The maui millionaires for business

ffirs.qxd 10/24/07 9:18 AM Page i Maui Millionaires The for Business The Five Secrets to Get on the Millionaire Fast-Track™ DAVID FINKEL DIANE KENNEDY, CPA John Wiley & Sons, Inc ffirs.qxd 10/24/07 9:18 AM Page iv ffirs.qxd 10/24/07 9:18 AM Page i Maui Millionaires The for Business The Five Secrets to Get on the Millionaire Fast-Track™ DAVID FINKEL DIANE KENNEDY, CPA John Wiley & Sons, Inc ffirs.qxd 10/24/07 9:18 AM Page ii Copyright © 2008 by David Finkel and Diane Kennedy All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada Wiley Bicentennial Logo: Richard J Pacifico No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization 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where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books For more information about Wiley products, visit our web site at www.wiley.com The following trademarks are the exclusive property of Maui Millionaires, LLC and are used with permission: Maui Millionaire™, Maui Millionaires™, Self Employment Trap™, Money Plus™, Gateway Offer™, Core Value Process™, Millionaire Fast-Track™, The Five Languages of Financial Fluency™, Wealth Matrix™ (and the Wealth Matrix Diagram shown in Chapter 10), The Inside/Outside Asset Protection Plan™, Tax Efficiency Rate™, Tax Power Percentage™, Wealth Frame™, Wealth Map™, Wealth Curve™, The Great Risk Hoax™, Cash Flow Maximizer™, Preemptive Tax Strategy™, The Five Wealth Factors™, Z-Cost™, Unique Advantages™, E-Ratio™ The following trademarks are the exclusive property of Maui Mastermind (NV), LLC and are used with permission: Maui Mastermind™, the most exclusive wealth retreat in the world™, the world’s most exclusive wealth retreat™ The following trademarks are the exclusive property of New Edge Financial, LLC and are used with permission: Wealth Operating System™, Wealth Factor Test™, S-Factor™, R-Score™ Library of Congress Cataloging-in-Publication Data: Finkel, David The Maui millionaires for business : the five secrets to get on the millionaire fast-track™ / David Finkel, Diane Kennedy p cm ISBN 978-0-470-16495-2 (cloth) Entrepreneurship—United States Success in business—United States Wealth— United States Millionaires—United States I Kennedy, Diane, 1956– II Title HB615.F56 2008 332.024'01—dc22 2007020650 Printed in the United States of America 10 ffirs.qxd 10/24/07 9:18 AM Page iii This book is dedicated to the extraordinary members of the Maui Millionaire community Your commitment to build, enjoy, and share great wealth is an inspiration You have changed our world Thank you ffirs.qxd 10/24/07 9:18 AM Page iv ftoc.qxd 10/24/07 9:19 AM Page v CONTENTS ix ACKNOWLEDGMENTS INTRODUCTION The Three Greatest Challenges That Entrepreneurs and Business People Face xi PA R T O N E Invest in Your Business CHAPTER The Single Decision that Leads to Financial Failure or Financial Fortune SECRET #1: Build a Level Three Business and Get on the Millionaire Fast-Track CHAPTER The Three Levels of Building a Business 15 CHAPTER The Five Pillars of a Level Three Business 31 CHAPTER The Four Keys to Turn Your Business into a Thriving Level Three Business in 36 Months or Less 49 The 12 Characteristics of the Ideal Business Opportunity 63 The 10 Biggest Blunders (and How You Can Avoid Them) 73 CHAPTER CHAPTER SECRET #2: Leverage Your Business Assets and Triple Your Cash Flow CHAPTER CHAPTER The Five Most Important Business Multipliers 85 35 Hidden Assets You Can Leverage in Your Business 93 v ftoc.qxd 10/24/07 9:19 AM Page vi vi CONTENTS 32 Often Overlooked Techniques to Immediately Boost Your Business’ Cash Flow CHAPTER 103 PA R T T W O Invest in Yourself SECRET #3: Become Financially Fluent and Guarantee Your Future! CHAPTER 10 The Five Languages of Financial Fluency 115 CHAPTER 11 The Language of Money 121 CHAPTER 12 The Business Wealth Line (The Languages of Business and Leadership) 147 The Personal Wealth Line (The Languages of Cash Flow and Wealth) 169 CHAPTER 13 SECRET #4: Create Your Wealth Map and Build Your Passive Residual Income CHAPTER 14 Creating Your Personal Wealth Map 189 CHAPTER 15 Your Strategic Wealth Assessment (Step One) 193 CHAPTER 16 The Wealth Curve (Step Two) 207 CHAPTER 17 The Great Risk Hoax (Step Three) 219 CHAPTER 18 Choosing Your Wealth Vehicle (Step Four) 229 CHAPTER 19 The Cash Flow Multiplier (Step Five) 237 CHAPTER 20 Preemptive Tax Strategy (Step Six) 241 CHAPTER 21 Getting Into Action (Step Seven) 253 ftoc.qxd 10/24/07 9:19 AM Page vii Contents vii PA R T T H R E E Invest in the Greater Good SECRET #5: Invest in the Greater Good and Reap Enduring Rewards! CHAPTER 22 APPENDIX Six Reasons Why Giving Creates a Competitive Advantage for Your Business 261 The Millionaire Fast-Track—Your FREE $2,150 Bonus from the Authors! 