Residual income is the continual inflow of cash through a business venture that does not require the additional efforts of the business owner, once the initial system has been established. Otherwise known as passive income, it can be generated from several business sources, that is, the entrepreneur can choose to create multiple streams of income by setting up several businesses with an automated cash flow system.
With the present state of our national economy that is constantly faced by the dwindling value of the Naira, falling oil prices, insecurity issues and several other concerns, it is imperative for any entrepreneur who seeks to succeed against these odds to build a system that will ensure a sustained and diverse flow of continuous income.
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In contrast, linear income is cash flow that only comes after you work. Most times this ‘pay-as-you-work’ system brings earnings that are not commensurate with the amount of time and energy invested in the venture, which in most instances are owned by someone else who pays the worker a meagre salary in return for his huge efforts.
Those who live on a linear income will always struggle to make ends meet, after putting in 30 days of work, salaries which are often delayed, will go into offsetting debts, paying bills and meeting other personal and family needs, leaving little, if any, in savings. Setting up a business that generates passive income instantly puts you on the path to financial freedom.
How to earn passive income
If you are considering what type of business to establish in order to tap into that steady flowing stream of residual income, then the following are worth investing in:
• Real estate: Ownership of properties is one way you can secure your financial future as there will always be a need for housing, your tenants will continually bring you money which will serve as your source of passive income.
• Publishing: If you have a good writing skill, then you can use it to create your source of continuous income. Using the internet, you can write on various topics of public interest (e.g. travelling, finance management, romance, exercise, health, etc.) which will then be sold as online books that will always be available for multiple orders from readers.
• Artistic/sporting talents: Other ways of making money from residual income formula is to develop your talents in the areas of music, acting and sporting activities. With strong focus and determination, you can attain a status where your skills will be widely recognised and rewarded with mouth-watering sums in fees, contracts and endorsement deals.
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