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Rich Woman

Real estate investor and author Kim Kiyosaki reveals what you can do to take control of your financial future.

Rosalind Resnick

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Kim Kiyosaki, author of Rich Woman: A Book on Investing for Women, began her career as a real estate investor in 1989 after launching her first business with her husband, Robert Kiyosaki, the author of the bestselling Rich Dad, Poor Dad series. Today, Kim controls millions of dollars of investment property and teaches women how to achieve financial freedom through investing and taking control of their financial futures. We recently spoke with her to get her insight and advice on the importance of taking charge of your money – and your life.

Given your own success in building companies and buying real estate, why do you think that so many women are still afraid to take business risks?

I think part of it is that many of us haven’t been educated about investing and haven’t really been expected to be the ones handling the money. Being risk averse is not necessarily a detriment unless it’s to the point where you become so afraid of risk that you do nothing. What I’ve found over the years is that the way I grow and the way I learn is by placing myself in situations where I have to face something I’m not familiar with or to break through a fear. I want to create a movement throughout the world to teach other women to put [my principles] into practice and become financially independent.

Most women know how risky it is to depend on a man for financial support, yet millions of women continue to hope that their husbands will take care of them. Looking back on your own experiences growing up, what was the turning point that transformed you into the financial risk taker you are today?

I’ve always been very independent. When I was 14 years old, I came home one day and my mother was sitting with her girlfriend in the dining room, and my mom’s girlfriend was crying, very upset. I was ushered out quietly, but I stayed in the other room and overheard the conversation. This woman was saying that her husband had left her for another woman and how horrible it was, but when my mom asked: “Did you know? Did you have an idea?” she said that yes, she did have an idea but that, even though the marriage wasn’t working, at least she was financially taken care of. And I just remember thinking: “Why would anyone want such a miserable life?” I think so many of us women still have this idea that Prince Charming is going to take care of us. With one out of two marriages ending in divorce nowadays, that’s just not the case any more.

Another challenge for women entrepreneurs is balancing work and family. What advice do you have for women who don’t have the time to invest in a business venture?

Let’s say you’ve got a full-time career and you’ve got a family. At the end of the day, the last thing you want to do is go look at property. You’ve got to somehow make that a priority. I think that every woman has her own business called “Managing and Growing Your Money.” And it has to be looked at as a business, not just a thing to do to pay the bills. A lot of women business owners say: “I’ve got a business, and it’s doing well, so why do I need to invest?” I would bet you that every businesswoman out there has said to herself at some point: “I’d love to shut it down. I’d love to not have to go to work today.” Eventually, you’re going to get tired. You’re going to want to take a break. By creating that income stream, you have a choice.

In your book, Rich Woman, you talk extensively about leverage – that is, the power of debt financing to increase an investor’s returns. What do see as the pros and cons of financing real estate and other investments with borrowed money?

I see leverage as a plus as long as you know what you’re doing, as long as you understand the numbers of the deal. With real estate, you can put down 10% to 20% and own 100% of the property. Now, if you manage the property well, you’ll have a nice, positive cash flow. The con is what I call “the flipper” – when you buy the property with the sole intention of turning around and selling it for a profit. If the market turns, as it’s doing right now, people are finding themselves stuck. If the market doesn’t go up and they don’t have a renter, now they’re stuck and they’ve got this big mortgage payment that they’ve got to make every month. If you’re buying to buy and hold, then the fluctuations of the market don’t affect you as much.

You say in your book that your husband, Robert Kiyosaki, the author of the Rich Dad, Poor Dad books, has been very supportive of your investing activities. What advice do you have for women whose spouses are less supportive?

I’ve talked to a lot of women about that, and when I asked about it, I got answers ranging from: “Dump him!” to “Learn how to work together!” But, ideally, if you can do it with your spouse or your partner, you’re going to be more successful and you’re going to get a greater return on your money. For those women whose husbands aren’t supportive, the best advice I can give is to start, just start. Don’t not do it because he’s not interested. Because once you start and once he sees how interested you are and once he sees the cash flow coming in, often he’ll jump in and say: “Let’s do it together!”

Every woman who seeks financial freedom through starting a business or buying a piece of real estate has to start somewhere. What’s the first step that you’d advise a woman to take?

Number one, whether it’s business or investing, is education. If you’re starting a business, get some education about the business you want to start. Talk to mentors, talk to people who are doing what you want to be doing. Read up on it, attend seminars, go to speaking events. There are some great organisations that are supportive of women in business. If you can hook up with them, fantastic! There are also some great investment organisations. Hang around people who are going to support your ideas and support you in what you want to do. Don’t hang around with negative people, people who say it’s never going to work, that you’re crazy, that it’s too risky. Get those people out of your life.

