Chapter of The MREA: Part Two – The Four Stages: Active vs Passive Income
We return with a deeper insight into The Four Issues of Receive A Million, with the first being your Active vs Passive income.
Active and passive income represent two sides of the spectrum for receiving money. When generating active income, you need to generate value that returns a cash payment, whereas passive income is largely regarded as money that your business generates for you. This distinction must be met with the asterisk that just because you receive passive income does not mean you haven’t put any work in to receive it.
There is a misconception around reaching the higher levels of business ownership, and receiving a passive income from your business, that you won’t have to work to generate that income. But, on the contrary, passive income isn’t sustainable or even lucrative if you aren’t putting your energy into your business.
This doesn’t mean that you are present in all day to day matters, doing the groundwork, but rather that you still have a role in steering the business from a birds-eye-view. This won’t require the hours of a full–time job, but to ensure your standards are kept, and profit continues to rise, you must be aware of and participate in your business’ health.
As Gary puts it, you mustn’t go “AWOL” from your business. Instead, treat every hour you invest into your business as a step towards creating and sustaining passive income. Of course, once you have reached the upper echelons of business ownership, your time to money ratio will dramatically increase in favour of money, but don’t let that force your eye from the ball.
At this point, you will have leveraged people, systems and tools to run your business in the day to day. This is a core component of receiving passive income, but you will be the one to sustain that relationship. So stay invested in your business, ensure your standards are met, and keep pursuing higher ambitions for your business.