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Fractal Patterns: The Secret to Big Business

In the last post, we talked about the main passive income streams that are being utilized today. As part of the post, I briefly talked about fractal patterns being the secret to the B quadrant and big business.

Since that post, I’ve been thinking about how quickly I went through that description. I’ve felt I didn’t do it much justice. 

So, let’s get a little into what fractal patterns or fractals actually are. And, even more importantly, how the apply to internet based business so we can use them to grow your passive income.

The Basics

So a fractal is defined as… 

a curve or geometric figure, each part of which has the same statistical character as the whole. Fractals are useful in modeling structures (such as eroded coastlines or snowflakes) in which similar patterns recur at progressively smaller scales, and in describing partly random or chaotic phenomena such as crystal growth, fluid turbulence, and galaxy formation.

Here’s a few examples:


I reiterated this in the last post by talking about how we see these patterns everywhere. One example is with giant sequoias. These trees interweave their roots with each other so that no one particular tree supports the weight of itself. They’re tied to the mesh of these roots. It’s because of this that the trees are able to grow huge in size.

Behold, the Giant Sequoia Network!

In this example, the tree itself is a node where the root system connects the tree to others by acting as branches of a larger organism – a larger system, the forest.

As you can see in the image below, branches connect nodes to each other. Tree A has roots which are intertwined with roots of trees B and C. They, in turn, have their roots interlaced with all the others of the forest.

Parts of a System

They are part of a larger system.

Forms of Systems

So if trees are nodes in a forest, and a forest is system, what else can a system take the form of?

Well, if we understand the word system as “a set of things working together as parts of a mechanism or an interconnecting network”, we can think of a city as a system. And just like we’re part of that system, we have systems that are part of us (circulatory, lymph, nervous, etc.).

That said, where we and forests consist of natural systems, a city is a form of a designed system.

Designed systems are systems which we as people have designed. And one such system is the internet. A fractal system built on servers (nodes) and communication wires (branches).

Interconnections of Facebook Users Across the Globe

How the Internet Changed the Game of Commerce

Before the internet, the only systems that existed which transported information were owned by large corporations. These included newspaper, TV, and radio companies. Since the big companies owned them, they were in control of the information which they transmitted. To this day, this is how these networks generally work.

However, due to the internet growing up and becoming the behemoth it has become, they’re having to compete with the open flow of data and commerce. And since they seem to not change how they do things, they’re losing quite a bit of money and influence. In the last 15 years, a lot of people have stopped reading newspapers, watching network TV, and listening to the radio.


As business owners ourselves, we can capitalize on this change of interest and focus. To do that, we can go where the eyeballs have gone – search engines and social media.

Leveraging Internet Commerce Today

At one point, about 10 years ago, there wasn’t nearly as much competition on the web for these eyeballs. Not only that, but the way that sites were indexed on Google and how posts were shared on Facebook was completely different. If you knew how to do SEO properly, you could rank fairly well on Google, and if you posted regularly on Facebook, you’d get plenty of exposure.

Unfortunately, that’s not how it works today. Organic growth through posting has dwindled to 5% (if not lower) and there’s way too many people to compete with on search engines. 

So the question is, how do you use these particular systems/networks to get your business noticed these days? 


Well, unfortunately (or fortunately?) through ads on social media and search engines.

Remember that Facebook (and the internet for that matter) is based on fractal patterns. So what works for you on a small scale with a handful of clients can be advertised to those who share the same demographics.

However, paying to play in ads isn’t something they think they have a budget for. But, what they’re not seeing is the opportunity they’re missing. 

The reason you would WANT to post ads is that you can specifically market to the people in your niche. The more money that is spent, the more likely Facebook’s algorithm will figure out who exactly you’re looking for. For example, with America Multi-Sport we’ve been placing ads for years now every week. That’s plenty of time for Facebook’s system to know who you want to get in front of.

Of course, the algorithm can only do so much. You still have to create copy that creates a desire to take action.

Action Steps

I hope this gives you a little perspective on what fractals are and how they’re used to create passive income. 

Remember, even though I shared the idea of using the Facebook network as a system to make use of with ads, you can use others as well. 