One of the challenges that women entrepreneurs continue to face is lack of capital. What advice do you have for women who want to start businesses or buy properties but have little access to cash or credit?

For every business that I’ve ever started – and I’ve started them all with my husband – we had no money. There’s this idea that you have to have a lot of money to build a business or you have to have a lot of money to invest. I don’t subscribe to that. Borders bookstore started in a garage. Apple Computer started in a garage. None of those companies was highly financed. When it comes to property, Robert and I were broke for quite a while. We were homeless for a short period of time when we were building our businesses. But when it came to investments, we didn’t have money, either. My very first investment was a little two-bedroom, two-bath house in Portland, Oregon. I needed a $5 000 down payment and I didn’t have it – but I found a way to get it. The thing I’d say about investing, especially about real estate investing, is to find the investment first because then it’s a tangible thing. Otherwise, it’s just talk. Once you find the investment, it becomes real to you. Then you can figure out how to find the money.

Rosalind Resnick is the founder and CEO of consulting firm that advises startups and small businesses.

Leading

What A Grade 1 Sticker Business Taught Me About Business

It’s the very fundamentals that are frequently overlooked amid ambition and “blue sky thinking” – yet, these remain the most crucial element of any business.

Grant Field

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When I was a kid, my father believed that instead of getting pocket money, my brothers and I should learn how to make money. Stickers were the school craze when I was in Grade 1, and we wanted a collection for ourselves, so Dad said if we wanted to buy the stickers, we needed to make the money. So, logically, we started a sticker trading business. Dad gave us the start-up money and took us through the basics of business.

We had a cash float for purchases, and learnt about cost price, mark-up and selling price – very basic accounting. We kept recycling that money, making extra and using it to buy more stickers. Then we worked out that if we increased the mark-up, we’d make a bigger profit – so why not make the mark-up as big as possible? The obvious happened. Our prices were too high, and we lost customers.

Valuable business lesson learnt, we came back down to a mark-up that other kids were willing to pay for.

More lessons to learn

Then people came to us and asked if they could take a sticker today and pay us tomorrow. We saw no reason not to trust them. Guess what? They didn’t pay us back. We had bad debt on our hands. When we sold out of stickers, we had cash-flow issues and couldn’t buy more stock. Dad was there to help us out, though, so we received another capital injection to get back off the ground. And this time, if we did extend credit, we loaded it for the privilege of “buy now, pay later” – another lesson learnt.

We ran a proper ledger for the business, tracking our inventory, sales and profit. Even if our “bank” account was a piggy bank, we had a clear record of what was going on. When I look back on it, none of what I learnt was irrelevant.

Today, I run a leading financial services company with billions of rand running through our bank accounts. Even though the finances of the business are run on a much larger scale, the principles of business – those basic principles that we learnt trading stickers – still power our company. And when I see entrepreneurial ventures failing, or when friends come to me for advice because their business is struggling, it’s almost always because they haven’t got these basics right.

Related: Successful SA Entreps Share Their Most Valuable Business Advice Ever Received

Clarity

One of the most important lessons I’ve learnt is that if you don’t fully understand how the money is being made, walk away. Whether you are dealing with stickers or financial services, the business principles should be straightforward: money coming in, money going out, and profitability.

Every day, I look at an Excel statement of my company’s forty bank accounts. Every day, I look at the cashflow, and unusual big-ticket items get a note so I know what’s going on. It’s just like that Grade 1 business, only on a bigger scale.

Entrepreneur, thwarted

Once the other kids saw the success of our sticker business, they started to want to get in on the action, so they came to market with their own competing products. At first, we were able to innovate as the competition squeezed our margins and started to impact on our profits. Eventually, the whole situation got completely out of hand and the school banned sticker trading for profit.

While I didn’t become a sticker magnate, the lessons I learnt in Grade 1 remain central to every business I am involved with – get the basics right.

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How To Handle A Director Who Always Says No

Diverse opinions on a board is a good thing — but is it boosting your business, or hindering growth and decisions?

Carl Bates

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Do you have that director on your board who always says ‘no’? Regardless of what the issue is, regardless of the context, who raises it or whether or not it is indeed a good idea, their response is either a simple ‘no’ or an elongated perspective on why they disagree? It can even feel at times that they are actively working against the company and against the board. Although they obviously do not see it that way.

Experienced directors will have multiple war stories related to this subject. Aspiring directors should be aware of how to approach these situations when they arise and how to avoid becoming the subject of such stories.

Develop a culture of trust, candour and professionalism

A board’s conduct must be characterised by trust, respect, candour, professionalism, accountability, diligence and commitment. It is the board’s collective responsibility to build this culture and to engage with one another in a productive and effective way.