275 INDEX 279 ABOUT THE AUTHORS 289 ccc_maui_275-278_appx.qxd 8/30/07 3:50 PM Page 276 276 ■ ■ ■ ■ ■ APPENDIX Private access to over hours of in-depth, money-making, howto online workshops that will make growing your business and your wealth easier and faster! Eight free e-Books on wealth, business, real estate investing, and tax strategy! Free downloads of all the worksheets and wealth forms shown in this book! Free 30-Day trial membership to Maui Mastermind Online, the online Maui community of entrepreneurs and investors who help each other succeed financially! And much, much more! You’ll also get access to proprietary wealth tools like the Wealth Factor Test, a personalized assessment of your current Wealth Operating System; a free download of the Wealth Map, a revolutionary new approach to creating a detailed road map for your financial life; and the Wealth Level Worksheet, a simple, yet extremely powerful worksheet you can fill out and in less than five minutes know exactly what wealth-building level you are at and what you can to accelerate your financial progress These tools, and others like them, are designed to help you take the guesswork out of creating enduring wealth and put you on the fast track to financial freedom and the Maui Millionaire lifestyle you desire Three More Special Bonuses When You Register Within 30 Days of Buying This Book Bonus One: Behind-the-Scenes Audio Interviews with 10 Maui Millionaires! When you register right now, you’ll get exclusive access to more than six hours of private interviews conducted with 10 Maui Millionaires Imagine the power of listening to these one-on-one interviews in which they share directly with you how they really built their wealth, what obstacles stood in their way, and how they would build their wealth differently if they had to it all over again ccc_maui_275-278_appx.qxd 8/30/07 3:50 PM Page 277 The Millionaire Fast-Track—Your FREE $2,150 Bonus from the Authors! 277 Bonus Two: Five Free e-books! ■ ■ ■ ■ ■ The Five Most Important Financial Controls You Must Activate in Your Business (or You Could Lose Everything) 10 Paperwork Pitfalls of Real Estate Contracts The Core Accounts System for Managing Your Money: The Simplest Way to Get Your Financial Life Under Control Fast The Three Secrets to Mastermind Your Way to Millions Escaping the Self-Employment Trap: How Doctors, Lawyers, CPAs, Consultants, and Other Experts Can Turn Their Expertise into Residual Streams of Income Bonus Three: Six Additional Hours of Online Business, Investing, Tax Strategy, and Financial Fluency Training! Watch and listen to dozens of ideas to help expand your business, increase your wealth, and enjoy a level of financial freedom only dreamed about by the average person You’ll learn how to boost your investment returns, lower your investing risks, and tap into your real passions through your business Each of these online workshops can be viewed or listened to from the convenience of your home or office, streamed to you over the Internet! How to Enroll in the Millionaire Fast-Track Program Right Now—FREE! Simply go to www.MauiMillionaires.com/book and complete the short enrollment form When you are prompted for the “Book Access Code,” enter the following access code: Cashflow17 It’s literally that easy! Just go to the web site, enter in your registration information, and hit enter But remember, this offer is only available for a very limited time, so make sure you don’t miss out Go online and register now that you’re thinking about it ccc_maui_275-278_appx.qxd 8/30/07 3:50 PM Page 278 278 APPENDIX In closing, we want to thank you for choosing to work with us as your wealth mentors We wish you a lifetime of success and happiness Enjoy your “graduation gift” of the Millionaire Fast-Track Program! Our very best to you, David and Diane P.S To get immediate access to your FREE Millionaire Fast-Track Program ($2,150 value), go online right now and register at www.Maui Millionaires.com/book P.P.S Register within 30 days of purchasing this book and you’ll get all three of those extra bonuses you just read about! Register now! ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 279 INDEX Abdication of leadership, 22–23 Accountability, establishing, 59 See also Performance assessment Accounting, 121–122, 139 See also Bookkeeping; Financial systems Accounts payable, 39, 106, 109 Accounts receivable, 39, 68, 74–75, 104–105, 108, 133 Accrual accounting, 139 Action steps, 253–255 Active income, 128, 198 Active participation, 203–204 See also Involvement of owner Active sellers, 36–38, 99 Actual financial statements, 139–140 Advantages, capitalizing on, 204, 220–222, 237 Advisors, business, 86–87, 185–186, 209, 213 Affiliate programs, 100 Agreements See also Contracts nondisclosure and noncompete, 55, 79, 152 partnership, 151–152, 231 Allen, Paul, 65 Alternative Minimum Tax (AMT), 249, 250, 252 American Medical Association, Amortization, 108, 139 Annuities, 234 Appreciation: forced, 210–211, 212, 232–233, 248 passive, 176, 248 Assessments: financial, 193–206 performance, 22, 59, 80–81 Assets, 132–133 allocating, 227–228 appreciation of (see Appreciation) for creating wealth, 10 current, 133 encumbering, 158–159 equity stripping, 159 fixed, 133 growing base, 212–213 hidden, 93 income generating (see Passive, residual income) personal, 131–132 protecting, 153–162, 184, 213, 215, 216 refinancing, 159 Attorney, 8–9, 87, 182 See also Law; Lawsuit(s); Legal advice; Legal system Audio interviews, 276 Audit procedures, 42, 172, 231 Automatic payments, 105 Autopilot analogy, 23–24 Background checks, 55, 79, 230 Balance sheets See also Financial statements business, 41, 132–135, 138, 139 personal, 124–125, 131–132 Bank accounts, business, 156 Banks, 181 Benefits, 58 Bids, competitive, 108 Billing procedures, 39, 104 See also Accounts receivable; Payment Billionaires, creation of, Blended tax rate, 241–242 Board of directors, 225 Bonds, 233–234 Bono (Paul David Hewson), 263 Bookkeeping, 39–43, 107, 130, 185 See also Accounting; Financial systems Brand, 69, 100 Brin, Sergey, 65 Brokers, 87, 160 Brooks, Garth, 47 Budgeting, 129 Buffett, Warren, 167, 221, 262 Bundled offers, 109 Business builders, 20–21, 26 Business cycles, 142 Business Wealth Line, 118–119 Buyers See Client(s) California State Bar Association, Capital gains, 198 Capital-gain-type investment, 224–225 Casa de la Nueva Vida (House of the New Life), 267 Cash accounting, 139 279 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 280 280 INDEX Cash flow See also Financial systems creating, 10, 34, 170, 214, 232–233, 249 increasing, 85, 93–95, 103–109 language of, 9, 117, 170–177 managing, 39, 68, 73–74, 107–108 multipliers, 237–239 passive, residual, 24 statements, 41, 125, 137–139 (see also Financial statements) from tax savings, 171–177 Cash-flow-type investment, 224–225 “Cashing out,” 115–116 Cash-on-cash return (COCR), 144 Cash reserves, 224 C Corporation, 154–155, 246 Centralization of technology, 59–60 Certified Management Accountant, 39 Certified Public Accountant (CPA), 39, 42–43, 46, 87, 182 Character, 90, 201–205 See also Values, business Charitable giving: impact of, 102, 261, 270–273 planning for, 203, 215–216 reasons for, 262–269 views on, 185, 204 Chief Financial Officer (CFO), 39, 42 Choosing the Right Business Structure: How a Little Knowledge Can Save a Lot of Money, 155 Chunking, 167 Circulation of money, 9–10 Client(s): approaching former, 98–99 attracting, 17–18, 262–263 base (see Client base) billing (see Billing procedures) cutting-edge, 95 deepening relationship with, 66–67, 77–78, 88–89, 98, 262–263 empowering, 95 product/service valuation by, 45–46 prospective, 78, 94–95 referrals, 33–34, 94, 263 sales to (see Sale(s)) satisfaction, 33–34 testimonials, 95 Client base, 70, 87–89, 93–95 Collectibles (as investment), 234 Collection practices, 39, 68, 74–75, 104–105 Commission structure, 109 Communication, 59, 162, 167 See also E-mail Competitors, 69, 95–96, 108 Conflict of interest, 231 Conflict resolution, 150 Consistency of results, 49–50 Consolidation of purchases, 108 Consultations, free, 76–77 Consumable products/services, 67 Contact information, 59, 78 Contracts, 55, 59, 104, 148–150 See also Agreements Controller, 39, 42 Control(s): delegating, 21–22 financial, 231 lowering risk with, 222–223 Copyright, 69, 70, 101 Core Values Process, 100–101 Corporations See also Incorporation multiple, 156–157, 159, 184 types of, 154–156, 244–247 Cost(s): direct, 66, 140–141 fixed vs direct, 66 of goods sold, 137 hidden, 108–109 of hiring vs outsourcing, 54–56 (see also Team: paying) of incorporation, 155 indirect, 141 of insurance, 159 lifestyle (see S-Factor (Simplicity Factor)) office, 59, 244 of products/services, 68 start-up, 65 sunk, 71 Courage, 90 See also Fear, conquering CPA See Certified Public Accountant (CPA) Creativity, 89 Credit cards, 105, 179 Cross selling, 94 Current assets and liabilities, 133 Current income vs future wealth, 237–239 Customer(s) See Client(s) Cutting-edge clients, 95 Cycles: business, 142 sales, 107 Database See Client base Debt, 39, 108–109, 179–180 See also Expenses; Liabilities (financial) Debt, AIDS, Trade, Africa (DATA), 263 Decision making, 165, 180 Deductions, 105, 107, 174, 243–244 See also tax-related entries Delegation, 21–22 Delivery, electronic, 106 See also Technology Dell, Michael, 65, 167 Dependency on business owner, 18–19, 36 Deposits, tax, 107 Depreciation, 137, 139, 175 Desert Rose Band, 47 Digital See Technology Direct costs, 66, 140–141 Directors’ insurance, 225 Disclosure, 223, 231 Discounts, 108 