In fact you can use your own! 

One of the books I’m reading called The Power of Who talks about how knowing just a few people will launch you to wherever you want to go. We each have a handful of people in our lives who are highly connected themselves. It’s your job to figure out who those people are and how you can leverage (notice I didn’t say use) them to get where you want to go.

Sure this method is a bit more manual and slower. But you actually have control of who your message is being delivered to.

passive income streams

Popular Passive Income Streams in Modern Business

Passive Income is a topic that many still struggle with today in 2019. And, I have to admit, while I understand why people aren’t too familiar with the concept, it still kind of blows my mind. Personally, I think it’s been 18 years since I first read Robert Kiyosaki’s Rich Dad, Poor Dad and his second book, Rich Dad’s Cashflow Quadrant. Since then I’ve picked up the basics of developing passive income streams and understanding how it all works. In this post, we’re going to explore the top 8 methods of developing passive income.

Yes, it’s really that simple!

I Quadrant Opportunities

If you’re familiar with Robert Kiyosaki’s work, you’ll recognize his company, Rich Dad, Poor Dad. Robert himself is a fan of all passive income opportunities, however, when he originally wrote his first book, his experience was via Real Estate Investing (REI) and Traditional Investing through Stocks, Bonds, 401k’s, Mutual Funds, etc.

Real Estate Investing (REI)

REI is probably one of the most well represented options out there. However, when most people think of REI, they believe that they can’t get in the game. In fact, I remember starting to read Robert’s book Rich Dad’s Guide to Investing when I was in college and thinking “When I get a real income when I’m out of college, this will be how I make my fortune!”

While I still haven’t gone that route, it’s definitely something I see myself eventually getting into.

If this is a track you might be interested in, I’ve had several REI success stories on the show:

Chris Prefontaine (AoL 155)

Damion Lupo (AoL 125)

Kevin Bupp (AoL 124)

Whitney Nicely (AoL 123)

Traditional Investing

Outside of REI, when most people think of passive income, they think of making money through stocks, bonds, and mutual funds. 401k’s fit in this area as well.


While this isn’t necessarily a bad topic to think about, I will say that if you do the math, it takes about $1.25M to be invested in various assets to yield a comfortable $50k+ per year income.

Thing is, most people won’t ever smell that kind of lump sum amount in their career working a day job. However, there are tactics you can use to save a little bit here and there to eventually make that work out. Fortunately, you can read material by folks like Dave Ramsey to make this more of a reality than a dream.

Also, if this is an arena you’d want to play in, I’d also recommend checking out Tony Robbins’ book Money: Master the Game

B Quadrant Opportunities

If you’re already in the S Quadrant, you should definitely look at the B Quadrant!

In the I Quadrant, we’re mainly focused on making our money work for us to make more money. However, again, not everyone has access to that seed money to get up and running. So what’s one to do if they want to get in the passive income game?

They should totally look at the B Quadrant. The B standing for Big Business or Business Systems. These terms can be used interchangeably because you can’t have a big business without harnessing the power of business systems.

What’s great about the B Quadrant is that it’s the scaled up version of the S Quadrant. The main difference being that while in the S Quadrant you’re capped by the activity you can put in yourself, in the B Quadrant you can grow your business through fractal patterns or fractals. If you’re unfamiliar with fractals, a basic example is a tree in a forest. A tree has a trunk, limbs, branches, and twigs. They all are formed using a pattern of nodes and branches. Depending on the type of tree, however, the pattern might keep going. 

Most trees have a tap root that counterbalances the tree and keeps it in the ground. When the tree is growing, a lot of energy is put into creating that tap root.

However, Giant Sequoia trees have a network of roots that support the entire forest like a mesh. Sure, a tree can grow by itself and support itself, but Sequoias, being the largest trees in existence have evolved to support each other in this network. The trees themselves act as the nodes, while the roots act as the branches. 

So simply saying when it comes to fractals, the larger the network, the more potential for growth.

Traditional “Tried and True” Opportunities

The B Quadrant isn’t anything new. In fact, you probably already know of examples of people who are successful in this quadrant.

Insurance

As long as there’s been insurance, there’s been agencies. And insurance has been around a pretty long time.

