UNDERSTANDING PASSIVE/RESIDUAL INCOME At 25 the thought of working for someone else for the rest of my life sent me balmy. So I upped sticks! Think about it - do you want to continue working 40, 50, 60 hours a week for the rest of your life? Even if you are running your own business it’s a good idea to work in a field which will allow you to ease up once the wheels are in motion. There are ways to be able to take time off whenever you want to, without worrying about what's going to happen to your business. As a business owner, let's define "being promoted" as an increase in earnings and being able to work less. The obvious thing to do is to raise prices, become more efficient or get more customers. Stop and think though - until you can remove yourself from being directly involved in doing the work that needs to be done to generate your profits, your income will be capped. Applying this method will always put a limit on how much you can earn and it means that an increase in income usually happens slowly. This is true of many business models run by individuals. It is also true of the income you get in your job. In this instance you are limited by the number of hours you can trade with your boss or your skill level. This brings us on to passive income – put simply, it’s an income that does not require your direct involvement. Income is received on a regular basis, with little effort required to maintain the income stream. Passive income streams usually require a lot of effort to set up, but little effort to maintain. Here are some familiar examples: owning rental property, royalties on an invention or creative work like a book or music, and network marketing. The fact is that if you want to earn more, work less, and have a decent retirement, you're going to have to figure out how to create income streams that do not require your direct involvement. Whether you're thinking about jumping ship, just starting your business, or you've been running it a while, the sooner you start thinking about how you are going to shift your business model to create more passive income, the sooner you can achieve a better lifestyle though greater personal and financial freedom. Passive or residual incomes are monetary returns that occur over time from work done once upon a time. Some examples include: An fitness instructor who produces a video and sells it A photographer makes his photos available through a stock photography clearing house and gets paid a royalty each time a purchase is made An insurance agent who gets commission every year when a customer renews their policy There are many different ways to generate residual income across a wide variety of businesses. It may be recurring income from the same customers, or the sales of a product to new customers. It may require no personal involvement whatsoever (the photo sold on a stock photography site), or it may require some personal interaction (the insurance agent may need call the customer to remind them about their renewal and possibly make changes to it) – but remember that kind of work can often be delegated to a competant assistant. Leveraged income literally leverages the work of other people creating income for you. Some examples: A network marketer who builds a team and receives commissions on sales made by people in her team Franchising your business model to other entrepreneurs (the ultimate leveraged income) An e-book author selling an e-book through affiliates The key here is that you make money off of other people's labour rather than your own hard work. This is because you did the hard work – you built a team, created a franchisable business or wrote the e-book. The key here is that you make money off of other people's labour rather than your own hard work. This is because you did the hard work – you built a team, created a franchisable business or wrote the e-book. So, why not apply these principles and look at how you can earn a passive income? One of the simplest ways to do this is through network marketing. I recommend networking marketing over other potentially lucrative options because network marketing doesn’t take a huge chunk of investment or time. This makes it a workable system for the majority. You can check out Success University as an example of a very successful network marketing company that has taken the world by storm since it’s launch in 2005. It’s moving on to become a world wide phenomenon offering a product that was predicted as the next big thing in Forbes magazine by Peter Drucker, world renowned Economist. More information can be found here. Forward this article to a friend! Visit www.pure-success-coach.com for more hints and tips on wealth creation. Visit my wealth creation blog! Email email@example.com with any Disclaimer comments, I’ll be glad to hear from you. All content within the pure:edge pure success coach website and articles is provided for general information only. pure:edge pure success coach is not by Sara Brown (26/05/2008) responsible or liable for any actions made psc004bo by a user based on the content of this website, articles or blog.