3 Lessons Home Business Owners can Learn from the Rich Dad Bankruptcy

The recent Rich Dad bankruptcy is big news. And home business owners can learn a lot from this small hiccup from best-selling author Robert Kiyosaki.

The big news in the world of earning money this week is that Robert Kiyosaki, the “Rich Dad,” filed for bankruptcy. While I enjoyed the book Rich Dad Poor Dad, and I learned some interesting things (particularly getting away from the idea of a primary residence as an “investment”), I’m not a huge fan of Kiyosaki.

However, he does offer interesting insights, and he’s always entertaining. Plus, the bankruptcy of one of his companies, Rich Global, LLC, provides some very useful lessons for the home business owner:

1. Keep Your Business Assets Separate from Your Personal Assets

One of the best lessons from the Rich Dad bankruptcy is that you need to keep your home business assets separate from your personal assets. And it’s not just about a separate bank account for your home business. An actual business entity, that is completely separate from your business assets, is a good idea if you want to protect yourself.

Let’s be real: Robert Kiyosaki isn’t filing for bankruptcy. His personal wealth is estimated in the tens of millions of dollars. Rich Global, LLC is filing for bankruptcy protection. Rich Global was sued for fees owed to a promoter. The judgment was almost $24 million. Now, the promoter will only get a portion of the judgment, since Rich Global’s assets were fairly small in comparison to the rest of Kiyosaki’s empire.

A separate business can mean that your personal assets are better protected from things that your business does. It really can help to take the steps necessary to turn your home business into a “real” business from a legal standpoint.

2. Build a Loyal Following that will Stick with You

Kiyosaki has built a rabid following. Those who are devoted to him and his teachings are?devoted. As Luke points out over at Consumerism Commentary, the loyal Kiyosaki fans aren’t going anywhere. Look for ways to build a loyal following with your home business. All of us experience setbacks, and the same is true in your home business. However, if you have taken the time to build a loyal following, it doesn’t matter. Your fans will stick with you even when times get tough.

Decide whom your home business is likely to serve, and learn what they like. Kiyosaki’s fans like his no-nonsense persona, as well as his lack of political correctness. Figure out what your fan base is likely to be, and then make sure you relate to them. Make the effort to connect to your customers, and they will remain loyal to you.

3. Prepare to Move Forward after a Setback

Most home business owners aren’t going to have 10 businesses (plus or minus) to fall back on. However, it is possible to prepare to move forward after a setback. Even though the Rich Dad bankruptcy story line might make some things more difficult for Kiyosaki, he is prepared to move forward. In fact, he can probably turn this whole thing around. This isn’t a setback; it’s a brilliant business move that limits the amount the plaintiff in the lawsuit will also get, and it keeps his other business and personal assets safe.

Look at how you can prepare yourself to move forward. This means investing in yourself, developing skills, acquiring knowledge, and shoring up your finances so that you are better prepared to weather various financial storms. Really think about how you can prepare yourself and your business, and look for positive lessons to learn from your difficulties.

Can you think of other lessons that can be learned from the Rich Dad bankruptcy?

13 thoughts on “3 Lessons Home Business Owners can Learn from the Rich Dad Bankruptcy”

    1. Miranda Marquit

      Great point! Although the judgment against his company isn’t that large, and the promoter will end up with even less. But it’s still money he doesn’t have.

  1. I’m not a huge fan either with his leveraging debt ideas, but it’s good to be challenged on your viewpoints. Didn’t know about the BK, but he’s smart enough to set up protections.

    1. Miranda Marquit

      I agree that it’s good to challenge yourself by reading a variety of ideas — including those you don’t agree with. There’s no question that Kiyosaki is a smart guy, though. Or at least a really savvy marketer 🙂

  2. I wish I could start a cult of personality. My cult would be awesome!

    Kiyosaki is, eh, he is what he is. He has a minimum of financial savvy and a ton of marketing savvy. He’s evidently smart enough to hire people to fill the gaps in his own expertise, so that’s something.

    I’m with John T Reed on this, though: some of his advice is outright illegal.

    1. Your cult would be awesome, Kyle 🙂 And, hopefully, you wouldn’t give what, sometimes, amounts to horrible advice for most of us “regular” folks.

  3. Jason Cabler (@DrCabler)

    I feel the same way in that I think he likes leverage too much. I’m a debt free, cash only guy myself and believe that’s absolutely the best way to go, period.

    He is obviously an incredible marketer and put out some good books that really shaped the way I think about money. But I don’t believe everything he says.

    You may sign up for my rapidly forming cult at http://www.cfinancialfreedom.com

    You must sign up now so we can catapult the world to debt freedom for all!

    1. Miranda Marquit

      Part of our problem right now is that so many people use “other people’s money” to take risks. At some point, that risk catches up with everyone. Good luck with your cult! 😉

      1. Jason Cabler (@DrCabler)

        That’s why we’ve had such a bad recession over the last few years. The use of OPM was way out of control. It causes a false prosperity that eventually comes crashing down.

        You must tell everyone you come in contact with to join my debt free cult now! Debt freedom is inevitable for those that catch the vision and spread it to the four corners of the earth! Debt freedom now! Debt freedom for all! Ah ha ha ha ha ha ha!!!

  4. Jason Cabler (@DrCabler)

    My Plan is working perfectly!

    I’ll be using other people’s brains instead of other people’s money.

    Now go and indoctrinate the masses!

  5. Gerald Prentice

    Kiyosaki’s bankruptcy isn’t his only problem. The SEC has just found that one of Roberts advisers, Wayne Palmer, has been running a $100 million ponzi scheme through the Rich Dad events. What a sleeze. Hide your assets so you don’t have to pay people you owe, and scam millions of people along the way. I hope he gets what’s coming to him. Check out the SEC article: http://www.sec.gov/news/press/2012/2012-119.htm

    1. Miranda Marquit

      Thanks for sharing this info! It really does seem like he is starting to look a little bit like the worst of the American Dream.

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