When someone takes the leap from being an agent and starting their own insurance agency, then they’re taking a step into the world of the B Quadrant. Those agencies can continue to grow to a point where they train other agents and agencies. At this point they become a Field Marketing Organization (FMO). Their most basic role is to offer insurance products, services and possibly training to insurance agents or agencies.

An example of one here in Indiana is Gordon Marketing.

Franchising

Using the same idea as an insurance FMO, a business can eventually grow to the point where they franchise the model of their business.

Like insurance, the idea of franchising goes way back to the Middle Ages. However, the franchising that we’re aware of today didn’t really start until after World War II.

Of course, one of the most well known franchises is McDonald’s. And luckily for us, a movie was released about the man who built the franchise. The Founder is the story of Ray Kroc and his journey to create the business that we know today.

It’s easy to see that this method of creating passive income works. There’s more franchises today than ever! In fact, there’s so many suburbs of one city resemble those of another city.

Personal Franchising

When it comes to franchising, you can do it one of two ways. The first is the more familiar route we just talked about. However, one issue with this method is that it can take quite a bit of startup capital.

Most people don’t have a spare $10k+ just sitting around.

So they participate in the age old tradition of direct sales. Direct sales is defined as “The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs.” With that kind of definition, you could say that just about any kind of sales outside of a traditional store or place of business is a form of direct sales.

Many direct sales companies today allow their sales associates or Independent Business Owners to sponsor other people to do what they do. One of the oldest companies that is set up to do specifically this is Amway. In fact, the reason  Amway was created, was so that anyone could have the capability to start their own business. At the same time, they’d also have the support from those who sponsored them as well as the company itself. 

If you’d want to know more about this form of direct sales, often referred to as multi-level marketing, you can check out our friend Robert Kiyosaki has to say on the subject. Interestingly, it’s how he met his wife Kim!

Like Robert, I highly recommend checking out this path if you’re stuck in the E Quadrant and want to quickly move to the B. Or even if you’re in the S Quadrant and don’t have enough to pursue the other options we’ve talked about so far.

Here’s a couple of folks I’ve had on the show who are experts in Direct Sales:

Mark Nathan (AoL 23)

Jeff Gamble (AoL 156)

Licensing

I’d be admiss if I didn’t cover the topic of licensing and what that means. Basically, it’s the sharing of Intellectual Property (IP) from one company (company A) to another (company B) in agreement that if the company B uses the company A’s IP, company A gets a commission. While it is similar to franchising, franchises differ in that they are in charge of how company B is actually ran. In licensing, while company A might have recommendations and regulations set, it’s pretty much left to company B to work out their own systems of operation.

As an owner of America Multi-Sport, I’ve had first hand experience to see how this can work out. While on the surface it might seem like a great idea since you’re skipping over some pretty hefty fees to actually make a franchise, there’s a good chance you’re going to fall behind. Since your licensees don’t have to operate to a certain standard, it leaves a lot of room for interpretation. Just with us, we’ve had a handful of licensees come and go in the last couple of years simply because they couldn’t do what we recommended to them.

However, just because it hasn’t been overly successful with us doesn’t mean it can’t be successful. The NFL got started the same way. Even though it’s had its ups and downs,  it’s celebrating 100 seasons!

Internet Powered Opportunities

Now that we’ve covered forms of opportunities that have been around 100 years or more, let’s look at a few things that have popped up in the last 20 due to the advent of the internet.

Scaled S Quadrant Work

If you’re more familiar with the podcast, you know that a number of the guests are simply people who have taken their service to the next level. They’ve found their Ikigai and have used technology to build a lifestyle that they’re proud of. Of the numerous hats I wear as an entrepreneur, one is helping people take their solopreneur business and scaling it through technology if they haven’t done so themselves. 

Of course, there’s different ways to capitalize on technology. You can become a digital nomad where the only work you do is through your laptop as you travel the world. Or you can start a brick and mortar agency that offers a service which can be executed online. Or perhaps you already have an agency and you’re up to your eyeballs in work and need help with all the work that’s coming your way.

