all those who work on the business, be charitable and eventually no longer need the entrepreneur. Before there is a business, a successful entrepreneur is designing this type of business in his or her mind’s eye. According to my rich dad, this is the job of a true entrepreneur.

Rich dad went on to explain that the world is filled with different types of entrepreneurs. There are entrepreneurs who are big and small, rich and poor, honest and crooked, for-profit and not-for-profit, saint and sinner, small-town and international, and successes and failures. He said, “The word entrepreneur is a big word that means different things to different people.”

It’s time to take control of your thoughts and how you express yourself. In which quadrant do you sit? In which quadrant do you want to be? Today’s economy is a perfect time to restart, rethink and begin anew. Start the transition from employee to entrepreneur now.

Robert Kiyosaki, author of Rich Dad Poor Dad, is an investor, entrepreneur and educator. This article was originally published in August 2009 and is based on Robert Kiyosaki’s Before You Quit Your Job: 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business. Copyright © 2005 Robert T. Kiyosaki with Sharon L. Lechter. Published by Warner Books.

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