THE ECONOMICS OF TIME AND EARNINGS
Time, how often in a day do we say, " I wish
I had more time". There never seems to be enough of it to stretch to allow us to
accomplish all the things we need to get done in a day - at least on most days.
It gets even worst when it comes to our
"income" and time. Now there really is never enough time in a day to earn what
we need. Do you find that you end up with "more month" left at the end of the
month than "money left over" when paying for all the expenses you have?
If so, you are not alone, the greatest majority of
the population faces the same difficulty each and every month. It is a sad fact, but about
80% of the population are in reality only a couple of pay checks away from literally being
homeless. Does this sound familiar to you or someone you know? Does it make you
uncomfortable to think about? It does for most of us.
Have you ever wondered why this is happening?
Let us take a look at how "income" is
generated in today's world.
There are a number of different ways to bring in
an income to your household. All involve an output of some kind of "energy" to
create the income. What do we mean by this?
"Energy" is defined by The Random
House Dictionary as "the capacity for vigorous activity".
For any "activity" to be performed
requires some type of "effort". So, we can say that to create an
"income" thus requires an "effort" by us to create it.
So exactly what "efforts" are there that
most everyone uses to gain their income?
There are only a fixed number of ways to earn an income stream:
1. The regular "Job" where you earn a set amount of
income for every "hour" of work you put in. Today, the average job consists of a
40 hour week at an hourly rate of between $7.00 to $12.00 per hour. Unfortunately this is
often not sufficient to pay all the needed expenses. You are exchanging, on a one-to-one
basis, your time for the set wage.
2. The "Better Job" where you still earn a set amount
as an hourly wage, but the wage per hour is higher. You are still on the one-to-one rate
of exchange.
3. The "Small Business Owner", who starts his own
business, purchasing goods and reselling them ( or a service ) and who can then make a
much higher return on his "hourly" work than the person who does the same in his
"job" at some company. Again the Small Business Owner is still limited to the
one-to-one rate of exchange.
To recap, each of these avenues of income will work, but ALL
are LIMITED to the same 24 hours a day that you are able to generate an income stream.
Because You still must trade your "time" for the "wage" that you earn,
you can only generate so much money per hour of your effort.
What is the solution then to this dilemma?
Somehow, you must find a way to "clone"
yourself and create more "hours" in a day that
produce an income stream for you.
As long as you remain in your regular "job" and work
for some company, the only option you would have is to take on a 2nd or even 3rd
"job" to increase your income and hope you do not burn out from all the extra
effort you are having to do.
You can look for and find a "better paying job" to
increase your income. That works, but most of us are limited in our skill level which
limits the jobs we are qualified to do. With additional education, our skill level can be
increased allowing us to receive a higher hourly pay scale. But again the same 24 hour
limit still applies. Even the Professional occupations such as a Doctor or Lawyer are
subject to the same limits in time. So, you are earning a total higher amount for your
time, but once again, this may still not be enough to do what you really would like.
Now,if you are a Small Business Owner, you can accomplish this
by hiring people to work for you, thus providing more "earning hours" in a day.
This works well as long as you are willing to take on the additional obligations of having
employees. Also there are a host of other requirements you must meet. From hiring,
training, added insurance, government regulations, a score of new taxes, employee
benefits, and on and on.
But realize that being a Small Business Owner is HARD WORK and you are likely to be working 60
to 70 hours a week. And you thought the 40 hour week was enough! Also, you, as the
business owner are the very last person who gets paid (saying there is enough to pay you
at all - in the first couple of years of your business - most business owners usually
receive NO pay at all!). Also, you have ALL the risks and the worries of your new business
and a huge amount of stress because of this.
Doesn't sound very appealing does it. But many
people do choose this avenue and give it a try. Remember what we said above - "every
11 seconds a new business is started ". Unfortunately, fully 80% of those businesses
do not last beyond their 5th year. In fact, the biggest portion of that 80%, fail within
the first 2 years. Not an endorsement to run right out and start your own new business now
is it!
If you are willing to work hard enough and long
enough, the pay-off can be substantial with a traditional Small Business Model. But I
think you will find that most people will have little interest in this if they understand
what is really involved.
Now that you understand how we generate our income, it is time
to explain that there are "TWO FORMS" of income that can be generated. OK, I
know you are thinking "HUH?", let's explain.
