self-employed

What is Passive Income?

April 3, 2017 By Ashley Price-Horton 2 Comments

Would you like to like to make money while you eat, sleep, and relax? If you are like many individuals who desire to make money without having a job, then you need to create passive income. What is passive income exactly?

What Is Passive Income

Passive income is income received on a regular basis without much effort aside from the initial investment of time. For example, let’s say you want to make passive income, and you’ve decided to create an eBook about saving money. You will create the book, put it online, and other people will buy it. Every time someone downloads your book, you will make passive income. That is just one passive income idea. There are many ways you can obtain passive income which can range from investments, classes, books, and many more options. Though passive income is a great source of money, it is important to understand the misconceptions surrounding passive income.

Misconceptions of Passive Income

Many people believe that passive income is the easiest income to obtain. Honestly, passive income is easy to obtain, if you are willing to put in the initial work without receiving money in advance.

When it comes to passive income, you cannot simply create it and leave it. That is a common misconception surrounding passive income. If you think that you will make a lot of money without maintaining or promoting your projects, then you will be disappointed. Yes, passive income is wonderful because you can make money as you do other things that aren’t related to working. However, passive income is not 100% passive.

Passive income is not 100% passive. You will need to maintain your projects and promote them. Let’s face it, if people do not know your product or service exists, they will not buy it. Also, it’s important to maintain your products and services. Information changes and you have to be willing to change your products as well.

Unlike a regular job, with passive income, you only receive money when customers buy your product or service. Therefore, passive income is not always stable.

Passive Income & Stability

Making passive income is great. Being able to receive money in your bank account while you do things other than work is a rewarding feeling. However, passive income is rarely stable. Some months, you may make thousands of dollars from your passive income project while other months, you may only make a few hundred.

A prime example of the stability of passive income is Pat Flynn. In January 2015, he made $109,175.58 in passive income. Yes, you read that correctly. $109,175.58! The following month, he made $87,418.77. That is a difference of -$21,756.81. Keep this into consideration as you build your passive income portfolio. Many factors can dictate the stability of your passive income.

If you want to make money while you sleep, travel, spend time with family, or watch TV, then passive income is definitely the best way to do that. Think of an income project you’d like to create, develop it, promote it and maintain it. You may very well be on your way to a lifetime of passive income.

Those interested in establishing a source of passive income should check out this in-depth guide on Chain of Wealth.

Photo: 401(K) 2012

The (Sensible) Leap of Faith

November 22, 2011 By Jennifer Derrick 2 Comments

Years ago I made the choice to leave the full time corporate world and go out on my own. I did it for many reasons, not the least of which was because I just couldn’t stand the toxic office games and politics. For the sake of my mental health I knew I had to do something. So I took a leap of faith and went out on my own. Of course it wasn’t all fairy tales and rainbows. I struggled for a while before I really found my footing and learned how to run a business. I adjusted, though, and the leap paid off.

A big reason why the leap worked out for me was that I didn’t make a blind leap. I didn’t storm into my bosses’ office one day and scream, “I quit,” at the top of my lungs (not that I didn’t want to). I planned my leap. At night I read about how to start a business. I worked my contact network and took jobs on the side to build up my client base. I learned about taxes and accounting. When I felt that I had a solid base in place, only then did I give my notice and quit my job.

Sometimes in your financial and work life you just need to take that leap of faith. It may mean the difference between an average life and one that is extraordinary. It may mean the difference between a so-so portfolio and one that leaves you short. The opposite can also be true. A leap of faith can leave you jobless, or with a portfolio in tatters. While there may be some factors that you can’t control that determine your success or failure, the main difference between a successful leap and a disaster is planning.

If you’re thinking about becoming self-employed, trying to invest on your own, quitting a job to stay home, or anything else that requires you to leave the safety and security of your known world, you want to do it sensibly. Just leaping off the edge can be exhilarating but is also dangerous. Take your time and plan your strategy. Learn everything you can about your new endeavor. Everything you can learn ahead of time acts as a hedge against confusion and disaster. Practice, if you can. If you can take jobs on the side to build your reputation, do it. If you can invest with just a few dollars, practice for a while and learn the ins and outs of the market before you commit all your savings.

A sensible leap of faith also requires that you prepare financially as well as intellectually. Don’t quit your job to start a business unless you can support yourself somehow until your new venture takes off. While you’re planning, save money and look for grants or other funding, if applicable. If you’re looking at taking risks with money in the stock market, don’t do it with money you can’t afford to lose. Build up a pile of “play money” that you can use to try out your strategies. If you’re trying to stay home, try living on one income for a while to see if you can do it.