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 281 Index Disney, Walt, 43–44 Doctor analogy, 8, 18 Documentation, 51, 162 See also Communication; Reports/reporting Due diligence, 225–226, 230–231 Earned income, 127–128, 173, 246–247 Earned income trap, 128–129 eBay, 89 Economic profile, 154 Education See also Training acquiring, financial, 41–42, 117, 121–122, 185–186, 209–210 selecting appropriate, 8–9 value of, Effort/Energy/Emotion (E-Ratio), 223 Electronic delivery, 106 See also Technology E-mail, 59, 60, 162 Emotional capacity, 269 Emotional fluency, 91 Employees See Team Employment tax, 107 Empowering: clients, 95 team, 21–22, 39 Encumbering assets, 158–159 Endorsements, 97–98 See also Testimonials Entity See Corporations Entrepreneur See Owner(ship) of business Equity, 132–133 See also Net worth barriers to, 161 growth of, 210 return on, 144 stake, 230 stripping assets, 159 E-Ratio (Effort/Energy/Emotion), 223 Estate planning, 184–185, 213, 215, 216 Estrellas Para Ninos (Stars for Children), 269 Ethic, work, 150 Ewert, Marichiel, 270–273 Expansion, 75, 100, 142, 143, 246 See also Scalability Expenses, 107–108, 129, 135, 170, 199–201 See also Debt; Liabilities (financial) Experience, capitalizing on, 230 Expertise: lowering risk with, 222 selling, 70, 76–77 Fabros, Kelly, 270–272 Fair market value, 140 Faith, 90 Family, 87, 203, 204, 265–269 Fax numbers, 59 Fear, conquering, 191, 209 See also Courage Finance charges, 104 Financial assessment, 193–206 Financial controls, 231 Financial fluency, 9, 91, 116–120, 209, 213 281 Financial freedom, 117, 190, 201 Financial institutions, 181 Financial review, 253, 256 See also Financial statements Financial security, 5–6, 21, 90 Financial statements: business, 39, 41–42, 132–139, 141–143 initial, 129 personal, 124–126, 131–132, 145 prospective vs actual, 139–140 reviewing, 183–184 Financial systems, 39–43, 213 See also Accounting; Bookkeeping; Cash flow Financial vocabulary, 139–141, 144–145 Financing purchases, 105, 139 Fine art (as investment), 234 Five Buckets Approach to Your Finances, 224 Five Languages of Financial Fluency, 9, 116–120 See also specific languages Fixed assets, 133 Fixed costs, 66 Flat fee vs wages, 58 See also Team: paying Flexibility, 246 Fluency: emotional, 91 financial, 9, 91, 116–120, 209, 213 Focus: business, 178–179 investment, 179 language, 180 learning, 185–186 maintaining, 166 wealth, 179 Forced appreciation, 210–211, 212, 232–233, 248 Ford Motor Company, 57 401(k) See Pension plans Franchise, 70, 100 Fraud, 154 Free consultations/offers, 76–78, 109 Freedom: attaining, 21 financial, 117, 190, 201 and money, 24 security vs., 10–11 Friendly mortgages, 159 Funnel, deep, 66–67 Future, financial planning for, 178 See also Legacy; Retirement Future wealth vs current income, 237–239 Gains: capital, 198 unrealized, 197, 210–211, 239 Gates, Bill, 65, 167, 262 Gates, Melinda, 262 Gateway offers, 98 Gift certificates, 109 Giving See Charitable giving ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 282 282 INDEX Global impact, 24, 102, 204, 215–216, 262–269 See also Charitable giving Goals, financial, 203, 205 Google, 65 Government agencies See also Internal Revenue Service (IRS) asset seizure by, 153 incentives from, 171, 172, 242 Gratitude, lifestyle of, 215 Great Risk Hoax, 220, 222 Gross income/profit/profit margin, 140 Gross sales, 25 Growth: of asset base, 212–213 of business (see Expansion; Scalability) of equity, 210 Guarantee, personal, 225, 232 Habits, healthy financial, 211 Hedge funds, 234 Hidden assets, 93 Hidden business deductions, 174 Hidden costs, 108–109 Hiring See Outsourcing; Team: hiring Historic market value, 140 Home office, 244 Homestead exemption, 158–159 Hourly sales, 76 See also Team: paying Human resources, 38–39 See also Benefits; Insurance; Outsourcing; Team Hybrid accounting, 139 Ideas, 95, 98 Incentives: financial (in partnership), 152 government, 171, 172, 242 payment, 105 Income, 135 See also Money active, 128, 198 assessment, 197–199 to create wealth, 249 current, vs future wealth, 237–239 earned, 127–128, 173, 246–247 gross, 140 methods of earning, 122–123 net, 139, 141 passive, 127–128, 170, 173–174, 198 passive, residual, 123, 128, 198–199, 214, 215, 216, 246–247 portfolio, 127–128, 173, 246 statement (see Profit-and-loss statements) taxable, 141, 173–174, 247 tracking, 129 types of, 127–128, 173 Income-earning opportunities, Incorporation: of independent contractors, 58 as liability shield, 154–156, 157, 232 Independent contractors, 55, 58–59 See also Outsourcing; Team Indirect costs, 141 Individual retirement accounts (IRAs) See Pension plans Industry players, 86, 97–98, 263–264 Information products, 76, 106 Infrastructure of business, 21, 54–55, 75–76 See also Systems: business Inside/Outside Asset Protection