What The Bleep Are Passive Income Businesses

PART 1 of a 4-part How To Build a Passive Income Stream Online Mini Training Series

Businesses are the third asset group you want to be stocking in your asset drawer together with equities and investment properties.

This is all explained in the article “The Investment Pyramid”. 

Specifically businesses that are set up and run in a way that brings in loads of income for you without you having to be involved in the value exchange.

Sadly, 9 out of 10 people who start a business don’t actually understand what a passive business set up means or entails and through ignorance they set up a prison for themselves where the business can’t actually make any money without them.

Not all businesses are equal and not all businesses have passive income assets which can serve you and create your freedom. 

This is why I decided to share this cool old video I did a few years back. In it you will learn exactly what a passive income business is so you don’t fall into the trap of creating something that turns into a prison instead of an asset.

A passive income business is something through which you can generate both income and value growth with other mechanisms doing the work.

There is NO aspect of you earning money based on you selling your time.

Most salaried employees earn money by trading their time for income, with the implied agreement that during that time they will add value to the company paying them for that time.

Many self-employed people, in any form of service based industry, do exactly that. 

Although they may believe they have a business asset, they actually don’t because their income is still based on some form of time for money trade off. If they aren’t “working” they aren’t earning. Without THEM in the equation the business has no value and no money is generated. 

This is the time-for-money trap.

The businesses you want to be looking to create or buy or promote are those that earn income through other mechanisms that deliver value without you having to be directly involved in the immediate value exchange.

These other mechanisms should be thought of as sub-assets and how well you manage these and leverage them determines your return. 

So that’s the rub!

Just like your money, these things need to be managed by you and given direction and leadership. It is up to you to leverage them and how well you are able to magnify the value they deliver determines the income and capital growth you receive in return.

These sub-assets include:

• Other people's time
• Other people's money
•  Other people's creativity
• Other people's businesses and products
• Products and services created by you.
• Products and services created by others

The levers you have to magnify their value include:

• Other people's time
• Other people's money
• Online and offline distribution
• Systems and processes that deliver the value and or service on your behalf

VALUE LEVERAGE IS WHAT IT IS ABOUT

To create successful business assets you must keep the principle of value leverage clearly in your mind, and keep focusing on how you can remove yourself from the immediate value exchange.

Looking at those principles you will also realise that both your equity investment portfolio and your real estate portfolios are in fact low input businesses.

With your equity portfolio, you are buying businesses that create value and from which you get to share in the returns in the form of capital growth and dividend payouts without you having to actually do the work.

With your real estate portfolio, you have physical property delivering the value for you and you get the return. 

Success Tip: 

Consider your life as a business holding company called
MY BIG JUICY LIFE Inc 
and your various assets within the different asset classes are
companies owned and managed by the holding company. 

You are the CFO of these businesses. The Chief Freedom Officer.

To have your freedom you must provide leadership and direction to each business  - ensuring they keep adding more value and thereby bringing you greater returns.

Your holding company must have a number of different businesses, some being the bigger businesses bringing you your primary source of wealth and also have little side stream income flows bringing in a nice steady flow of income.

When you see your financial life and your assets in this way, you realise there is no such thing as a completely passive business, only smartly leveraged businesses.

This is why I prefer to use the phrase “Passive Income Streams” rather than passive businesses, as the goal is not to spend no time on your business but rather to be more and more leveraged so that for each hour you put in managing your assets you get greater and greater returns.

There is no such thing as a too small passive income stream. These small trickles combine and grow into big rivers.

Big love

Ann