Whether you’re an investor, entrepreneur, or some combination, you’re in the business of multiplying capital. Once you recognize this, actually multiplying your capital becomes clearer. I’ve identified four basic pillars that all entrepreneurs should follow as they grow their own empire.
In the most basic sense, you multiply capital through leveraging your unique abilities and resources to multiply what you have. If you’re not thinking this way, you must.
So where do the pillars come from? The obsessive study of successful wealth creators. Over five hundred interviews revealed four things that each one of these Cashflow Ninjas practice. The principles create a solid foundation to build up from—if one pillar were out of place, or missing altogether, the structure would eventually crumble. Learn the pillars, and learn to apply them, and soon you’ll be multiplying capital like you never have before.
The First Pillar—Cash Creation
The very first pillar is one everyone is familiar with, entrepreneur or not, and that is Cash Creation. This pillar is all about your ability to produce and create value for the world around you. The beauty of Cash Creation is that in execution, it can be as unique as you are. Your life story, your skills, your interests—no one has quite the same combination as you. When you can take those special traits and fill a gap in the marketplace, you have almost limitless potential.
This is especially true with high-income skill sets, which I define as skill-sets that solves a very big, very specific problem. I like to think of income as proportionate to your ability to solve problems. The more people you serve and the more problems you solve, the more money you can make. If you can fill someone else’s weaknesses with your strengths, you probably have a high-income skill set. Some niches have more demand than others. If your skill-set only allows you to serve 10-15 people at a time, while someone else can go online and serve millions of people, they are likely to generate more income. Marketing and sales, for example, have high volume demand—the deeper and more specific you get, the more potential there is. Surgeons, lawyers, and accountants, on the other hand, cannot serve millions of people, but the field is highly specialized and therefore pays well. Knowing this, you can develop your skills and passions to create a Cash Creation strategy that suits you perfectly.
Products and services generate money, it’s how the marketplace persists. So the use of your intellectual capital, combined with your relationship capital, creates financial capital. At the very base level, you’re already multiplying. Learning how to navigate the marketplace with your skills will serve you well.
The Second Pillar—Cash Capture
Once you have created the money, you must learn how to keep the money. This is the essence of the Cash Capture pillar. Figuring out the perfect place to store your cash, along with sustainable strategies to manage it, is key to keeping your wealth. How many times have you heard of people finding wealth only to squander it? You’ve worked hard to earn the money, you should work hard to keep it too.
For this phase, I advocate for putting your money into vehicles you can leverage and collateralize in order to create assets. Here’s an example of what I mean: you could warehouse your capital in an overfunded whole life insurance contract. That’s my personal favorite because of the guarantees attached to it, the primary guarantee being tax-free growth. This is a huge bonus, not to be underestimated—it is worth paying taxes on the front end to accumulate money tax free. Don’t fall for the false-assurance of tax-deferment. Additionally, you have a death benefit and, if bundled properly, will protect your earning potential as a business owner. Technically, you’re buying your net worth.
The other advantage of such a vehicle, is that you can warehouse your money outside of the Wall Street casino, giving you complete control. The asset gives so much control, it can also be collateralized and leveraged for other assets. An especially well-structured policy can also provide a private pension later in life. This kind of account also plays into legacy and estate planning.
Cash Capture, in essence, is about creating your own personal banking system. It puts you in control of your own assets, independent of Wall Street or any other big entity. For more details on this method of Cash Capture, I’ve put together a video series where I deep-dive into the subject.
Subcategories of Cash Capture
Before moving on to the third pillar, there are some sub-categories of the second pillar that I’d like to mention. The first is “Cash Recapture.” It’s not hard to imagine, but we all lose money each and every month. The low-hanging fruit in this scenario is taxes—we’re all overpaying. Most don’t even realize. But the fact is that in small ways, that quickly add up, we have tax inefficiencies that would benefit from simple tweaks. This could look like overlapping insurances, or lazy bookkeeping. But if you can plug your cashflow leaks, you can actually recapture a significant portion of what you’re overpaying in taxes.
Another sub-category is automation, because once you’ve plugged the leaks you can automate a lot of your finances. This step protects you from yourself, and it’s important, because once you make more, Parkinson’s Law kicks in. This is the notion that the more money you make, the more you spend, and a luxury once enjoyed becomes a necessity. Protect yourself from yourself and automate as much as you can.
The Third Pillar—Cashflow Creation
Cashflow Creation is a slightly different beast than just Cash Creation alone. This is the phase in which you begin to multiply on a different level. The extra cash you have starts to create opportunities to invest, which creates more opportunities to invest, and so on. This pillar actually has quite a lot to do with the Capture pillar, because the vehicle you choose will largely aid in putting the “flow” in Cashflow.
Really, there’s an art and there’s a science to financial freedom. We all have different interests and strengths. Because there’s a lot of ground to cover, I can’t get into it all here. If you check out 21 Cash Flow Investing Secrets, you’ll discover some of the best niches to invest in, gleaned from the most successful investors in the world. These secrets give you direct insights into the most popular and lucrative investments, with pros and cons that can help you determine the best fit for your investing profile.
Cashflow Creation is a gamechanger, because you start to see the world in a new way, and think in a new way. You’re no longer at a stage where you depend on your business to put food on the table, which gives you a sense of true freedom. Your cash is flowing and creating synergy, almost self-sustaining as long as you’re there to guide it.
The Fourth Pillar—Cash Control
Cash Control is the protection stage. Once you have the wealth, you want to make sure that no matter what happens to you, your vision for your wealth stays intact. This includes insurance, estate planning, and tax strategies. This is the wall you put around what you’ve created, what you’ve captured, and what you’ve deployed to create cashflow.
For example, having a will in place ensures that your assets are divided according to your interests. Whole life insurance, again, can protect your wealth and make sure that it goes to your beneficiaries (and not creditors). This money can also be pushed into trusts for legacy planning. There are dozens of effective strategies that allow you complete control of your money even when you’re not around. And when you are around, there are things like insurance that will protect your real estate and other assets.
Order of Operations
Although these pillars are numbered, they actually work almost simultaneously with each other. You may be operating from a place of Cash Control immediately, alongside Cash Creation, by putting certain measures in place. Cash Capture and Cashflow Creation could also be happening simultaneously, even in small ways. That’s why I’ve returned to the idea of pillars over and over—because without one, anything built on top will eventually fall. There’s no particular order, but all must be considered and implemented. Don’t feel like there’s a right or wrong order, so long as you remember that they’re all important.
Once you’re in the business of multiplying capital, you’ve got to play the game. The rules are loose, but you must heed them. Hopefully you’ve gleaned some important insights from this article, and determined some “next steps” on your entrepreneurial journey. Thank you for spending your most precious resource, your time, with me. Remember, love your freedom, and live your legacy today, on your own terms.
Live your Freedom, Live Your Legacy, On Your Own Terms,
M.C. Laubscher is a husband, dad, podcaster & Cashflow Specialist. He helps business owners and investors create, recover, warehouse & multiply cashflow. You can learn more about exclusive cash flow strategies in M.C.’s new video series at https://www.yourownbankingsystem.com/