The 1st Type of Income Form is the one we have discussed
throughout so far. This Income Form consists of trading your "TIME" for the "WAGE"
that you receive. You spend a good portion of your 24 hour day in generating this wage and
if you do not go to work - if you become ill and can not work - if you are laid off or
quit your job - YOUR INCOME STOPS!
In this First Type of Income Form,
how many years you work does not matter, the very second you stop is the same second that
your income no longer exists. There is no way to make an income on-going without also
never stopping to work. All Employees and generally most of the Small Business Owners are
in this first type of Income Form.
So is the case with the small business owner, as soon as he
does not open his doors each day - his incomes STOPS too!
This is indeed the "reality" of today's world. How
many of those who were supposed to be retired and enjoying their latter years are forced
to continue to work simply to survive? Do you know anyone in this situation? Are you
looking at the same possible occurrence in your own life? Do you consider this at all?
The Second Type of Income Form
is one that will CONTINUE to pay you after
you stop working. This is know as "RESIDUAL INCOME"
and is the type you certainly want to create.
In this category, there are several ways to create this Income Form.
1. --
You have a skilled professional who develops or creates some form of intellectual
or artistic product. For example, a music artist who produces a music CD. The music artist
took their time and effort to create the CD, and once created, they do not have to re-do
it ever again. When one of the CD's are purchased by a consumer, then the artist receives
a "residual" (a portion of the price of the CD) from that sale. This happens
each time a CD is sold to someone. However, another person must expend their time to
create that sale. So, even though, the person does not themselves market their products,
their income is dependent on the work of others. Also, the product is a one time sale.
After all, how may of the same CD's do you require? To continue receiving their
residual income, new customers must be found to purchase their products. This is a better
way than a "job", but still somewhat subject to the same limitations as before.
2. --
There are the various types of "Investments" available, such as the
stock market, bonds, debentures, funding someone else's small business, and more. Again
this can certainly work and provide you with a comfortable residual income. There is one
large flaw however. These types of business are subject to economic changes, Buying
habits, profit taking and a host of other possible changes that can seriously effect the
amount of residual income that you may receive. Anyone remember the Stock Market Crashes
of the last 10 years? How many people totally lost their retirement funds when everything
crashed? Were YOU one of the unfortunate ones?
3. --
Now, we come to what is the most Popular and simplest type of Residual
Income of all. This is an income that continues to flow to you on an on-going basis and is
termed "Repeat Residual Income Form".
It is created by the recurring sales of a Consumable Product
to the same customers over and over again because those customers like and need that
product. To generate the initial purchase, time and effort were expended, but little
further time or effort is needed for the next purchase or the ones after that. Thus
your income "repeats" each month as the customers continue to Buy the products.
Some examples of companies who operate in this manner that you
are familiar with are: Mortgage Lenders, Insurance Companies, Credit Card companies,
Utility Companies such as Gas, Water, Electric, Telephone Companies and more.
As you can see, under the "REPEAT
RESIDUAL INCOME FORM " model a company can be very strong and stable
because their customer base, which generates their income, requires no further effort on
the company's part to keep them purchasing the company's goods.
It is very important that you understand this critical
difference. There are many business that have repeat customers for their goods, but those
business still must expend a lot of effort to keep those customers coming back again. Take
a Doctor for example. Certainly they have a lot of repeat customers, but they are still
expending their energy to service that customer over and over again. Now consider a
Grocery store whose regular customers return each week to purchase what they have come to
like from the store. Little additional effort is required to keep those customers coming
back each week - the initial marketing effort of the store, once done, is no longer
required to keep them coming back - the store has now created a "repeat residual
income" from that customer.
This is the "Repeat Residual
Income Form". Where your income continues because satisfied customers
purchase your products over and over again. Where the work, time, and effort you
expended that ONE TIME produces an income that comes in without the necessity to do any
further work or take up any further amount of your time.
This is the strongest and most viable type of Income Form and
is the model that most financially sound companies base themselves on.
So, then, just how can we
effectively "clone" ourselves without all of the problems that will be generated
when we take on the small business, with employees, needed costs and everything else that
goes right along with having your own business and develop this "Repeat Residual Income Form"?
The answer is in Network Marketing.
NETWORK MARKETING:
