Most entrepreneurs get stuck on quadrant one (here are the other three)

A few weeks ago I wrapped up what I’d been calling the foundational series… the three shifts, the Textbook vs. Lifestyle Investor framing, the Freedom Number, the five filters, all of it.

From here on out, I want to share what’s actually happening week to week. The conversations. The deals. The questions members are asking. The stuff I’m thinking about.

So let me start with something I shared at a recent talk that landed harder than I expected.

I asked a room of around forty entrepreneurs, “How many of you would say you’re good at making money?” Every hand in the room went up.

Then I asked, “How many of you would say you’re good at managing money?”

One hand. One.

That gap… is the whole game.

The Four Quadrants

I look at the world of wealth in four quadrants. And I think most entrepreneurs get really good at quadrant one and then stall.

Quadrant 1: Make Money. This is what you do for a living. You built a business. You have a skill people pay for. You can earn. If you’re reading this, you’ve probably already won this quadrant.

Quadrant 2: Manage Money. This is the discipline of keeping what you make. Budgeting at a high level. Knowing your numbers. Not having too much in your checking account (and I’ll come back to that one because almost everyone in that room had way too much sitting in cash, and most didn’t know it).

Quadrant 3: Multiply Money. This is where most entrepreneurs have never played. It’s seeing opportunities other people don’t see. Spotting the asset class before it’s mainstream. Mobile home parks before anyone cared. Single-family rentals before “SFR” was even a category. Private credit ten years ago. This is the work of investing, not the hope of investing.

Quadrant 4: Make Money Matter. This is the one nobody wants to talk about until they’re forced to. What is all of this actually for? More money in my family’s hands past a certain point… I’m not sure that’s good for us. More money in the right hands, doing the right things… that’s a different conversation.

Most entrepreneurs are A+ at quadrant one. C- at quadrant two. Have barely touched quadrant three. And haven’t seriously thought about quadrant four.

That’s not a judgment. It’s just the pattern. And the reason is that you’ve been told your whole career to focus on the top line. Earn more. Grow more. Hire more. So you did. And it worked. But the skill set that built the business is not the same skill set that builds wealth around the business.

The Realization I Had

I read Robert Kiyosaki’s Cashflow Quadrant early in my career. There’s a line in there that hit me like a truck.

He said… if your business can’t run for a year without you, you don’t own a business. You own a sole proprietorship. You ARE the business.

I sat with that for a while. And I had to be honest with myself. I couldn’t take a month off, much less a year. I couldn’t go to Europe for three months. I couldn’t write a book. The business owned me.

So I had to figure out how to actually move from quadrant one into the others. And the answer was uncomfortable… it meant taking some of the energy I was pouring into the business and pointing it at managing, multiplying, and giving.

It meant building a team for my wealth, not just my company.

The Question Most Entrepreneurs Are Asking Wrong

Here’s something else I asked that room.

“Have you ever made a critical business decision where the top question was ‘can I afford this?'”

Most of them nodded. Some of them laughed because they knew where I was going.

“Can I afford this” is not the question of someone who is financially free. It’s the question of someone whose income still depends entirely on whether the business performs this quarter.

The better questions are different. Is this the right call for my team? Is this the right call for the customer? Is this the right call for the next ten years of this brand? Is this the right call for innovation?

When your lifestyle is already covered by income that doesn’t depend on the business… I guarantee you’ll make better business decisions. Calmer ones. Smarter ones. Ones with longer time horizons.

That’s the practical reason quadrants two, three, and four matter. Not because you should care about wealth for its own sake. Because financial freedom outside the business makes you a better operator inside it.

Where You Probably Are

If I had to guess where most readers of this newsletter are… it’s somewhere between late-stage quadrant one and early quadrant three. You make great money. You manage it reasonably well. You’ve started doing some private investing but you’re not sure if your allocation, your due diligence, or your team is what it should be.

And quadrant four… that’s a someday thing. Eventually.

What I’d offer is that quadrant four isn’t a someday thing. It’s a clarifying thing. When you know what you want the money to do once you have more of it than you need… your decisions in quadrants two and three get sharper. You stop chasing for the sake of chasing. The goalposts stop moving on you.

I just spent time with a few people who are decades ahead of me on this. John Maxwell picked a net worth number 35 years ago and said anything above it gets given away. David Weekley and Terry Looper, the two of them have been giving away half of everything they make every year for 35 years. David Green at Hobby Lobby has been giving 50% of corporate profits to impact since 1973.

I’m not there. But I’m working on it. And being around people who are playing that game at that level changes how I think about all four quadrants.

Until Next Week

I’ll share more of what’s coming out of that conversation in a future issue. For now… ask yourself which quadrant you’re spending the most time in right now, and which one is the one you’ve been avoiding.

If quadrant one is still where most of your hours go, that’s fine. It might be the right season for that. But the other three don’t build themselves. And quadrant three especially compounds in a way that, in my experience, makes the next decade look completely different than the last one.

Until next week,
Justin

P.S. I’m curious. When you read the four quadrants, which one did you flag as the weakest for you right now? Make, manage, multiply, or matter? Send me an email and let me know. I read every response and it shapes what I write about next.