Linear Income vs. Residual Income: Knowing the Difference Will Change Your Life!

By: Dimitri Turner

If you don't know the differences between linear income and residual income, then you definitely need to spend five minutes and read the remainder of this article. Knowing the difference will change the way you think, in return, changing the decisions you make and ultimately change your life from this day forward.

These income concepts are what divide the rich and the poor, the wealthy and the struggling middle-class, the knowledgeable and the ignorant. Linear income and residual income are the two ways that people make money in the world. This article will show you which income concept is best, or let's just say, preferable.

First off, let's address what is understood to be linear income. Employees, independent contractors, and self-employed business owners make up the linear income bracket. Linear income earners are only paid for the specific time expended, or paid directly proportional to the number of hours invested in their job. Linear income earners must be physically present or "clocked in" to get their paycheck.

Now here's the biggie! Linear income earners cannot leverage their time and efforts. Leveraging is what creates the wealthy/rich social class, and the absence of leveraging is what creates the middle to impoverished social classes. I will discuss leveraging in depth when we talk about residual income earners.

Linear income earners can be fired or "down-sized" at any time. For example, an employee could be the perfect worker within their company. But now a bigger and better company has bought out (acquire and merge) the smaller company, and the bigger company now "downsizes" several workers of the original company. What's sad in this situation is you were the perfect employee, but because you were working for the wrong company at the wrong time, you are now out of a great job with great benefits. You have no control whatsoever of the situation.

In addition, in the linear income bracket, the height of your success is determined by your boss, not you. You have very little control of your achievement within the company that employs you. You must work and hustle in an effort to be recognized as valuable to the company, but only for your superior to get the credit for your work and hustle while you remain in your current position. That sucks doesn't it!

If you're self-employed, you do have control of your personal achievement which is great, right? Now tell me this, what happens to your business if you're in a car accident and/or hospitalized, and it takes you three months to reach full recovery? Because you're self-employed, you'll more than likely miss that money!

Let me ask this question. As a linear income earner, can you pass your job down to your children or grandchildren? I don't know too many jobs that allow you to do that. And even in the corporate world, in order to be promoted, your superior either has to be promoted or demoted.
In summary, linear income earners have little control of their success, they live paycheck to paycheck, they can be fired at any time, they cannot pass their job down as an inheritance, and they are participants of the "dog eat dog" world which thrives on the destruction of co-workers' and superiors' reputation in order to receive promotion.

Now, the alternate income bracket is the residual income earner. I'll let you decide which the better of the two is.

Residual income earners consist of business owners, network marketing associates, and investors. Their income continues to be generated after the initial effort of building the business has been expended. Residual income earners don't worry about "clocking in," they can be absent for periods of time and still see consistent income from their business. As a residual earner, you could be in the shower, in the hospital, or in the Bahamas, and you'll still see checks in the mail or direct deposit transactions on your bank statement. Doesn't that sound like fun!
Remember when I mentioned the word "leveraging" earlier? Leveraging is basically using someone else's time and money to benefit you. Now wait just a second. I know that sounds very harsh and cruel but think about it first. Isn't your boss leveraging your efforts? When I put it that way, you start to get the picture of how this concept separates the wealthy from the not so wealthy.

A residual earner's income stems from their business or businesses. They are the boss; they have total control of their business's success and achievement. Wouldn't you like to be in that position if you aren't already? With your own business, you can pass it to your children, and they can pass the business to their children in return, you are leaving a family legacy. You are able to leave your children with a ready-made pipeline of income versus working your job, retiring, and leaving your kids with nothing but debt.

With a residual income business such as a network marketing (multi-level marketing) business, you benefit only by helping others to be successful. I personally don't know of too many instances where corporate employees are helping others they work with to become successful.
The two major separations between linear income earners and residual income earner's is the linear-minded people work, scrap, and hustle for money. Most are only after a quick paycheck. Residual-minded people work, scrap, and hustle for freedom. By freedom I mean, freedom with their time, freedom with their lives, and freedom with their finances.

