When I was a teenager and young adult (I'd like to think I'm still a young adult (but with more wisdom) and since I often work with 80 and 90 year olds, I am still a young adult by comparison) I used to stand around my parent's kitchen, leaning or sitting on the counter tops, listening to my family members discuss many topics. Since my father worked at Fidelity Investments conversations often revolved around investing and his customers who would call in for advice or to move money around buying and selling stocks, bonds, and mutual funds. I learned concepts such as "buy low, sell high", "invest early and often", "diversify", "the power of compounding interest", and to ask the question "why do you want to buy that mutual fund", as that was the most common beginning to most stories.
As I got older, my oldest brother ventured out into several businesses (some that I was a part of--lawn maintenance/landscaping, some that I wanted to be a part of but was not--real estate, and some that I did not want to be a part of but affected my world--bee keeping!). I was then introduced to a whole new world of concepts. I miss those days of staying up way past my bedtime soaking in the aspirations of my brother and learning about his and other people's successes and failures (from these alone, I could probably write a book). There are several ideas that I continue to come back to from time to time and expand upon as I gain new knowledge and understanding. One in particular still seems to haunt me.
I was probably in my late teens or early twenties and was interested in cars, especially about fixing them. My brother had a jeep and had rebuilt and improved several systems on it. I had seen the jeep in various phases of rebuild sitting under my parent's carport throughout my high school years, but had very little experience in fixing cars myself. I had an old Plymouth Horizon in high school that I had bought from another brother. I had replaced the door handle several times (poor design and huge muscles-ha), the wiper blades, the tires, mickey moused the exhaust system up with hangers, the brakes (mostly my best friend who later became a car mechanic did this one), and packed my wheel bearings once (thank goodness my older brother showed up while I was attempting this one with no prior training and went easy on me--but that is another story). In any case, I wanted to know more, but did not have a suitable mentor, so I began taking classes at the local applied technology center. I thought that being a car mechanic would be a good job to have to work on the side while I went to school for a bachelor's degree, rather than working at McDonald's.
One day while discussing business in the kitchen, my brother must have been trying to get something through my thick skull. Finally he asked, "could you run a car mechanic shop?" "No, I'm not a mechanic yet. But one day I will be able to run a shop." I replied. "Wrong! You don't need to be able to fix cars to run a mechanic shop!" he said. "But I'm learning how to fix cars" I protested. He must have been exasperated. It's a wonder he even tried to continue, but he explained that running a business and working in a business are two different skill sets altogether. I don't remember the specifics, but that phrase still haunts me while I think about running a business--any kind of business--"you don't need to be able to fix cars to run a mechanic shop". I don't think he even realized the full importance of his idea. Larry Miller is not a great basketball player. Michael Jordan is not a car manufacturer or car salesman. I'm not even sure that Ray Crock could make a cheeseburger.
Robert Kiyosaki, author of the Rich Dad, Poor Dad book series and associated products makes the distinction between a small business or specialist "S" and a big business "B". Small business owners own a job. Big business owners own an asset. S jobs: dentist, lawyer, accountant, doctor, etc. B jobs: business owner of a system. I was stuck in my mentality of becoming a specialist--a car mechanic--then becoming an owner of a mom and pop mechanic shop (an "S" or owner of a job). While he was trying to take me to the mentality of going straight to a "B" (owner of Jiffy Lube chain).
What I find interesting at the moment is that I have become a more highly paid "S"--a physical therapist--and am about to open a clinic (where I will own the job). I guess I am still working on elevating my mentality. What is also interesting, is that my lawyer says that my wife cannot be a part owner in the business because she is not a physical therapist. Professional companies (pllc, pcorp) cannot be owned by anyone outside the profession, supposedly to protect the public from greedy business people and ensure proper services (you can sue the whole company and individual professional for malpractice etc. because they are all members of the same profession). So I am forced to be an owner of an "S". Interestingly this also affects taxation. A work around seen throughout the professional world is to have another company own proprietary information and service marks and real estate and rent or lease this to the underlying professional company. In other words a "B" company can own what makes the "S" company go 'round, but cannot own the "S" company. The "S" company is never a true asset because it cannot be easily sold (small market--only the professionals in the particular category--in this case only a physical therapist would be interested in buying a PT clinic, because it could not legally be bought or run by anyone else), or bequeathed, and cannot legally be divided into shares for an IPO. In essence, all the "S" company does, is allow you to own a job. It's a "B" company that holds all the magic.
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