Plan, 157 Insider’s Guide to Tax-Free Real Estate: Retire Rich Using Your IRA, The (Kennedy), 176–177 Insider trading, 222 Inside team, 86 Inspiration, 165 See also Motivation of team; Passion; Persuasion Insurance, 159–161, 182–183 agents, as advisors, 87 directors’, 225 medical, 246 whole life, 234 Integrity, 90, 151, 152, 165 See also Character Intellectual property, 55, 70–71, 101, 152 Interest rates, 108 Internal rate of return (IRR), 145 Internal Revenue Service (IRS), 55, 58, 139, 153, 172 Internet See E-mail; Online workshops; Technology; Virtual company; Web-based business Inventory, 105–106 Investing/investments: alternative, 234 in businesses, 142–143, 230–232 cash flow and, 10, 139 cash-flow-type vs capital-gain-type, 224–225 comparing/contrasting, 145 focus, 179 passive, 230–232 passive, residual, 170 in/with pension plans, 176–177, 248–249 in real estate, 175, 232–233, 249, 252 risk (see Risk) savings vs., 10 skills, 170 speculating vs., 213 of time, 237–239 Investment vehicles, 180, 229, 230–234 Investors Contract Library, The, 56 Involvement of owner, 15–16, 24, 203–204, 214 IRA See Pension plans IRS See Internal Revenue Service (IRS) Jobs, good, 5, 7, 9–10 Joint ventures, 56, 86, 94, 95–97, 152 Juarez, Mexico, 267–269 Just-in-time growth, 75 Just-in-time inventory, 106 Language focus, 180 Language of Business, 9, 117, 147–148 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 283 Index Language of Cash Flow, 9, 117, 170–177 Language of Leadership, 9, 117, 163 Language of Money, 9, 117 importance of, 121–124 in Level One, 126–132 in Level Two, 132–141 overview of, 124–126 test, 125 Language of Wealth, 9, 117, 177–186 Law See also Attorney; Lawsuit(s); Legal advice contract, 148–150 vocabulary of, 147–148 Lawsuit(s), 153–154, 161 See also Liabilities (legal) Lawyer See Attorney Leadership, 22–23, 43–45, 90, 163–167 See also Language of Leadership Leads, sales, 94–97 Learning focus, 185–186 See also Education Legacy, 203, 204 See also Charitable giving; Family Legal advice, 245 See also Attorney; Law; Lawsuit(s) on contracts, 148–150 on partnerships, 151–153, 231 Legal system, 147–148 Lending See Banks; Interest rates Level One business: building wealth in, 207–210 description of, 15, 16 financial approach to, 122–123 financial staff, 39 Language of Money in, 126–132 Language of Wealth in, 178–186 leadership in, 163 tax strategies, 172–174, 241–242 Level Two business: building wealth in, 210–215 description of, 15–16 financial approach to, 122–123 financial staff, 39, 42 financial vocabulary for, 139–141 Language of Money in, 132–141 Language of Wealth in, 178–186 leadership in, 163 R-Score of, 200 stages of, 17–19 tax strategies, 174–175, 242, 243–247 transition to Level Three, 26–29, 31–32, 49–61, 76, 141–142 valuation of, 25–29 Level Three business: building, 20–23 building wealth in, 117, 215–217 description of, 16 financial approach to, 122–123 financial formulas in, 144–145 financial staff, 39, 42 five pillars of, 31–47 283 future of, 19–20 Language of Wealth in, 178–186 leadership in, 163 pitfalls of building, 21–23 rewards of, 24 R-Score of, 200 tax strategies, 175–177, 247–249, 251, 252 transition from Level Two, 26–29, 31–32, 49–61, 76, 141–142 valuation of, 25 Liabilities (financial), 131–133 See also Debt; Expenses Liabilities (legal), 225, 232 See also Lawsuit(s) Liability shields (legal), 154–156, 157, 159, 232 Lifestyle: cost of (see S-Factor (Simplicity Factor)) of gratitude, 215 quality of, 24 Limited liability companies (LLCs), 154–155, 157, 184, 245 Liquidity, 223–224 Locations, multiple, 100 Loopholes, tax, 171 Lottery, 4, 121 Macro leadership, 164 Makeup offers, 98 Management: of cash flow, 39, 68, 73–74, 107–108 of expenses, 107–108, 170 leadership vs., 22 preference, 203–204 Margin, gross profit, 140 Marketing, 17–18, 34–38 Market niche, 65, 69, 220–222 Marketplace See Client(s) Market risk, 225 Market value, fair vs historic, 140 Mastermind groups, 86–87, 209 See also Advisors, business Mastery skills of leadership, 167 Meaning of money, 265 Medical insurance, 246 Medical practice See Doctor analogy Mentor/mentoring, 209, 211, 216 Merck, 44 Meta leadership, 164 Mexican orphanages, 267–269 Micro leadership, 164 Microsoft, 57, 65 Middle-class solution, 249–250 See also Level One business; Level Two business Millionaire Fast-Track Program, 275–278 Millionaires: audio interviews with, 276 creation of, Mission statements, 38, 44, 55 Mistakes See Pitfalls ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 284 284 INDEX MITS (Micro Instrumentation Telemetry Systems), 65 Model(s): influence of, 3–5 of success, 51, 96 value, 45–46 wealth, 3, (see also Traditional wealth plan) Money See also Cash flow; Income; Wealth adding meaning to, 265 circulation of, 9–10 earning, and freedom, 24 