So which would you rather be? Would you rather be the linear individual living from paycheck to paycheck, no control over your success, unable to spend quality time with your children, and always sick because you have dreams and goals but are unable to achieve them? Or would you rather be the residual individual who possesses full control of their life, spends quality time with their kids regularly, is able to leave an inheritance for the future, doesn't have to sit on their goals and dreams, and can show others how to do the same?

I'll leave it up to you!

Now I would not explain those two concepts without providing a means to crossover from the linear mindset to a residual mindset.

http://www.payitforward4profits.com/dlturner3183

Check out the website above. This company will provide you with free information and they will simply introduce you to the most prominent and successful businesses that you can build out of your home and/or online. Aligning with this program will make the transition from linear income to residual income a smooth one.

If you want something you never had, you have to do something you've never done, period!


Author Bio
Dimitri Turner is an Internet Marketing Guru out of Memphis, TN. He writes in-depth and passionate articles about the network marketing industry as well as inspirational and motivational articles that encourages his readers to maximize their potential and maximize the present moment.

How do you know it shouldn’t have been 34%?

Suzanne Levesque

There’s a story about a consultant being interviewed by the CEO of a large company for a potential assignment.

The story goes that the CEO shoots the consultant a steely gaze, leans back in his chair and says “While I’ve been in charge of this organisation for the last 3 years we’ve enjoyed an annual growth rate of over 21%, why the hell should I hire you?”

After a pause the consultant replies “How do you know it shouldn’t have been 34%”
He gets the gig.

It’s an amusing story, and one that’s worth keeping in mind when you’re putting together a business plan or revenue forecast.

Why? Well it comes back to a topic I’ve posted about previously which is the need to challenge assumptions in business strategy.

Here we’re in the realm of “what you don’t know about what you do know” which is a bit of a mind-melter I agree but basically it’s what you’ve baked into your thinking without thinking about it.

In organisations this is referred to as your “culture”, or “how we do things around here”.
As human beings it’s how we operate in the world; it’s the accumulation of our experiences and learnings over the years. It’s just the stuff we do without thinking about it.

I remember when I joined my last company as an employee with a challenge to turnaround declining revenues in the service and maintenance division of an equipment supplier.

The first thing I needed was some data and after asking around no-one had any.

A quick trip upstairs to IT and a chat with the resident techie in the DP room and I came back down with all the data I needed.

When discussing my analysis with other managers at the next Ops meeting everyone sat around slack jawed and shocked that I had managed to get hold of data that “for years” they had been asking for.

Fortunately for me, as an outsider to a very hierarchical organisation, I didn’t realise there was a way of doing things – I just went and got what I wanted.

This might have ruffled a few feathers but I didn’t care as it quickly enabled me to zero in on what was going wrong and put in place changes that successfully reversed over 5 years worth of declining revenues.

In the case of the story with our consultant, challenging the status quo when things are going well is something that rarely happens.

Everyone in sales knows that when you’re on target you’re left alone. My old sales boss, many moons ago, used to have a phrase that he didn’t care whether I was “tap dancing on Main Street on Friday afternoon” as long as I hit my quota.

But, of course, my quota was just a number that someone made up. Of course, it was based on some historical extrapolation or an arbitrary % of some larger target number that someone else made up (based on who knows what).

What if you’re hitting your targets but only working at half capacity? What if you’re actually leaving money on the table because you’re under-selling and under-pricing?

Of course, maybe you are doing everything you can do and your performance is absolutely top notch.

But how do you know that?

These skills will give you a leg up on your competitors

Rick Spence 

Getty ImagesDisorganized? It's a trait many entrepreneurs share.

 Successful entrepreneurs share many common traits, but they also share the absence of certain traits. And the latter spells opportunity for those who want to get ahead of the competition.