A leap of faith can lead you to a more fulfilling and richer life, both personally and financially. However, it’s best done sensibly and with thought rather than impulsively. You wouldn’t just bungee jump off a bridge without checking your equipment and researching the safety record of the company overseeing the jump (I hope) so why would you treat your financial leaps any differently?

(Image courtesy of mic_p)

Versatility Equals More Income

September 27, 2010 By Jennifer Derrick 2 Comments

People often want to know how they can make more money. Beyond the standard answers of sell your stuff, take a part time job, do online surveys, or other ideas, there is one way that a lot of people don’t consider: Become more versatile. While there are some professions that reward specialists with high pay (think medicine, law, and the sciences), most of us need multiple skills if we want to earn more money. We need to let go of the notion that one job or one skill will be enough to carry us.

This is particularly true for the self-employed. Self-employment income can be variable with periods of feast and famine. Wouldn’t it be nice, if during a slow period, you could pull out another skill and get more work? For example, let’s say a freelance writer makes a good income writing support manuals for computer software. She specializes in technical writing. But one day, the tech writing work is hard to come by. No one is hiring and our writer’s income is in the dumps. It
would be nice if she could also write grant proposals, magazine articles, or advertising copy. Those markets might still be hiring and she could be earning money while she waits for the tech market to pick up. Even better, what if she could not only write, but also design web sites or brochures? Her opportunities just increased some more.

This works in all fields. Some examples: I know a freelance computer network engineer who has also taken the time to learn about sophisticated phone systems, as well as electrical engineering. When it’s hard to find computer work, he can also look for work setting up these phone systems or designing electrical systems. He’s never without work. I know teachers that also tutor, and writers that teach at the community school level. I know an artist who both teaches and does commercial work when her personal artwork isn’t selling. I know a secretary in a medical practice who works nights as a medical transcriptionist. The mechanic at the local quickie lube teaches shop class at the high school and does freelance shop work.

You can become more versatile in two ways. The first is by doing the same work but in different fields. The writer profiled above is an example of this. Everything she does is writing based. Grant proposals, technical writing, articles, and advertising copy are all writing activities but the markets are different and, when the need for one is on the wane, chances are another type of writing is still hiring. The second way to become more versatile is to acquire more and different skills. You can still work within your primary subject area, but you do different things. This is the case of the artist who also teaches art classes, or the teacher who does private tutoring. They are both still working in their chosen field, but they are tapping different skills and markets. If you can combine these two approaches, for example becoming a writer who can write in many areas and also teach, you open up your opportunities even more.

Even if you aren’t self-employed, being versatile can make your employment more lucrative. The more skills you have and the more roles you can fill at your employer, the more money you can command. Being versatile will also make your job searches easier. You can look for work in more than one field or narrow job description. During times of recession, if you can tap many markets or search for more than one skill based job, you are better off than the person who can only look in one area.

Becoming versatile takes some time. You have to learn your extra skills and then build up experience in your chosen markets. You have to invest time in educating yourself and improving your skills. However, the effort will quickly pay for itself. If you have no income coming in from your primary endeavor, anything you bring in from another job will be welcome. Even if you’re making good money from your first job, additional money may allow you to reach your goals faster. Versatility is one of the best ways to boost and protect your income.

Five Topics You Should Never Discuss With Clients

November 13, 2009 By David G. Mitchell 10 Comments

I am tired. I have been up for the past two nights until about 1 am trying to finish projects for clients and writing content for my website. I am also a bit under the weather, as I seem to have a sore throat and headache that just won’t go away. I can tell you such things. I can also tell my family when I am sick or tired, or even when I am just down in the dumps. I can tell my friends when things are not going right. There are a lot of people I can tell, but there is one very important group of people who never need to know, or even should know, when I am sick, tired, down or frazzled – my clients.

It is always important to remember that even when your clients are your friends, they are not your friends when they are your clients. Clients are a special class of people. They are people who want to give you money for your time, talent and energy. They do not want to know when you are tired because, by implication, they are contributing to your fatigue. They do not want to know when you are not feeling well or you down in the dumps because that means that they are not necessarily getting your best work. They do not want to know when anything bad is happening in your universe.

Your clients are special. You need to insulate your clients from every negative aspect of your life just as if you were always on a first date and doing your best to ensure a second date. If you are going to have a successful experience with your clients, there are a lot of subjects you need to avoid and they include:

Politics: Your clients do not need to know whether you are a Democrat, Republican or anything else. Do not offer that information. If your client asks you your political leanings, answer truthfully but briefly. If you can describe yourself as a moderate, do so. Of course, if you find out that your client supports a particular candidate or issue, and you actually support the candidate or your client’s position as well, you can talk about that candidate or issue. Just do not get too zealous.

