The 4 Types of Cash Flows

I’d like to talk about this thing called the Cash Flow Quadrant. I was exposed to this a couple of years back, but I didn’t really study it until recently. Take a look at it.

According to this, the cash flow is coming based on the amount of active work that determines your income. The thing about these quadrants that you see, the truth is a lot of people are actually wearing multiple of these hats. A lot of our favorite entrepreneurs such as Elon Musk have admitted to this. In Elon Musk’s case, not only is he an investor and a business owner, but he’s also admitted that sometimes he feels like an employee to his shareholders because he’s working mad hours.

Now, I know that this is kind of a complicated concept. I get into more details about this in my last All Virtual Lesson, which you can watch here.

(Make sure to join the All Virtual – Delegation and Staffing for CEOs FB Private Group so you can view the whole video.)

The bottom-line is, as a business owner, your income does not depend on your active work. It depends on how well you build out your team. In my case, I I always hire the person who knows how to lead with intention and delegate with clarity over the person who is 10% better at a particular skill every time.

Ideally, we all want to be investors and receive a lot of passive income—because income has absolutely nothing to do with what you contribute and it doesn’t depend on your workload or what you do in the business. What matters is that you're honest about where you want to be with the people that you asked to help you.