That’s because if you knew that you and your competitors were equally lacking at certain basic skills, you could consciously work to upgrade or delegate those abilities to leave the competition well behind.

Personal-assessment expert Bill J. Bonnstetter  of Arizona-based TTI Performance Systems Ltd. has been studying entrepreneurs for years. In a recent article for the HBR Blog Network run by the Harvard Business Review, Bonnstetter identified four common traits serial entrepreneurs lack. See if you recognize any of these deficiencies in yourself:

Empathy Entrepreneurs often build products and companies to help people meet needs or deal with problems, but their commitment is on an intellectual or market basis — not on a personal level, Bonnstetter says.  “They do this in hopes of a return on investment,” not to make friends or improve their personal relationships. But empathy is a key attribute for effective leaders and coaches. If your business depends on teamwork and individual effort, consider how a little more personal warmth and caring might help you reach your goals faster.

Self-management “Entrepreneurial-minded people are not proficient in managing themselves and their time,” Bonnstetter notes. “Often they need assistance managing everyday tasks and should hire or delegate them to someone who has mastered this skill.”
 

Planning and organizing It’s not that entrepreneurs are more impulsive than anyone else; they are so task-oriented that if they ever spent time planning every task or meeting on their to-do list, they would never get anything done. Once again, consider downloading this job on a dependable aide. Hiring someone to manage your calendar, organize meetings, keep you on schedule and de-clutter your office can help you overcome these weaknesses and achieve greater efficiency, Bonnstetter says. 

 

Analytical problem-solving Entrepreneurs believe in action and fast decisions. “By nature they do not have time to collect and analyze the data,” Bonnstetter says. “They see numbers as getting in their way, and they should — everyone who has told them an idea wouldn’t pan out has used data and logic to illustrate that point.” He suggests entrepreneurs focus on creating and promoting their vision and mission, and hire people to create an executable strategy and follow through on the details.
Bonnstetter’s firms came to these conclusions by comparing the attributes of a group of serial entrepreneurs to a control group of 17,000 people. The group was assessed on its mastery of 23 important job-related skills.

Of course, Bonnstetter notes that the serial entrepreneurs in his study display several key strengths, too. In a previous article for HBR Blog Network, he noted that the entrepreneurs scored well above average in four key skills: persuasion; leadership; personal accountability; and goal orientation. These skills obviously represent key advantages to entrepreneurial types, so you might want to work on upgrading these skills as well.

Anything your competitors can do, you need to do better.

Three simple rules to make your company truly great

Rick Spence 

 

Photo by Justin Sullivan / Getty ImagesMcDonald's is among the exceptional companies in a recent survey that looked at what makes companies great.

In a recent article in the Harvard Business Review, two business authors are pulling on Jim Collins’ cape with their new study entitled “Three Rules for Making a Company Truly Great.”

Michael E. Raynor and Mumtaz Ahmed complain about the lack of reliable business advice to be gleaned from most studies of successful companies, because they say previous authors underestimated the role of chance. Raynor and Ahmed accuse such popular studies as Collins’ Good to Great and the 1980s best-seller In Search of Excellence of using too short a timeline to prove that the high-performing companies they identified were truly exceptional.

Now they have completed their own study to suss out the secrets of long-term performers. And yet their hard work has produced what’s probably the shortest and simplest list of “rules” you’ve ever seen for running an outstanding company. The authors say that “the many and diverse choices that made certain companies great were consistent with just three seemingly elementary rules.”

1. Better before cheaper: Compete on differentiators other than price.
2. Revenue before cost: Prioritize increasing revenue over reducing costs.
3. There are no other rules: Change anything you must to follow Rules 1 and 2.

The authors spent five years studying companies’ return on assets from the biggest database they could find: Compustat’s list of more than 25,000 companies trading on U.S. stock exchanges between 1966 and 2010. They identified two categories of overachievers: “Miracle Workers” (the companies in the top 10% of ROA often enough that their performance was unlikely to have been a fluke) and “Long Runners” (companies in the top 20% to 40%). They used advanced simulation techniques to identify long-term performers (e.g., a Miracle Worker that had been public for just 10 years had to make the top 10% for the full decade, while one that had been public for the entire 45-year time span needed to crack the top 10% for at least 16 years).

