Why you must only go for Residual Income



Residual income, which is also called passive income, is income that continues to be generated after the initial work setting up the income has been completed.

Linear income is income which is a one shot type of payment. This is usually made up of wages, commission or salaries etc.

It is income which does not continue and does not have an ongoing life. Linear income is proportional to the number of hours that you put into anything so you are limited by the number of hours in a day.

Linear income could be, for example, the charge out by a consultant to clients. There are only 24 hours in a day, and out of those 24 a charge out of 8 – 10 hours a day is the maximum that is possible.

This puts a limit on the amount of earnings that one can make. The great advantage of residual income is that once things have been set up, then you are able to continue making money from your initial efforts while giving you the time to move into other areas of income generation or enjoyment of life.

Linear income, which is basically earnings by the hour, is not the best. This constraint on the number of hours you can bill out, often keeps you from your financial goals. There are only so many hours in the day that you can actually bill to clients and even when you have a 50 hour week, most of those are not billable hours.

At the most you are probably able to bill out 24 hours per week.

In order to achieve an adequate income you would have to raise your rates high enough to produce a good income and keep your customers happy. There is a few ways out of this trap.

It doesn’t matter what business you are in, you can look at these other options.

  1. Provide additional material to your clients.
    For example, if you are consulting on a particular matter you may also want to develop workbooks, manuals, self help programs etc which can be added onto the fee charged to a client.

  2. Record a tape, CD or video.
    If you are a consultant or you make a particular product or conduct lessons in something you may wish to record these and sell them to increase your earnings.

  3. Do a class.
    You may like to increase the amount of money you earn by putting forth your knowledge – not to one person, but to a number of people in a class. It is a means of growing your income by presenting the same information to a number of people, thus multiplying your overall income.

  4. Write a book.
    You can put your knowledge into a book and publish it. If writing isn’t your strong point you can find a ghost writer or someone to co-author it with you. This is a popular way of not only increasing your income, but perhaps gaining residual value from the royalties.

  5. Market other products.
    If you don’t have any good products of your own, use your experience to market other people’s products which you know will have demand in the marketplace. This can include books, tapes, software or a particular process.


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