Think your house is your biggest asset? Think again…

Think your house is your biggest asset? Think again…

By: SiarzaSD
Date: 16 Aug 2018

If you ask the average person on the street about their assets, they’ll probably start talking about their house. But they’d be wrong.

Robert Kiyosaki’s brilliant (and unorthodox) book Rich Dad, Poor Dad deconstructs the myth that houses (and cars and other goodies) are assets. Kiyosaki’s ideas have many implications for both business and personal finance. Once you understand the Rich Dad philosophy, you can accumulate real assets for your business.

Defining an asset the Rich Dad way

You (and your accountant) might be a little surprised to learn that a house isn’t an asset. But the reason for that is pretty simple: Unless you have paid tenants, your house isn’t generating income for you right now.

In fact, owning a house is probably costing you money—even if you’ve paid off your mortgage in full. Leaky roof? You have to pay to fix it. Paint looking a little chipped? You’re paying for that, too. And let’s not even get into property taxes.

So a house isn’t an asset. It is, in fact, a liability. The classification is simple. Assets make money for you, while liabilities cost money. Kiyosaki shows that there are four types of personal assets:

  • Real estate that can generate income. (So, not a house in which you live, or any property that you hold for an extended period of time without seeing a return.)
  • Business assets (i.e. owning your own business)
  • Paper assets (stocks, bonds, mutual funds, etc.)
  • Commodities (objects that have value in and of themselves, like gold bars)

The common elements of these assets: Holding them does not require spending money. In fact, these assets generate wealth on all on their own, even while you take a nap or play golf. You don’t have to do anything in order for your bonds to accumulate value. They just do, all on their own.

Kiyosaki says that the key difference between financially successful and unsuccessful people is this: The successful people know how to accumulate and take advantage of assets. In contrast, unsuccessful people only acquire liabilities. They end up trapped in a cycle where they have to work constantly just to afford the upkeep on their liabilities, instead of just allowing wealth to grow.

That’s how the Rich Dad system works for personal finances. But how does it apply to businesses?

The same basic principle applies. A liability to your business is something that costs you money on a regular basis—think your office space or the printer that never seems to work correctly.

An asset to your business is different. Assets help your company generate income with little or no effort on your part. And one of the greatest assets you can own is a marketing system.

How marketing can be an asset for your business

Anyone who has ever worked in outbound sales knows that it’s a rough game. A single sales representative may have to send out one hundred cold emails just to get a handful of responses. All of that labor requires upfront payment.

Inbound marketing works in the exact opposite way. Instead of spending money to go after customers who may not even want your product, interested customers come to you. A good marketing system works for you 24 hours a day, 365 days a year. With great marketing, prospective customers can learn about what you have to offer with absolutely no extra effort or expense on your part. This is what Kiyosaki would call an asset.

Of course, marketing encompasses a wide swathe of tactics, not all of which are equally effective. Building a true marketing system is different from just throwing money at pay-per-click ads and other one-offs.

In today’s world, Google is the first and oftentimes only place where consumers gain information. That means businesses need to get on the first page—not as an ad (which is costly), but for organic searches.

The way to do that is content marketing. When you have a rich portfolio of content, customers will come your way naturally. In this respect, content acts similarly to paper assets or commodities that appreciate in value over time.

The many benefits of content marketing

The ways in which content marketing can generate business are well-documented. According to Aberdeen, companies that are leaders in content marketing see a 19.7% annual increase in unique website traffic. For content marketing laggards, that figure is only 2.5%. All of those extra clicks can be converted into additional sales.

If you doubt that content really does generate income, consider this: More than half of consumers say that reading blog posts influences their purchasing decisions. 61% say they are more likely to buy from a company that has custom content on its website. This is usually even truer for complex purchases. So while you might not need a library of 1000-word blog posts to sell socks, it’s necessary if you’re going to convince people to invest in your innovative software.

Another advantage of content marketing is that it helps you find good clients. If someone finds you from your content, it’s fairly reasonable to assume that they are a conscientious person who is interested in seeking knowledge in your area of expertise. They’re not just out to buy the cheapest option, but care about quality.

Of course, attracting quality clients requires having a real strategy and putting out quality content yourself. Think about it with the Rich Dad mindset. You wouldn’t just invest in any old stock and hope that it works out. To see a real return on your asset, you need to do your research and identify assets that will actually appreciate in value.

Poorly researched content riddled with grammatical errors is not a good asset. Subpar content attracts subpar customers. Strong content, on the other hand, acts as a machine that continually brings good customers (and income) to you. Just like a good asset should.

If you really want to grow your business in the long term, you need to adapt the Rich Dad philosophy and invest in content as an asset.

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