Out of 25,000 companies studied, just 174 qualified as Miracle Workers, and 170 as Long Runners. (Regarding previous studies, the authors added this catty note: “It’s probably worth mentioning that of the allegedly superior companies mentioned by 19 high-profile success studies we examined, barely 12% met our criteria, even for Long Runner status.”)

The authors discovered that long-term great companies come in all shapes and sizes: “3M, with its legendary innovation and thousands of products in commercial and industrial markets, made the list, but so did WD-40, a company built on a single, unpatented product… The globally ubiquitous McDonald’s proved to be exceptional, but so did Luby’s, a cafeteria chain, when it had only 43 locations.”

Indeed, Raynor and Ahmed had trouble identifying common success factors. Some companies prospered through acquisition; others grew organically. Popular success factors such as customer focus, innovation and risk-taking proved equally attributable to great companies and average performers.

The authors made their breakthrough when they shifted focus from what the top-performing companies did to how they apparently decided what to do. “When considering acquisitions, for example, Miracle Workers acted as though they were following our rules, going for deals that would enhance their non-price positions and allow them to bring in disproportionately higher revenues.”

Better before cheaper The authors found that Miracle Workers competed mainly by offering superior non-price benefits such as a great brand, exciting style, or excellent functionality, durability, or convenience. “Average Joe” companies, by contrast, competed mainly on price, while the Long Runners showed no clear focus.

Revenue before cost The authors say top-performing companies “garner superior profits by achieving higher revenue than their rivals, through either higher prices or greater volume.” Only rarely was “cost leadership” a driver of superior profitability. Raynor and Ahmed were surprised by the many ways great companies leveraged this strategy. For instance, discount retailer Family Dollar Stores offers superior convenience through its sheer numbers of neighbourhood stores, even though that produces higher cost structures than those of its superstore competitors.

There are no other rules This cheeky rule was developed to underscore the idea that other strategies that supposedly lead to business success, from operational excellence to corporate culture, don’t seem to matter in a statistically consistent way. Still, they note, “the absence of other rules doesn’t give you permission to shut down your thinking. You are still responsible for searching actively — and flexibly — for ways to follow the rules in the face of what may be wrenching competitive change. It takes enormous creativity to remain true to the first two rules.”

Copy these 10 things one startup founder is doing right

Rick Spence 

 

Wonders never cease. Last week I met for coffee with a startup entrepreneur who’s doing a lot of things right. Maybe it’s because he’s not fresh out of school; in his mid-30s, he has held operating positions at companies big and small, so he’s seen what works and what doesn’t. Or maybe it’s just because he has good instincts and laser focus.

 

I don’t intend to jinx his promising Internet startup by setting him up as some kind of role model — so let’s just call him Bruce. Here are 10 things I think Bruce is doing right, and that other entrepreneurs can learn from. After all, you may have to compete with him one day.

Bruce bootstrapped his business. He created a company that doesn’t need venture capital or angel funding. Too many startups waste too much time trying to attract picky, demanding venture capitalists. Bruce put his energy into getting his low-cost business model into local markets throughout North America. With break-even point already in sight, Bruce seems to have avoided the high cost of selling equity early. If he needs growth capital later, his early success will help him raise more money that most startups do, with less dilution.

He has a plan. Bruce is tackling one under-served vertical market with a unique solution that links buyers and sellers more efficiently. Although he started off with a laundry list of niche markets he would like to disrupt, he is content for now to challenge just one market. If business picks up, he is quite prepared to tackle another market or two — next year.

