Personal level Income Streams
Income can be broken down into essentially three types:
Earned income (1:1)
Portfolio income (Investment)
Passive income
Online profit streams
Regardless of whether you are beginning to develop your own business model or simply analyzing an existing business, the key focus is to decide on how are you going to generate that extra income. From my point of view, the best source of income is passive income whereby you do not have to physically there as it is created on an auto- pilot system.
If you’re familiar with flying, you know that an automatic pilot is an instrument the pilot uses to make flying a lot easier. It is not used during takeoff, when the pilot must concentrate on every detail. However, once at cruising altitude, the pilot can set his course, speed and altitude, turn on the automatic pilot, and presto- the plane takes over! The pilot is now free to do other things. This does not mean he can forget his job. However,this means he only need to check his gauges and instruments occasionally. The pressure of flying has been significantly reduced. Your goal, as a creative investor, is to launch your ship into financial orbit, and then put it on auto- pilot mode!
Take a look at the 2 scenarios below which will exemplify the point on scalability.
Scenario A: David is an accountant in a firm and has been offering one-to- one professional service to small and medium- tier businesses for the last fifteen years. Although he charges $200 an hour, his revenue potential is limited as he only has 24 hours a day. He rants at the accounting software which only caters to the big companies and is not user- friendly for the small firm.He ends up slogging day and night for 10 hours daily. His wife threatens to file for a divorce with him as he hardly has time for his family.
Now, consider the following scenario B.
Scenario B: David leverages on his capability of offering sound accounting advice and develops a new software with templates that aids the accounting function of these businesses. His software is well- received as he understands the common accounting difficulties small and medium- tier business faces. He is able to provide a solution for their businesses needs. David is now able to enjoy more time with his family as he earns from the royalties from the sales of the software. He no longer have to be physically present to earn an income as he is able to create a system that runs on auto- pilot mode.
The above scenario is a tad simplistic, yet this point highlights the fact that as we develop from an Industrial Age to an Information Age, there can be boundless opportunities and the ability to reach out to the mass in a much shorter time. In your course of life, do think about making use of technology to aid you to work smarter, not harder.