Religion: As with politics, it is generally not a good idea to talk about religion outside of your church. If your client asks you to which house of worship you belong, you can answer truthfully but never get into a debate over the merits of one faith over another, even if your client tries to do so.

Gossip: Whether you live in a small town or a large city, it is never professional to gossip. If your client knows that you will gossip about other people, your client also knows that you will gossip about him or her.

Regrets: Whether you love your job or hate your job, your client needs to believe that you love it. Talking about career decisions that you regret or unpleasant things that you have to do for your job will not instill in your client any sense of confidence in you. Whatever you may have to do, do it with a smile.

Sex: In the work place, we are all gender neutral, sexless beings. At least that is how it should be. Keep it that way and you cannot run into problems.

What other subjects do you feel should be taboo when speaking with clients or customers? Have you ever had a conversation with a client that you regret? Have any people you have hired ever brought up subjects that you feel were inappropriate.

Starting A Business Resources

October 10, 2009 By David G. Mitchell 6 Comments

Now that I have made the decision to start a business, what next? Doing a good job in one’s chosen field usually requires entirely different skill sets and knowledge than running a business. Accounting software? Tracking time? Building a website? Forming a corporation? The list of tasks is lengthy and can be more than a little intimidating. Even more intimidating is the knowledge that chances are very good that you will miss some important task and have to scramble to complete it later on. You can only hope that the tasks you omit are not too damaging to your business.

Of course, if you have the time, you can spend several days, weeks or months preparing a detailed business plan. For many of us, however, the luxury of time may not be available. After all, a wonderful business plan does not immediately put dinner on the table. Nevertheless, you do need to do some basic research to determine the most important elements of starting the business that you want to start. Without at least a basic plan, you will likely move sideways or backwards as much as you move forward and that will likely cost you more money in the long run.

Fortunately, you may have a lot of resources at your disposal and those resources will help you a great deal in identifying what you need to do in order to get your business up and running.

People You Know: Chances are good that whatever business you want to operate, you know other people who are in the same or similar business. If you are a building contractor who has worked for other people in the past, for example, you will know other contractors who have their own businesses and who might be willing to talk to you about how they started out. Even though you might be a future competitor, you might also be able to work together on projects so those people have many good business reasons to sit down and share their insight with you. Make sure you take good notes.

People Who Want Your Business: Whatever business you may start, there will be other business owners who want your business. Lawyers, accountants, and other professionals will be quite willing to give you a free consultation (and be cautious with any who try to charge for the consultation). They will very often give you a great deal of advice without charge and I have known several who have freely shared do-it-yourself tips with businesses that are just starting out. Indeed, yesterday I visited a CPA who mentioned that although she could set up a corporation for me for about $450, she readily showed me the website that she would use and told me that it would be much cheaper if I did it myself. As a result, I saved $380 since the cost of incorporation was only $70. (By comparison, I spoke with one lawyer who quoted over $3000 for the job.)

State Websites: If you live in the United States, or in any of many other countries, chances are good that there are state-run websites that will guide you through the process of setting up a business. You should be able to learn the process for organizing a company and obtaining necessary local licenses.

Professional Organizations: If you belong to any professional organization, your organization probably offers programs that will guide you through the obstacles associated with setting up a business. From finding the best online expense report software to proper staffing, these organizations will give you a myriad of advice to correctly run your business. Spend plenty of time exploring the organization websites and don’t hesitate to call the organization for help. If you are paying dues the organization, you should find that the organization is there to help you.

Potential Clients: If you know potential clients who are likely to want your business, ask them to talk with you about the experience that they want to have and what would make them more likely to use your services. I had several conversations with potential clients to determine what they consider a fair hourly rate to be. I learned that the rate is about two-thirds of the going rate in my industry and area and about twenty percent of the top rate that I have seen quoted. I think I can very quickly find myself working forty-plus hours per week if I charge the rate that my potential clients suggested and I am sure that I will be quite comfortable even at that rate. I’ll also feel good about providing a needed service at a rate that is not excessive.

Perhaps these resources are intuitive to many, but I have found that many people I have known in the past have been afraid to ask questions. As an owner of a new business, you will not have that luxury. You need to explore all of the resources available to you and learn as much as you can from them. While you are doing your research, you also need to realize that every conversation you have can result in the possibility of new clients. That means that you need to be professional and courteous in each of the discussions that you may have. More importantly, no matter how confused you might be, you must present yourself confidently. You may not know what you are doing, but you cannot let anyone know that.

