Page 172 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

The world is filled with small business owners and professionals who are
not able to leverage because they are the product. Most employees fall into

this category. They don’t know how to leverage their services and trade
time for dollars.
Most of us know musicians who work hard but do not earn much money
simply because they fail to leverage their talents. The world is filled with

musicians who produce a CD, which is a form of leverage, but are not able
to leverage the distribution and sale of their CD. This is why amateur
programs such as American Idol are so popular. People who think they can
sing want the leverage of national television, even if Simon criticizes them.

3. Expandability. Once a product or business can be leveraged, the next
question Warren wants to know is, “How far can the leverage be

expanded?” Warren loves Coca-Cola because its leverage is expandable
throughout the world. Warren says, “Every time someone in the world
drinks a Coke, I make a little money.”
When I wrote Rich Dad Poor Dad, the book was my leverage. Instead of

my teaching in person, my book and my games could now do the teaching.
The next task was to expand the product into different countries by printing
the books and games in different languages. This was done by licensing the
rights to produce Rich Dad products to businesses in different parts of the

world. Instead of having my company print, inventory, and distribute my
products, there are now publishers in 109 countries that do that for me. This
is my example of leverage and then expandability.

4. Predictability. What Warren Buffett wants to know is how predictable
revenue is. He doesn’t want peaks and valleys in income. He wants to know
that come rain or shine, the money will come in like clockwork.
One of the reasons I love my apartment houses is that rain or shine, the

money comes in. I am not worried about the price of real estate going up or
coming down. I want my money coming in 24/7 from all over the world and
from my apartment houses.

This is why Warren Buffett does not diversify. Instead he focuses on a
business’s intrinsic value. Recognizing intrinsic value requires the five