How To Stay Passive In Business & Still Earns More

There's a saying in the corporate world: "Don't make yourself irreplaceable. If you can't be replaced, you can't be promoted."

As an entrepreneur, this is still true in its own way. Let's think of "being promoted" as earning more and working less. You can raise your prices, but until you can remove yourself from being directly involved in doing the work that generates the income, there's always going to be a limit to how much you can earn, and it can only increase very slowly.

Passive income, on the other hand, is income that does not require your direct involvement. Some kinds of passive income you may be familiar with include owning rental property, royalties on an invention or creative work, and network marketing. If you want to earn more, work less, and have a decent retirement, you're going to have to start creating income streams that do not require your direct involvement. Whether you're 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 personal and financial freedom.

Let's look at two basic types of passive income, and a third type of income that, while technically not passive, is a key strategy for earning more and working less.

Residual Income ~ A kind of revenue that occurs over time from work done one time. Some examples include:

>An insurance agent who gets commission every year when a customer renews his policy

>A network marketing or direct sales rep's income from her direct customers when they reorder product every month

>An aerobics instructor who produces a video and sells it at the gyms where she teaches

>A marketing consultant who creates a workbook and sells it in e-book format on the Internet

>A photographer who makes his photos available through a stock photography clearinghouse and gets paid a royalty whenever someone buys one of his images

>A restaurant or retail owner who has grown to the point of hiring a trustworthy manager

As you can see, 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, such as an e-book sold on a web site, or it may require some personal interaction, such as the insurance agent calling the customer to remind them about their renewal and ask them if they want to change any of their coverage. Often, it's something that you can delegate to an assistant.Note that this is different from merely recurring income. Recurring income may still require your involvement to earn the income, e.g., a coach or consultant on a monthly retainer, or a caterer who delivers lunch every Monday to the local school board. While this "active recurring income" offers welcome stability, it also tends to tie you down, and you still have limits on your earning capacity based on your own personal production capacity.

Leveraged income ~ A kind of revenue that leverages the work of other people to create income for you. Some examples of leveraged income include:

>An e-book author selling her e-book through affiliates who promote the product

>A network marketer who builds a downline and receives commissions on the sales made by people in his downline

>A general contractor who makes a profit margin on the work done by sub-contractors

>Franchising your business model to other entrepreneurs (the ultimate leveraged income)

Again, there are many different models in many different businesses. The key is that you are making money off of other people's labor, rather than primarily your own. Note that leveraged income may or may not also be residual income. When you combine them, that's even better.

Active Leveraged Income

This is a term I use to describe income that requires your direct participation, but that you can make more money by having more people involved. This generally involves a one-time event, such as:
>A seminar or class

>A conference or convention

>Concerts and dance recitals

>Raves and other parties

Although these require your direct participation, your earning potential is much higher than if someone were just paying you a direct hourly rate. Fill a room with 1,000 people paying $50 each and you can cover your facility cost, promotional cost, and staffing fees and still have a nice chunk of change left over.

Tracking your net worth

Wealthy people understand the huge distinction between working income and net worth. Working income is important, but is only one of the four factors that determine your net worth. The four net worth factors are:

Income - working income and passive income
Savings - if you don't keep any of your income, you will never create wealth
Investments - from the money you saved, move to the next stage by investing it
Simplification - simplify your lifestyle. What will it take for you to be happy financially?

Here's the url to download your net worth tracking sheet.

http://www.wealthlearning.net/download/net_worth_tracking_sheet.pdf

Most people know it's important to keep and organize all of your vital financial information. But knowing you should and knowing how are two different things!

Once you know the reasons for being very organized with your financial data (and keeping it all in a very safe place) I hope you will put organization on your net worth building to-do list (at or near the top).

You need to be able to see your financial strengths and weaknesses quickly. If you are an active investor, it's even more important that you do so. Time wasted on missing data and lost tracking information is money lost.

Also, keeping an accurate and up to date personal net worth statement (personal financial statement) can help you get loans or other financing more quickly.

It would be well worth the effort to be able to give your financial institutions information they need at a glance. And your needs for the same ability to query your net worth and data associated with accounts, investments, in and outgoing money, and other important data are very important.

Be sure and carefully consider all portions of your net worth. Often forgotten components of your net worth are listed below in a handy checklist to get your data system in order and on track.

• Cash on Hand and In Bank
• Notes Payable
• Marketable Securities
• Non-Marketable Securities
• Securities Held by Brokers
• Restricted or Control Stocks
• Partial Real Estate Interests
• Owned Real Estate
• Loans Receivable
• Life Insurance
• Other Assets
• Accounts Payable
• Amount Due to Brokers
• Unpaid Income
• Taxes
• Other Unpaid Taxes/Interest
• Other Debts
• Debt on Real Estate Equities
• Real Estate Mortgages

Make sure you know what you're really worth. The only way to calculate your net worth accurately is if you track everything above.

On your road to a high net worth you can make fewer pit stops if you have a plan and the data to support your investment decisions and abilities close at hand.

Make use of spread sheet software and programs (i.e. Quicken) to keep your net growth on track. The reports you can run are invaluable for seeing where you’ve been and how far you’ve come with your portfolios, mortgage, taxes, and other important information.

Lessons From Robert Kiyosaki's Seminar, 'Secrets Of The Rich' At The National Achievers Congress

The Secrets of the Rich - No. 1
The poor and the middle-class work for money. The rich have money work for them

I've recently been to a property fair featuring Australia properties. It was indeed an eye opener for someone like me who has not invested in any real estate properties. It was demonstrated how easy it was for someone who has moderate savings could actually own one small size apartment and start earning passive income. Certainly, the apartment has to be situated in good locations. Besides the passive income, the land which the apartment sits on will also appreciate and provide capital gain if he intends to sell the unit later.
Using that passive income, the person could either spend it or serve a new mortgage loan for another residential property. This is a formula that will never be taught in school.
How much interest are we earning today from our bank savings? It's a shameful amount.
It can be quite scary if one has no prior real estate investment experience because the initial capital outlay may cause uncomfortable to most ordinary people.

The Secrets of the Rich - No. 2
Mind your own business

Robert is not telling us not to be a busybody. The advice is to tell us to start our own business. Many people actually have many great ideas. This world has no lack of great ideas. It's whether the idea is being put into action is another set of story. It's a habit for not doing new things and it's also a habit for constantly doing new things. So the major problem of most ordinary people is that they lack action despite having great ideas. Hence, no great result was produced.
So start putting your idea into action and start a business for yourself. You've got to take care of yourself!

The Secrets of the Rich - No. 3
Create investments, don't buy them

Robert uses an example of real estate. I feel that this secret apply to your business too. If you have a great idea which you put into action to create your successful business, you will attract investors. They put huge capital into your business for you to grow them. How much an idea cost?

Create investment = Create idea
But you must put that idea into action. In other words, make things happen!

The Secrets of the Rich - No. 4
Expand the product before you buy

This can be applicable to your business too. This is what the big guys are doing in the business world. If you own a successful business, you can take it to public through IPO. Your business is still the same business. However, you've added an element of investment into your business. Money rolls into your business quicker.
Robert's next question was, "What is your winning formula?"
For him, don't do what everybody else is doing.

I feel this is an important question. What we've been doing and thinking have gotten us to where we are today. So, I choose not to work for somebody else, just like many others are doing, and today I'm earning passive income.

What about yourself?