“-What about your dreams?
-I exchanged them for a stable job”.
I could start saying that we all want to generate residual income. This is income that is continuously added to your personal finance by doing little to nothing at all to obtain it.
But, I would probably be wrong. Strange as it may seem, a great number of people wouldn’t feel too comfortable in a situation where they don’t have to work to make money or even build a residual income business from scratch.
This is often out of guilt, a false sense of morality, or simply because they feel they couldn’t just “do nothing”. As if “everything” was a full-time job, and anything other than that were “nothing”.
In order to generate residual income, you need to be entrepreneurial, and for that you need enthusiasm. To be enthusiastic, you need passion, which is something that many consider something unrelated to work and the generation of money.
In addition, the entrepreneurial trait tends to be associated with the creation of major companies, when in reality you can be an entrepreneur at a much smaller scale.
What I’m trying to say is that you don’t need to create a million-dollar company to be called “Entrepreneur”.
Any micro businesses can generate a passive income and will let you obtain a better life quality and have twice as much time available than you currently have.
For starters, I’m going to analyze the differences between an entrepreneur and an employee.
Then, I will go in deep into the generation of residual income, as well as some prospective methods to achieve your goal in 2016.
Entrepreneur vs. Employee
Entrepreneur: is an individual who has the decision-making ability and initiative to perform actions that are difficult or involve a certain risk.
The definition speaks for itself: when we work as employees, we opt for the risk and the initiative to befall on the employer.
Therefore, carrying out any kind of risk on a working or investment environment could be classified as the birth of a small-scale business.
This risk does not necessarily have to be associated with financial losses. It can be related to the risk of spending lots of time on something that may bring you no earnings.
Let’s see how 3 key aspects work in the mind of an entrepreneur as opposed to that of an employee:
While the employee earns an income only based on a number of hours worked, the entrepreneur does so while he sleeps, by having deployed a system that doesn’t require his physical presence or constant attention.
Furthermore, while for the employee’s income is limited, unidirectional, and compensation is fixed and “granted”, the entrepreneur’s income is multi-directional and opportunities for getting an income are usually limitless.
Lastly, the employee’s income is predictable in the short term, and uncertain in times of economic crises, while the entrepreneurs are variable in the short term but predictable in the long term, economic crises usually resulting in the largest growth in his assets due to the breakdown of emerging opportunities.
2. System, time and companionship:
The employee tends to abide by a system set forth by his superiors, whether he likes it or not. The entrepreneur creates his own system instead, at his leisure, and he can change it whenever he desires.
Working systems crafted by the employer have the purpose of maximizing the working time of his employees.
This is the reason why an employee’s free time is usually limited, while that of an entrepreneur can be a lot more, thanks to the generation of automated residual income.
The day-to-day company of the employee is not chosen; in other words, he must spend most of his day (and probably his life) surrounded by partners with whom he may have more or less affinity, but who are not chosen by him.
The entrepreneur, instead, chooses who he wants to spend his day-to-day with, whereby in many cases many of them prefer to work alone and communicate with their employees, through technological tools such as Skype or WhatsApp.
3. Emotions and consumption:
The employee’s emotions are more prone to fluctuate depending on external reasons, which may be related to the boss’s mood, work-related stress, downsizing, etc.; while the entrepreneur’s emotions are more linked to intrinsic factors, such as the enthusiasm for what he does.
Lastly, the employee’s consumption usually takes place through indebtedness (bank loans or credit cards) to take advantage of the predictability of his income in the short term we mentioned above, while entrepreneurs tend to invest most of their resources on their venture, and when consuming they privilege enjoyment over possession (this is usually called smart spending).
Residual Income Business Tips & Advice
In order to earn automated income in 2016, a necessary condition must be met: not getting scared by the prospect of starting to think with an entrepreneurial mind, comprehending the many realities mentioned above.
But in addition, it is important to keep in mind 3 key concepts:
Whatever we are to undertake has to be the result of your own, genuine enthusiasm; of something we are passionate about. Putting income before passion and enthusiasm is one of the capital sins one should avoid.
2. Taking advantage of new technologies
The micro business has to be thought out for placement on the Internet, with the purpose of exploiting the opportunities the internet offers us to reach prospective buyers of our product/service anywhere in the country or the world.
(Tip: Social networks have to be seriously considered as a means of advertisement when releasing our venture to the world.)
3. Automation, atomization, intangibility, outsourcing and membership.
These five words are the gold mine of any entrepreneur that isn’t looking to create the new Google company, but is instead aiming to add a few sources of automated, passive income to his life.
Automation means designing systems in which processes are predefined and require no intervention by the person who designed them.
Atomization of the sale of a product is to stop thinking about a niche market or specific market and seize the advantages of globalization and the Internet in order to reach the thousands or millions of people around the world who might be interested in what we have to offer.
Regarding intangibility, something is considered to be intangible when, for some reason, it cannot be touched or physically regarded.
Intangible products are services that a company or individual offers others, where the process of distribution through the use of intermediaries disappears since there is no physical flow to speak of, existing instead a direct relationship between who is offering the service and the user.
Features of intangible products:
- They don’t need to be stored or transported.
- They may be associated with products that are made and consumed simultaneously.
- The great advantage of producing intangible products is there are no costs or issues resulting from manufacturing, raw materials, delivery or logistics.
Taking advantage of outsourcing, especially at the onset of a project, is vital to keep initial costs in check. Nowadays it is possible to outsource anything from production to customer service and sale at an affordable price, whether domestically or abroad, thanks to the advantages of the Internet.
Lastly, selling some good or service that is paid via a yearly membership allows for certain predictability in regards to monthly cash flows, with the possibility of using online credit card payment tools to that end, offered by platforms such as PayPal, at affordable prices for small entrepreneurs.
Facing the beginning of the second half of the year offers a prime opportunity to transform our work and life reality, setting as a new goal earning residual income that enables us to better take advantage of the upcoming years.
Understanding the standpoint from which we are operating, now that we know there are other, more benign opportunities and realities for our interests, is undoubtedly the best contemplation we can do in what remains of 2016.