There’s ways to do all of this. It really depends on what you want to do. Of course if you’d like help with this, shoot me an email. I’d love to help you get to the next level.

Affiliate Marketing

The internet has brought on another form of direct sales called e-Commerce or internet marketing. Today, most of us no longer go to places of business and buy something on the spot. We opt to do our shopping from the comfort of our own home.

Lots of online business owners get their start in internet marketing by pedaling other company’s products or services. Most of the reviews that you see on YouTube, have an affiliate link in their description that you can buy the product through them and they get a commission. 

In fact, Pat Flynn did pretty much this for years. However, as his platform grew, so did his need to create his own online products.

Influencer Marketing

When I first learned of Pat, I also learned of Brendon Burchard and his course called Expert’s Academy. Today I think he’s called it the Influencer Academy because more people are familiar with that term on Instagram.

The idea of Influencer Marketing is pretty straight forward. If you have an engaged audience, you have a list of potential buyers. The bigger the audience, the more potential buyers.

You make a product specifically designed for that audience, and there’s a good chance they’re going to buy from you. Why? Because of your influence on them through that engagement!

Typically speaking, those products take the form of digital products like courses and eBooks. That said, it’s not uncommon to see books, audios, and videos released by people in this arena.

Anyway, here’s the catch. It’s important that we never confuse three things. 

  • Don’t confuse your platform with your income. 
  • Don’t confuse your income with your career.

When people are getting started in the online entrepreneur space, many times they believe that they need to become an influencer way before they’re successful in making income. Problem is, you can’t really be an influencer unless you have some form of success in your career. They’re putting their platform ahead of their income.

To correct this, we need to learn how to separate the idea of these two. Sure your income will be multiplied as you become an influencer, but if you don’t have any income, you’re essentially multiplying by 0. 

So the next time you hear the phrase “become the next influencer” and think it’s a great idea, make sure that you already have a proven business based on the material that you want to help the masses with.

SaaS Platform

Finally, the last option I’ll mention because it’s the last category I’m personally familiar with is building a Software as a Service (SaaS) Platform. Now, doing this is just like building any other kind of business. You have to start small and in a well defined niche.

What I learned from Dane Maxwell (AoL 56) and his program called the Foundation is that if you’re creating something from scratch, you really need to do your homework up front. Find out what the people really want.

However, because it’s a product and not a service, you’re going to have to learn how to do a little bit of pre-selling the concept. Especially if you’re creating it without using your own funds. Why? Because hopefully, you’re going to hire someone to do the programming for you! 

Once you have the online tool built with the help and funding of your “champions” and early users, then you can market it and build your influencer platform like any other online business.

Action Steps

So, lots of information here! 

Hope that it provides some value and gives you a bit of clarity.

Again, if you haven’t, I really recommend getting started with reading Rich Dad, Poor Dad and the Cashflow Quadrant. Everyone should be financially literate and these are great starting manuals on passive income. 

From there, feel free to connect with me. We can do a strategy session based on where you’re at and what your needs are.

Exercise Your Personal Freedom

Happy Election day! In the United States, we’re having elections today. It’s not a big one like next year’s will be, but it’s still something to take notice of. Personally, I’m close to an interesting mayor race in Indy. But for the most part, I haven’t seen too much more being advertised than that… not even in my hometown!

One thing that I believe that politicians really need to start addressing is the shrinking middle class. Here’s some data on that:

How has this happened? How has the top 1% gained 40% of all the money in the country? Well, for starters, big company jobs have been taken overseas. The jobs that are available don’t pay as much as they once did (with inflation in mind), and frankly, we have way too many people taking advantage of government run programs that were initially designed to help those in need. People honestly don’t work enough hours so that they have “benefits” form the government. (Yeah, really. As an HR professional, Maria can tell you all about it.) I’m sure I’ve just scratched the surface on what’s going on, but you get the picture.

As a nation, what are we doing to right the ship?

Not much, it seems.

That can change. Here’s how.