gain/loss of, 4, 121 language of (see Language of Money) vocabulary of, 180 wealth vs., 90 “Money plus,” Mortgages, friendly, 159 Motivation of team, 59, 165, 265 Multipliers: business, 86–91 cash flow, 237–239 Mutual funds, 233 Negotiation, 91, 108 Nest egg, 5, Net income, 139, 141 Net taxable income, 247 Networking, 94–102, 185–186, 211, 214, 263–264 Net worth See also Equity calculating, 193, 195, 196 increasing, 24, 247–248 percentage of, invested, 231 return on, 200–201 statement (aka balance sheet, personal), 124–125, 131–132 Niche, 65, 69, 220–222 Nondisclosure and noncompete agreements, 55, 79, 152 Offers, to entice clients, 76–78, 98, 109 Office costs, 59, 244 Omidyar, Pierre, 89 Online workshops, 277 Operations systems, 32–33, 79 Opportunities: business, 7–8, 63–71 income-earning, Orphanages, 267–269 Outcomes See Results Outsourcing, 54–56, 79, 87 See also Independent contractors; Vendors Overexpansion See Expansion Owner(ship) of business: as bookkeeper, 39–43 as business builder, 20–21, 26 change in, 142, 143 dependency on, 18–19, 36 increasing share of, 230 levels of involvement, 15–16, 24, 203–204, 214 passion of, 16–17 passive, 19 Package deal, 109 Page, Larry, 65 Partnerships, 56, 150–153, 231 Passion, 16–17, 64, 90, 164–165, 216, 265 Passive income, 127–128, 170, 173–174, 198 Passive investment, 230–232 Passive ownership, 19 Passive sellers, 36–38, 99 Passive, residual cash flow, 10, 24 Passive, residual income, 123, 128, 198–199, 214, 215, 216, 246–247 Passive, residual investments, 170 Patent registrations, 69, 70, 101 Payment: options, 104, 105 for products/services (see Accounts receivable) terms, 108 Payroll deductions, 105 Penalties, 109 Pension plans, 161–162, 176–177, 248–249 Performance assessment, 22, 59, 80–81 Personal guarantee, 225, 232 Personal stage of wealth building, 217–218 Personal value, in marketplace, 237–239 Personal Wealth Line, 118–119, 169 Personal Wealth Map, 189, 190–191, 194, 227, 253, 276 Personnel See Team Perspective, shifting, 20–21 Persuasion, 166 See also Inspiration; Motivation of team Philanthropy See Charitable giving Physician See Doctor analogy Pillars, of Level Three business, 31–47 Pitfalls, in business, 21–23, 73–79 Policies, insurance, 159–161 Portfolio income, 127–128, 173, 246 Powlen, Michael, 56 Precious metals (as investment), 234 Pre-eminence, 68 Preemptive Tax Strategies, 46, 212–213, 241–252 Preemptive Tax Strategy: Why the Rich Legally Pay Less in Taxes than the Poor and Middle Income (Kennedy), 107 Prepay options, 104, 107–108 Present value (PV), 144–145 Price of products/services, 68, 108, 109 Principal, 224 Process and procedures, 51, 100 Product Red, 263 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 285 Index Product(s): consumable, 67 multiple, 66–67 payment for (see Accounts receivable) price of, 45–46, 68, 108–109 Professional Employment Organization (PEO), 54 Profile, economic, 154 Profit, 135–137, 140 Profit-and-loss statements, 39, 41, 124–128, 136, 138, 139 See also Financial statements Profit margin, gross, 140 Prospective clients, 78, 94–95 See also Client(s): attracting Prospective financial statements, 139–140 Publicity, 262 Purchases, consolidating, 108 Quality of goods/services, 68 Quality of life, 24 Rapport, building, 167 Reactivation offers, 98 Real estate investment, 175, 232–233, 249, 252 Real estate investment trusts, 234 Record keeping See Bookkeeping; Reports/reporting Recurring sales, 67 References, checking, 55, 79, 230 Refer out, 94 Referral(s): client, 33–34, 94, 263 systems, 99 vendor, 97 Refinancing assets, 159 Relationship(s) See Advisors, business; Client(s); Family; Industry players; Mentor/mentoring Repeatability of results, 49–50 Reports/reporting: client/prospect contact, 78 financial (see Financial statements) operational, 33 progress, 22, 59, 80–81 sales and marketing, 35 of unconsummated transactions, 99 Reserves, cash, 224 Residual income See Passive, residual income Results: billing, 106, 109 consistent and repeatable, 49–50 defining, 50 Retirement, 5–7, 10, 183 Return, internal rate of (IRR), 145 Return on equity (ROE), 144 Return on net worth (R-Score), 200–201 Review, financial, 253, 256 See also Financial statements Rewards, of Level Three business, 24 285 Risk See also Liabilities (legal); Liability shields (legal); Security acceptable levels of, 181, 203 compartmentalizing, 156–157 conventional views on, 219–220 evaluating, 220–228 Risk Spectrum, 226–227 Rockerfeller, John D., Roth See Pension plans Royalty, 70 R-Score (return on net worth), 200–201 Safeguards, financial, 42–43 St Jude Children’s Research Hospital, 264 Sale(s): ability to create, 91 active vs passive, 36–38, 99 of business, 19, 115–116 cycles, 107 fulfilling, 32–33, 79 gross, 25 hourly, 76 importance of, 75–76 income, 135 and