He knows his business isn’t perfect. He deliberately launched without knowing everything he needed to know, and without working out all the bugs in the system. He figures you learn the most when you’re battling it out in the trenches, so why over-think your startup? Let customers point out the flaws that matter to them. “I’d rather have a pretty good business now,” he says, “than a perfect business that still isn’t ready for launch.”

He understands the paradoxical role of innovative upstarts. At one point in our conversation, Bruce referred to the challenge of “disrupting the industry and helping businesses get stronger.” Innovative entrepreneurs create value for some customers and disadvantage others. If Bruce’s business is successful, the winners will be those market players who adapt best to his model and continually improve their offerings to win over the new prospects he brings their way. As usual in this Darwinian world, those who prefer the way things used to be will find themselves struggling even more.

“I told you so” isn’t in his vocabulary. Like most startups, Bruce met rejection often when he asked target companies to join his referral network. Some of those companies, having seen his initial success, are now knocking on his door to sign up. He welcomes them gratefully, and does his best to help all succeed.

He has a bold, confident revenue model. Bruce’s company takes a commission on every deal that customers and suppliers make on his network. When he told me his pricing policy, I was shocked. He knows he’s bringing his best suppliers new business they wouldn’t have seen otherwise, so he’s not afraid to charge for that, especially on big deals. He knows his solution is much less expensive than hiring sales reps to scrounge for new business. In an era when many entrepreneurs underprice their services, Bruce understands the value he’s creating and isn’t shy about claiming his piece of it.

He’s surrounding his partners with value. Not only does Bruce create new business for his system partners, he also charges customers upfront — taking the responsibility for collections away from his supplier network. It’s just another way Bruce makes life easier for his partners.

He’s in touch with his customers. When working in the evening, or even watching TV, Bruce monitors his site and often jumps in to answer customers’ requests for help. They don’t usually know he’s the boss (although sometimes he says, “Let me escalate your concern to the CEO”). Getting real-time customer feedback helps him identify what’s working well and spot instant opportunities for improvement.

He reaches out to potential advisors and mentors. To stay in touch with fresh perspectives and new ideas, Bruce regularly contacts other technology entrepreneurs for feedback and advice. You can’t build a great business in a vacuum.

He thinks ahead. As we discussed his business’s future expansion into other market verticals, I learned Bruce has already registered an armada of dot-com URLs to cover potential future services. He seemed to have covered all the bases. But when I suggested a market he hadn’t considered, he immediately thought up a cool name to fit his brand, and made a note to buy the URL.

Thoughtful entrepreneurs know how to tell their story. But they also know when to listen.

Want to start a business? Why you shouldn’t wait for a ‘eureka’ moment

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Sarah Lambersky
More from Sarah Lambersky

FilesIs it necessary to have a eureka moment before jumping into action?

I propose to banish the imagery of the light bulb often associated with entrepreneurs.  Search “entrepreneur” in the image section of a search engine and light bulbs will fill the result page.  While helpful to create ambiance in a room, light bulbs put undue pressure on the entrepreneur who is already charged to identify an idea worthy of germination.

“Eureka!” is another word on my hit list. It describes the feelings of elation one experiences on having a new insight or idea.  Is this sudden recognition really what happens before we crown ourselves entrepreneurs and build business empires?

Is it necessary to have a eureka moment before jumping into action? I suppose it happens for some entrepreneurs, but I’m not one of them.

I deviated from the conventional path of employment in favour of embracing the roller-coaster ride of launching a startup; all without having an idea. To add another dimension of complexity, instead of staying local where my roots and networks are, I left Canada and crossed the Atlantic to pursue my entrepreneurial journey. In this blog “From the Desk of a GenY Bootstrapper,” I will take you with me as I move through the stages of building a startup, sharing experiences, tips to help you move through challenging periods, book and article recommendations for learning and inspiration and anecdotes revealing the less talked about emotional aspect of this lifestyle.

