The Cash Flow

The CASH FLOW QUADRANT

The E and S groups (80% of the population) – they own 20% of the wealth

The B and I groups (20% of the population) – they own 80% of the wealth

(( The B group (Business Income) refers to generating => PASSIVE income ))

When you study the CASH FLOW QUADRANT Chart above, you see that there are basically four (4) different sources by which income (or money) is generated, or earned. Most of us will have the potential to produce income from all of the 4 quadrants, but we tend to select only one or two - the primary one being that which we choose for our jobs, careers, businesses or professions.

PASSIVE Income - Earning a stream of dependable cash flows "while you sleep" is the dream of most people. The importance of being able to create on-going, largely "passive" income for yourself (especially if it can be done Online, from home) cannot be overstated.

Problem - It is very difficult (almost impossible) to develop passive income streams from a job or from providing services (Employees, and the Self Employed -including private practice health care professionals) - where you are simply trading "hours for dollars" -- "time for money" - because there is very little L-E-V-E-R-A-G-E in that. You'll need to find ways to "move to the RIGHT side of the Cash Flow Quadrant (the B and the I side) in order to build real wealth for the future (see diagram above).

Vulnerable - The "risk" factor for the self employed is high, because their income generally STOPS whenever "they" stop (sickness, accident, holidays, burnout etc). Unless they have a "backup" (a Plan B) - they are exposed - and if the bills and overhead don't get paid, that only adds more "stress" to the situation.

HOW to Develop 'Passive Income'? - There are many different ways to create "passive income" (real estate rentals // insurance renewals // royalties, from books, CDs // pensions // annuities // starting an eBiz, to market your own digital info. products, like eBooks, Audios, eReports, etc. // becoming an Affiliate for other's products & services (Affiliate Marketing) // Internet Marketing // Blogging //Network Marketing, etc).

Entrepreneurship - Each method requires its own skillset - each method has its pros and cons - but bottom line - the "concept" of developing PASSIVE INCOME - through LEVERAGE - and ideally, ONLINE, from the comfort of your own home - is very wise.

Becoming an entrepreneur or netpreneur (with the 'right kind' of an eBiz) is perhaps the best solution for the vast majority of people, because of its low startup costs, ease of operation, and high scalability (leverage, via the Internet). Such an Online business can lead not only to financial security, but true prosperity. Note this...

Passive (RESIDUAL) Income

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LINEAR Income (salary, wages, etc)

 

TIME Is MONEY - The reality is - there are only so many "hours" in each day - there is a finite "rate per hour" that you can earn (or charge) - you only have so much "energy" to go around when you perform your job / tasks / services, etc. You need to find ways develop more TIME LEVERAGE for yourself.

Bottom Line - If you're an E (Employee) or an S (Self Employed) - and your WAGE is your primary (or only) source of revenue - you are in an extremely vulnerable position. For the self-employed -yes, you are running a business, but if YOU need to be there to run it - that is still in the S category (Self Employment) - which means you're 'exposed' (vulnerable).

As good as the E (Employee) and S (Self Employed) on the left may be - as soon as you can embrace the B (Business Owner, with "leverage" built in, where YOU do not need to be there in order to run it) and the I (Investor) on the right hand side of the Quadrant, for any 'disposable' income you may have) - the better your financial future.

This does not mean "abandoning" what you're doing - NO (unless you wish to, or you feel burned out). It simply means this: positioning yourself intelligently, so that you have the right kind of a "B" (and/or an "I") option in place- to either supplement what you're doing - or to fall back on, should your primary source of income become threatened, or go away.

The CASH FLOW QUADRANT

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