marketing, 34–38 message, 17–18, 34–38 price, 45–46, 68, 108–109 process, refining, 100 recurring, 66–67 strategies, 94–97, 109 unconsummated, 99 using client base, 93–95 volume, 109 Sallee, Beverly, 261–262 Savings, 5, 7, 10, 106–107, 129 Scalability, 25–26, 34, 54, 70, 167 See also Expansion Schinner, Michael, 56 S Corporation, 154, 184, 245–246 Securities, publicly traded, 233–234 Security See also Risk of employment, financial, 5–6, 21, 190 of financial systems, 42–43 freedom vs., 10–11 Self-employment See Owner(ship) of business Self-mastery, 167 Self-service options, 95 Sellers, active vs passive, 36–38, 99 Selling system, 34–35, 98–99 See also Sale(s) SEP (simplified employee pension) plan See Pension plans Series LLC, 157 Service(s): consumable, 67 income, 135 payment for (see Accounts receivable) price of, 45–46, 68, 108–109 S-Factor (Simplicity Factor), 145, 199, 201, 215–216 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 286 286 INDEX Shriver, Bobby, 263 Skills, business, 90–91, 167, 170, 230 “Small Time Bubble,” 18–19 Software systems, 70, 101 Sole proprietorship, 155, 172, 184 Solo Roth 401(k) See Pension plans Speculating vs investing, 213 Stability, creating, 59 Standard of living, 6–7, 24 Start-up business, 142–143, 212 Start-up costs, 65 Statement(s): billing (see Accounts receivable) cash flow, 41, 125, 137–139 financial (see Financial statements) mission, 38, 44, 55 net worth (aka balance sheet, personal), 124–125, 131–132 profit and loss (aka income statement), 39, 41, 124–128, 136, 138, 139 values, 38, 44–45, 55, 150, 152, 165, 201–205 vision, 38, 43–44, 55, 152, 165 Statistics, tracking, 33 Sticky note system builder, 52 Stocks, 233–234 Strategic asset allocation, 227–228 Strategic Seller Audit, 37 Strategic thinking, 165 Structures, business See Corporations Success: measuring financial, 181 modeling, 51, 96 savoring, 46–47 Suing See Lawsuit(s) “Sunk cost,” 71 Support networks, client, 95 Sustainability of business, 79, 121, 153–162 Systems: business, 23–24, 49–53, 70 (see also Infrastructure of business) financial, 39–43, 213 (see also Accounting; Bookkeeping; Cash flow) legal, 147–148 mastery of, 167 operations, 32–33, 79 referral, 99 reporting (see Reports/reporting) selling, 34–35, 98–99 (see also Sale(s)) software, 70, 101 Taxable income, 141, 173–174, 247 Tax advice, 245 See also Tax strategies Tax breaks, 38, 172, 242 Tax deposits, timing of, 107 Tax efficiency rate, 242, 243–247 Tax loopholes, 171 Tax power percentage, 242, 247–249, 252 Tax rate, blended, 241–242 Tax strategies: to create cash flow, 171–177 depreciation as, 137, 139, 175 financial statements and, 39–40 importance of, 46, 204 incorporation, effect on, 38, 58, 155 Level One, 172–174, 185, 241–242 Level Two, 174–175, 185, 212, 242, 243–247 Level Three, 175–177, 185, 247–249, 251, 252 outsourcing, effect on, 55 planning, 185 preemptive (see Preemptive Tax Strategies) for saving money, 106–107 Teaching See Training Team See also Independent contractors; Outsourcing empowering, 21–22, 39, 53–54 hiring, 35, 38–39, 53–54, 78–79 infrastructure costs of, 54–55 inside, 86 leading, 164 maximizing talents of, 69, 101–102, 213 meaning of, 182 motivating, 59, 102, 265 paying, 54–56, 58–59, 76, 106, 109 relying on, 23–24 training, 49, 51 Technology, 56–61 See also E-mail; Online workshops; Software systems; Virtual company; Web-based business Telephone numbers, 59 Testimonials, 95 See also Endorsements Thomas, Danny, 264 3M, 44 Thue, Shawna, 268 Thunder Mission, 268 Time, use of, 91, 100–101, 237–239 See also Freedom Timing of tax deposits, 107 Tracking results See Reports/reporting Trademarks, 69, 70, 101 Traditional wealth plan, 5–7, 174, 189 Training, 49, 51, 277 See also Education Transactions, unconsummated, 99 See also Sale(s) Transition (of levels), 26–29 See also Level Two business: transition to Level Three Transparency, 223 Trend, financial, 194, 195, 197 Trusts, real estate investment, 234 Ultimate Business System (UBS), 60 Umbrella policy, 161 Unconsummated transactions, 99 Unique advantages, capitalizing on, 204, 220–222, 237 Unrealized gains, 197, 210–211, 239 Upselling, 66–67, 93–94 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 287 Index Valuation: of business, 176 of expertise, 70, 76–77 of Level Two business, 25–29 of Level Three business, 25 of products/services, 45–46, 68, 109 of real estate, 175, 232–233 Value: creating, 100–101 increasing, for clients, 100–101, 106 personal, in marketplace, 237–239 present, 144–145 willingness to offer, 77–78 Values, business, 38, 44–45, 55, 150, 152, 165, 201–205 See also Integrity Vendors, 55, 97, 108 See also Outsourcing Virtual company, 57–61 Vision, business, 38, 43–44, 55, 152, 165 Vocabulary: accounting, 121, 124 financial, 139–141, 144–145 legal, 147–148 of