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Cash Flow |Definition|How to Create Cash Flow |4 Foundational Systems

Updated on July 29, 2012

Cash flow as defined by Wikipedia is the movement of money into or out of a business, project or a financial product. But before that happens, one has to know how to create cash so that it can flow in and out of the system or business one creates and owns.

Many people want to be successful. Many wish to attain financial freedom. The very unfortunate situation as Robert T Kriyosaki said is that everyone around us are bullies. Your boss, your family members, your school and work mates and even your wife or husband. Why? Because many prevent us from talking risks to create systems that can generate cash flow for you. Writing for Hub Pages is a system that generates cash for you. Selling article on eBay, blogging or selling books on the street generates cash flow. A close friend of mine a and a very successful entrepreneur, named Willie Naneno has been selling Success Books and DVDs to business and individual entrepreneurs and has been very successful despite discouragement from his co-workers.

Most of our parents, limited by their own experiences pass on to us the antiquated notion that ‘responsibility’ is simply going to school, getting education, earning a job and maybe purchasing a good house or car or some equally important item. The society reinforces the notion through the education system, by telling us that our success depends on our education level or quite precisely on the marks and of course the degree we earn in college.

Employment

An easy way to generate cash flow is to have an employment and work for others so that they pay according to the time you spend working for them. Many graduates fall into this category. In most cases, the employer controls how much you should be paid, when you should work and where. Some jobs require you to work even beyond the required time specified in your job specifications.

In two oil palm companies called Hargy Oil Palm Limited and New Britain Palm oil Limited, where I was an executive, my job required me to work 24/7. I use to start at 4 am and finish around 10 or midnight. You either work and meet targets or get fired. The fear of being fires was too great. No public holidays, no weekends. Where it rained or not, we have to work to meet the companies set targets.

Though I was able to generate cash flowthrough employment, the other side of the coin was that I abused my health by not giving it enough rest. It was like

As a Specialist

Now I am in this category. I sell my expertise for money. I don’t have a boss to answer to. I write whenever and where I want to and the dollars keep growing every day. It is here in Hub Pages that I earn much of my income.

I realize earlier that I had passion for writing. With my background in research and management, and of course, technical writing skills, working as a freelance writer came naturally to me. I earn as a writer. Others earn as musicians, authors, stock trades and the list is infinite. The bottom line is to turn your specialty into a marketable commodity to generate cash flow.

This is often the cheapest means of generating cash flow. Writing for Hub Pages for instance is absolutely free and you may wish to start straight away. Sign up here.

Big business

If you have worked with a company for a long time and have accumulated enough startup capital, you can start up big business like putting up a cloths or liquor shop or a fashion shop and start up a hire car business. This is just some examples. Study you economic situation, use simple economic principals of supply and demand to determine the most economically viable and strategically feasible business to set up. Often expensive to start up and run.

Investor

After generating enough cash flow from the other three systems discussed, you may want to make your money work for you by investing it. This is often times an expensive system and carries a lot of risks but if done correctly, you can be generating big cash flow. Do names like Warren Buffet and George Soros rings a bell in your mind? I am sure it does. Warren is widely considered as the most successful investor of the 20th century and was ranked third wealthiest person in the world in 2011. Similar would be said of George Soros, known as the “Man Who Broke the Bank of England” because of his US$1 billion in investment profit during 1992 Black Wednesday UK currency crisis.

These guys use money to generate even more cash flow into their accounts. There are countless others out there that we can’t possibly include them all in this hub.

Conclusion

Education is needed for each system. Financial literacy becomes necessary in this respect. Education alone doesn’t make you successful. No way. You need to practice what you learn. It is only through practice that you can perfect what you have learnt. Practice makes perfect is the success formulae you just can’t do without. Most of us are primary educated for the Employment and Specialist paths, limiting our potential by time to grow financially as we are paid by law to a FLAT HOURLY rate.

I hope you have learnt something from the 4 foundational systems of generating cash flow.

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    • TToombs08 profile image

      Terrye Toombs 4 years ago from Somewhere between Heaven and Hell without a road map.

      Ian, an excellent high level view of the cash flow system. Took me right back to my years spent sleeping in accounting classes. :) VUM.

    • Ian Dabasori Hetr profile image
      Author

      Ian D Hetri 4 years ago from Papua New Guinea

      Thanks TT. Appreciate your comment much.

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