One year and one month ago from a simple Ikea desk in my home office in Prague, I launched Countlan, a quarterly digital magazine that explores how people around the world entertain at home. There was no jolting insight. Countlan did not emerge from reading a magazine where I suddenly exclaimed, “that’s what I am going to do,” nor was it a natural career progression stemming from years of experience in the publishing or media industry.

The pressure to come up with an idea can be overwhelming, particularly if you want to put something in motion sooner than later or have watched one too many episodes of CBC’s Dragons’ Den.

A friend recently confided she has strong entrepreneurial inclinations but has not acted. I was rather bemused by her concluding remark:  “I just wish I would wake up one day with a eureka moment!” It was as if having a eureka moment was like the start of a race. Until the buzzer goes, you must wait behind the starting line on the ball of your feet, finger tips down.

My friend has spent several months mulling over potential industries and verticals where she could focus her brain power and make an impact. Furthermore, she has narrowed her focus to the health and wellness sector, an area that is both meaningful and stimulating for her. She is already doing it: she has a direction, and just needs to keep exploring, and let her ideas marinate a while longer.

When I’m asked how I launched my startup, I feel as if people are waiting to hear: “It happened on this day, after I saw a moose, ate an ice cream and had a eureka moment.” What I can say with certainty is the magazine I spend my days and nights fussing over is the culmination of many years of thoughts, experiences and character traits that were marinating subconsciously together; sloshing around my right cerebral hemisphere.

There was no light bulb. The only immediacy was to act.

I echoed a similar message to a group of entrepreneurially curious undergraduate students who were eager to start something of their own but did not know what. Thinking about a business idea means you have taken your first entrepreneurial step and put the wheels in motion. There will come a time when the idea must evolve from a thought to an assessment of the marketplace, but taking a critical look at your environment where you are able to articulate why offering a different solution may be interesting to pursue is a great start. No light bulb required.

Sarah Lambersky is the co-founder and editor of Countlan Magazine.  

This post was taken from http://wwwbrucemacdonald.blogspot.ca

Check out Bruce MacDonald's new e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain"

Study Shows Most Customers Make Purchase Decisions In the Store

By: Jim Tierney

Most customers ultimately make their purchase decisions in the store, according to POPAI’s 2013 Shopper Engagement Study. The study found that 76% of customers surveyed indicated that they make their purchase decisions in the store.

POPAI officials are working on another wave of research with the help of SmartRevenue, Shopper Sense, and Eye Faster. The team will interview 2,800 mass merchant shoppers across the United States.

“In our groundbreaking 2012 Shopper Engagement Study we provided new insights, but also recognized the need to understand more about the shopping trip and shopper mindset,” Popai President Richard Winter explained in a press release. “Within this second wave of research we will dive deeper into what the role displays play in the in-store decision-making process as well as drivers of unplanned purchases in the mass merchant channel.”

The next study will also provide a broad understanding of general merchandise categories as well as grocery items that are found within most of today’s mass merchant stores.

“While technology and data analytics provide more answers than ever before, it remains essential to understand purchase behavior at the critical moment of decision," SmartRevenue CEO John Dranow said. “The POPAI study, which meticulously and authoritatively identifies what percentage of the purchase decision is made in-store, serves as an essential and invaluable guide to marketers and merchandisers as they allocate their resources for maximum impact and return on investment.”

To complement the robust data set of shopper purchases, POPAI is also working with Eye Faster to conduct eye tracking for a subset of shoppers in the field.

“Eye tracking can reveal new information and insights that are hidden in plain view of most other conventional research techniques,” Kirk Hendrickson. Co-founder & CEO of Eye Faster, said. “By revealing visual activity, the shoppers are not consciously aware of and therefore cannot or do not want to express, patterns can emerge leading to clearer insight and stronger understandings of shopper behavior. In this study Eye Faster adds deep insights from the shoppers own point of view by focusing on the path-to-purchase, category shopping behavior and display engagement.”

Fieldwork for the study will be completed this year with findings and analysis available in early 2014.

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