Do you own a business? How did you learn how to get your business ready for operation? With whom did you consult? What resources were available to you? Who was helpful? Who was not? For information on how to improve you business cashflow check out the credit crunch guide by Hitachi Capital Invoice Finance.

New Work Realities

July 29, 2009 By David G. Mitchell 7 Comments

Although our economy seems to be turning a corner — home sales have continued to improve for a full three months and, as I write this, the DJIA remains over 9,000 for the second day — unemployment remains very high and layoffs continue. As one friend recently told me, she was very tired from working very long hours, not because her company was busier, but because her company had eliminated more than half of the people who worked at her level in the company. Surviving with a job in this economy is a great thing, but employment in the wake of our new economic reality can also mean changing, and often diminishing, quality of life.

If you are looking for a job, or even if you just want to keep your job, there are a lot of sometimes unpleasant factors that now must be considered seriously. If you do not consider all of them and rationally assess how your opportunities might be improved by accepting them, you are very possibly limiting your long term success. After reading the following list, assess your current prospects, and then let us know whether acceptance of one or more of the following possibilities (or necessities) will make it easier for you to thrive, or at least get by, in the new economy.

You May Have to Relocate

During the Great Depression, a huge percentage of the American population was mobile, moving from town to town and state to state in search of work. Whatever you do for a living, there may be other parts of the country that offer more opportunity for you. If you have a family, especially children who live at home, you may have to consider uprooting them so that you can better provide for them. You might not want to do so, and it will probably be very stressful, but when faced with the choice of remaining unemployed or relocating, relocation is a much more viable option.

You May Have to Separate from Your Family

I have a friend who found work out of the country. He has been commuting to Mexico from the Eastern USA every Sunday night, returning on Friday night. He does this every week and has done so for several months. He could not make nearly as much money in his home state as he does consulting in Mexico so, despite the separation from his family and the need to pay double income taxes (Mexico and USA), he leaves his family every week to ensure that they can continue to enjoy the quality of life to which they have become accustomed.

You May Have a Longer Commute

Even if you do not have to relocate or separate from your family, you may find that you need to drive an hour or more to get to your new job. There are added costs associated with commuting but if a longer commute will get you a better job — or any job — you need to accept the longer commute.

You May Make Less Money

Some money is better than no money. If you can find a job that does not pay as much as you are used to making, it is a better to bring home a paycheck and benefits and to continue to look for a better job, than to turn up your nose at the thought of taking less.

You May Receive Fewer Benefits

You might be used to great benefits at your previous job. Your new job may not offer nearly as much. You may not get as much vacation as you want or as you previously received. You need to accept that you are starting over and benefits tend to benefit more senior employees so you will have to work your way back to seniority.

You May Have to Work Longer Hours

My friend described in the introduction to this article has learned that keeping her job means she also needs to absorb the work that her laid off colleagues used to perform. She is exhausted but she is also employed. She comforts herself that when the economy does improve, her company will hire more people and she will be rewarded with the benefits of greater experience and seniority.

You May Need to Travel More

As companies have fewer employees, the employees who are retained or hired may find that they need to travel for longer periods of time. You might be used to a sales territory that covered a radius of 100 miles from your home. You may have to accept that your new territory is far greater than that and that you have a lot more driving to do. If you travel by plane, you may find that you have a great many more overnight stays. Travel may get old after a while, but it is better to be employed on the road than unemployed on your couch.

You May Need to Spend More

Your new job may not pay as much as your old job but it may cost you more to keep it. If your commute is farther each day or if you need to pay more for work-appropriate clothing, your costs will increase. That is a simple truth and one that we need to accept.

You May Need to Work for Yourself

It may be that you have a skill that no employers seem to need but that you could market effectively to your customers. If you cannot find a job, perhaps you should be finding clients and setting up shop for yourself. If you can manage it, working for oneself is always preferable.

You May Have to Change Professions

Whatever you do for a living, you may need to be flexible and look for employment in other fields. Many skills are transferable from one job to another. Do not limit yourself to what you have done in the past. Expand your opportunities based on the skills you have developed and not on the jobs that you have held.

You May Not Have the Security that You Want

The days of the gold watch at the end of a career are long past. You may take a job today only to find that it is gone tomorrow. That is our reality. If you are fortunate, you will get a bit of severance and perhaps have the opportunity to enjoy COBRA insurance benefits. If you lose a job soon after you find one, it is time to reassess all over.

What do you think? What are the difficult truths that we need to confront in the current employment market?