Dissent should be welcomed when it is constructive and engaging. The idea of being the ‘devil’s advocate’ for the sake of it however, is not the best way to approach this. Dissent should be based on a real belief that the issue has not been fully debated or creates a real challenge for the company going forward.

If you have a director who genuinely believes a different path is right for the company, hear them out and engage in the discussion. In my experience, this often opens up an issue or changes a detail that when taken as part of the whole, improves the decision-making outcome for the board and the company.

Related: Contributing In The Boardroom

Remove the politics from the boardroom

At the heart of this issue is often politics. Politics between directors, who are also shareholders or executives. Politics between the ‘new guard’ and the ‘old.’ Regardless of the genesis, politics really do not have a place in the boardroom and directors who engage in it should be called out by the chairman or another senior director.

In local government I have heard stories of councillors who always vote ‘no,’ so that whenever something goes wrong, they can say “I told you so,” and show the public why they should be re-elected. But that is indeed politics. The boardroom is a very different space. It is private and discussions should be confidential.

Board rotation, a simple solution

While the removal of an errant director should never just be left to resolve itself, there is a simple solution that can support the easy removal of the most difficult directors. The challenge is that it requires forward planning prior to the appointment of any new director.

Directors should only ever be appointed for a predefined term, with automatic rotation at the end of that term. This does not stop you from reappointing a director for a further period. It is, however, always easier to ask someone to consider a further term than it is to tell them that their time has come and they should resign from the board.

Having a predefined term for a director essentially ensures an automatic resignation period. A simple rotation policy for directors is not just good governance, it is a practical step you can take to provide a way out of a sticky relationship.

Ultimately the board as a whole must address issues that detract from the board fulfilling its function as and when they arise. A rotation policy might provide an effective backstop. A high-performance board is one that will tackle the issue head-on.

Read next: How Diversity Drives Board Performance

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Leading

The Power Pose: Using Body Language To Lead

Use the way you move and stand and interact with others to become a better entrepreneur and leader.

Howard Feldman

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In 2012, the power pose became a global sensation. A Ted Talk by Amy Cuddy hit a staggering 46 million views and became the second most popular Ted Talk in history. The premise was simple – hold a powerful pose and it will not only affect the way you behave but it will even change your body chemistry. Since the talk, the power pose has met with heavy criticism and been labelled as nothing more than pseudoscience. Fortunately for believers, they were proven right. Amy Cuddy released further research this year and it fundamentally proves that this bold stance works exactly how she said it did back in 2012.

The power pose isn’t something that you’d adopt in a meeting or around the office but the science behind it shows how important it is to pay attention to your body language as it can fundamentally change how you are perceived.

Notice how you are noticed

People spend a lot of time reading one another’s body language and the way a person stands or holds their hands or moves can influence how others see them. It’s very natural to judge someone else’s posture, but what about the way they are judging yours? Few people look at how their body language is affecting the way people engage with them.

Related: [Quiz] How Good Are You At Reading Others In Business?

So, what are you supposed to do?

Fake it until you make it

Want to know how can you adapt to become a better leader? You can fake it.

The power pose isn’t the only way to change your mood. Research has shown that whether you laugh naturally or put on a smile and make yourself laugh, your body still releases the same levels of serotonin.

Whether you are really laughing or just pretending to laugh doesn’t matter – they both have the same impact on your demeanour.

Change how others see you

Think about the pose that every athlete adopts when they win a race or achieve something that’s been physically taxing. They hold their hands outstretched in the air. Even blind athletes hold the same pose. It’s big, it’s bold and it’s a physical manifestation of success.

Now consider the defensive pose. The tight hunched shoulders or inward curve of the spine. These poses immediately make a person look nervous, afraid and lacking in confidence. Like the porcupine curling in on itself for protection.

The same ideas apply to daily business life. While the power pose and the athlete pose are not necessarily a team activity, ensuring that you hold your body upright and with confidence means that you’re conveying an attitude of strength. You come across as confident and capable and positive. You are ready to take on anything and overcome the odds.

By contrast, if you are hunched and withdrawn, you come across as nervous and lacking in confidence and these are not the qualities you want associated with you as an entrepreneur and a leader.

Related: (Slideshow) 5 TED Talks That May Change Your Perspective on Life

Body language for entrepreneurs

  • Shake hands like a hero. The way you shake hands with someone is very significant in terms of establishing equality. Be even, be firm but don’t pull people towards you or turn their hands under your own. This makes them feel like you are trying to establish dominance.
  • Create an atmosphere of openness. Maintain eye contact, say hello to people with warmth while holding a strong posture. A warm and open greeting is essential to establishing trust.
  • Do the power pose for two minutes before any meeting or interview. This will get those chemicals stirring and make you feel confident and in charge.

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