Two Things You Can Do To Exercise Your Personal Freedom

Elect Representation That is in Favor of Your Freedom

For the middle class to grow, two things need to happen. The first is simply the fact that politicians need to reform regulations that are currently holding our markets hostage. One such market is the housing market. After hearing that most of the cost of a house is due to the regulations on that house, I had to look it up. What I found was crazy. I came across a few articles that suggest that anywhere from 40% to 60% of the cost of a house is based on regulations. (Here’s one source for San Diego in April.) It seems that we keep electing people who add more and more regulations on various markets. How many times do we need to shoot ourselves in the foot?

We need to listen to the candidates for next year. Do they talk about taking money from group and giving it to another? Do they talk about restrictions and more control? If you hear any of those things, change the channel or run away. Whatever they’re planning on doing to the 1% (which I agree is part of the problem), it’s not going help the rest of us. The wealthy need to be incentivized to bring back jobs and wealth. Not be punished. If we try to take their wealth, they’ll simply outsource more of it. Or worse yet, move away and take their cut of the nation’s money with them.

What you can do is educate yourself on who’s running and then vote on whether that person is for big government of small government. Look at their voting record. Listen to other sources’ reviews of them. If they want smaller government, it means you have more freedom. Larger government equals less freedom for you as an individual. Exercise your personal freedom and go vote.

Get In the Game: Do Meaningful Work You Love

Having the ability to be free is just one part of the equation. The other part is actually being free.

If you’ve ever read anything by Robert Kiyosaki, you know that he has a passion for teaching people why they need to wake up about money. If anything, in the book he released with Donald Trump in 2006, he mentioned why he believes that we should be interested in being “rich”.

Basically it’s this: the government is going to go bankrupt. (It kinda has already. Several times, in fact. When we raised the debt ceiling and printed more money.  Also, there’s that part about China bailing us out again and again.)

Essentially they’re saying, “If you don’t have the money to keep up with the inflation and higher tax rates, you’re going to sink lower and lower.”

Think about it for a second. People still make the same amount that we did back in 2006, but things are more expensive. This is why McDonald’s workers want higher pay. They literally can’t survive on those wages where they live.

In other books by Robert, he talks about the real reason you need to be interested in being wealthy. It simply gives you options in life.

McDonald’s was never designed to give a person a wage for the rest of their life. I’m sure the percentage of people who want to flip burgers as a career is very small. Historically, who has worked there? People in their first or second job. It was a resume builder for high school kids.

That’s actually not the norm anymore. In fact, where you used to see high school kids working, you just don’t see them anymore at all.

Where’d they go? Well, I’m not certain where they’ve all gone. But I can tell you that some of them have gotten creative! I mean, check out this video for just an example:

 

You can’t tell me that’s not creative! How many kids do you see with YouTube channels? Kids teaching how to do stuff (anything really) on there? Teaching technical stuff about software or hardware? Having a series about dinosaurs? Kids are figuring out the new economy before most “grown ups” are. It’s insane. I mean, even kids in my hometown are getting on the news for selling salt at school. Really? Why can’t we figure this stuff out?

The thing is, though, is that we are figuring it out. Even if it’s slowly. People are getting out of their dead end jobs and doing things they love. Be it a dream job in an organization they care deeply about or starting their own thing.

When we were growing up, we didn’t hear much about entrepreneurs and business owners. Our parents didn’t know anything about it. (Why would they? Jobs were bountiful most of their career.) In fact, I remember a joke on Home Improvement (I think that was the show) that someone was made fun of for being an entrepreneur. I think it was Tim’s brother. He said something about it and was asked “Don’t you mean, professionally unemployed?”. <Insert laugh track>

Entrepreneurs were a small silent minority. Now, we have TV shows like Shark Tank and Undercover Boss that feature heads of companies engaging with the everyday person. We’re slowly being reminded that these people, who were once “untouchables”, are actually people too.

Case in point:

So just remember, this is a free country. We can be anything we want to be, it’s just a matter of taking the right steps out of our comfort zones.

The hard part is that first step into the unknown.

Once you get on the field, you’ll be addicted.

Homework:

It’s November. 2015 is almost gone already. Was this the year that you were going to apply for that dream gig? How about start that new side business? Or even go full time with the one you’ve been working on? We’d love to hear about any of the activities you’re thinking about moving forward with.

Share below with what you’ve been putting off. We might be able to help!