Sometimes you hear pearls of wisdom and you take action. Sometimes you don't. Each and everyone of us are flooded with opportunties every single day. When we are caught up in disempowering conversations, we are blind to those opportunities and we rob ourselves of free choice.
From George Moen to share with you all:
"Residual Income ( aka Passive income ) is an income received on a regular basis, with little effort required to maintain it."
Most people start out their life earning "Linear Income" or income where you exchange time for money. This is also known as a Job or Career. I learned early on in my business life the power of Residual Income when I began earning Royalties from a chain of restaurants I owned that still pays 30 plus years later. The appeal is to work up front and to enjoy the benefits of the cash flow for years and months to come.
The objective is simple to identify, build, monitor and then enjoy the fruits of your decisions with respect to residual income streams. The hard part is to find the right vehicle the rest is actually pretty easy.
Tip #1: Rule #1 Only Invest Time & Energy If It Pays While Your Sleep!
I get approached all the time with opportunity. The VERY first thing I do is to evaluate if it has a residual or potential of a residual income stream. If I can't it does not get my attention period. I have been like this for years and have established dozens of income streams large and small in all aspect of my working and investing life. I prefer monthly, but can do different periods but NONE greater than an Annual payout. ( IE in the case of a Bond or GIC in my RRSP ).
Once that evaluation is made then the next thing is can I do what it takes to establish the income stream. Can I do the work, do I want to do the work and how long must I work at it to lift the income to a "cash flow" stream. Then I ask the final question does the cash flow when I am in bed? If so, it might get my serious attention.
Tip #2: Can You Identify The Recurring Revenue Stream!
This may seem obvious but I must be able without a lot of effort identify the actual recurring stream. Further, I analyse in detail the cash from the customers pockets into my bank account and follow the step by step mechanics of all the steps of transactions. The key is can it be fully or almost fully automated. This is again one of the fundamentals of residual income. Ideally what I want is the money coming in from past efforts not current or future efforts.
Tip #3: What Is The Stability Of The Revenue Stream!
Part of my evaluation is one of longevity and stability. How stable do I think the company or the product is that generates the cash flow. In some cases it is me and my products or services but often it depends on other companies and institutions. I will take a pass on the opportunity if it is a short term play. I rather spend the energy on product or services with years of potential.
Tip #4: Set Up Audits & Monitoring!
I have a "master calendar" that monitors all the Rev Streams I have. Overtime I have also set up "systems" that maintains the paper flow and action items that go into the various streams. I have found that it is not 100% hands free some effort must go into each and every one of them but it is a far cry from a job or business. Some are small and some are large but they all require some action and tweaking at time...but the efforts are compensated well.
Tip #5: Dig The Next Well Before You Need The Water!
Even before I have finished off the last "new" Residual Income stream project I am on the lookout for the next one. The best time to dig the well is before you need the water and this applies to building income streams. You are far more effective in earning new revenue when you are not pressured by the needs of life. I found I made way more short term decisions that often were not good business decisions due to short term cash flow needs. I also know that some of the streams can come to and end for a number of reasons and I am always trying to replenish the inventory. You will find that if you do not live beyond your means your cash flow catches up and surpasses your lifestyle. That is where you then begin the accumulation of wealth and brings with it even more residual opportunity.
A good friend of mine once said to me early on in my residual income building life "George if you knew what it felt like to be financially free you would work twice as hard as you do now to achieve it".
He was right, my life is much different today than in the past. Today the world offers even more opportunity to achieve financial independence from multiple income streams. If it is something you have thought about start today, I mean today! It is well worth the effort and in the end it is a lot less effort than a job or a professional career a lot less. I know that to be true! And on a final note it is never too late to start.
Background & Resources:
Definition Of Passive Income: http://en.wikipedia.org/wiki/Passive_income
George Moen - The Rapid CEO http://www.georgemoen.tel
Rapid Time Networks: http://rapidtimenetworks.com