money, 180 Volume, sales, 109 Wages vs flat fee, 58 See also Team: paying Wal-Mart, 106 Walt Disney, 43–44 Wealth: building, 203, 207–218, 249 creating cash flow with, 249 287 focus, 179 future, vs current income, 237–239 language of, 9, 117, 177–186 Level One, 207–210 Level Two, 210–215 Level Three, 117, 215–217 lines, 118–119, 169 map, 189, 190–191, 194, 227, 253, 276 Maui, 24 model, 3, (see also Traditional wealth plan) money vs., 90 vehicles (see Investment vehicles) Wealth Curve, 207, 208 Wealth Factor Test, 276 Wealth Frame, 178, 203 Wealth Level Worksheet, 276 Wealth Matrix, 118, 121, 169 Wealth Operating System, 215–216, 276 Web-based business, 70 See also Virtual company Welch, Jack, 167 “Where Does Your Income Go?” exercise, 243 Whole life insurance, 234 Winfrey, Oprah, 262 Work ethic, 150 Workshops, online, 277 World, impact on See Global impact Z-Cost tolerance, 203 ccc_maui_279-288_ind.qxd 8/30/07 4:01 PM Page 288 ccc_maui_289-290_ata.qxd 8/30/07 3:51 PM Page 289 A B O U T T H E AU T H O R S David Finkel In a cluttered marketplace of “how-to-get-rich” books and infomercials, ex-Olympic-level athlete turned business and real estate multimillionaire David Finkel is one of the nation’s most respected wealth masters David first retired after selling off one of his successful multimilliondollar companies at age 35, but he soon grew bored with the quiet life Taking advantage of his fresh start, David carefully chose what he was most passionate about, and then launched and built successful businesses, Maui Millionaires™ and Maui Mastermind™, which focused on that passion—helping entrepreneurs and investors create, enjoy, and share great wealth David’s mission is to share the real story on how to build wealth that debunks the prevailing money myths that keep so many good people living below their real potential His investing background started with interests in single-family houses across the United States, and since then has grown to focus on apartment complexes, office buildings, shopping centers, industrial parks, and other large commercial real estate projects A Wall Street Journal and BusinessWeek Best Selling author of over 40 business and investing books and courses, including the wildly successful Real Estate Fast-Track and co-authoring The Maui Millionaires, his howto financial articles have appeared in over 4,000 periodicals across the United States He and his wife Heather first met in San Diego, but now live part of the year in Jackson Hole, Wyoming, and part of the year in Charlottesville, Virginia His web site (www.MauiMillionaires.com) is home to one of the most popular wealth-building communities on the Web, and has dozens of free tools and downloads for visitors 289 ccc_maui_289-290_ata.qxd 8/30/07 3:51 PM Page 290 290 ABOUT THE AUTHORS Diane Kennedy Diane Kennedy, the nation’s preeminent tax strategist, is owner of Diane Kennedy & Associates, a leading tax strategy and accounting firm, and founder of TaxLoopholes.com, a tax education company Diane is the author of The Wall Street Journal and BusinessWeek best sellers Loopholes of the Rich and Real Estate Loopholes, and co-author of The Insider’s Guide to Real Estate Investing Loopholes, The Insider’s Guide to Making Money in Real Estate, and Tax Loopholes for eBay Sellers Diane’s extensive teachings have empowered people throughout the country to minimize their tax liabilities through the use of legal tax loopholes Diane has written for numerous financial publications, and has been featured in Kiplinger’s Personal Finance, The Wall Street Journal, and USA Today, and on CNN and CNBC A highly sought-after international speaker and educator, she has dedicated her career to empowering and educating others about financial investments and the tax advantages that are available Through Diane’s knowledge and execution of tax loopholes in her business and real estate investments, she and her husband Richard are able to contribute to special life-changing projects and charities in the United States and around the world For the latest expert advice on tax loopholes and critical tax law updates, as well wealth building resources, visit her web site: www.taxloopholes.com ... decisions after they no longer have their businesses They wake up one day without their business, and with nothing to show for their years spent building their business To create the wealth you... allows for Step Three in the traditional model: Save Save a lot Save for the future, save for your children, save for your golden years, save for emergencies, save for weddings, save for the. .. mandatory in order for the business to succeed and be profitable In a sense, rather than creating their own business these entrepreneurs have instead created their own jobs, with all of the responsibilities