What passive income in the aspect of entrepreneurship is: analyzing problems and finding their solutions

Today I will start the conversation with a famous person - John Rockefeller. His financial path to success began when he was a child. The little boy who knew a lot about savings, investing, partnerships, grew into a businessman and became the first dollar billionaire. Before him, there was no such success in the field of entrepreneurship in the history of mankind. The experience of a man with a billionaire fortune allows you to believe his words, and what he said was: "The more you work, the poorer you get", "Create a source of passive income and live for your pleasure", "The way to great wealth lies only through passive income."

Robert Toru Kiyosaki, who wrote the bestseller "Rich Dad, Poor Dad", interprets the importance of an independent flow of money just the same. By the way, his book is a kind of passive income for him as an author. It seems that the rules for creating a comfortable life in abundance are so obvious, but everything is not always so rosy. Any entrepreneur may have difficulties in developing, promoting his business, a crisis or compelling circumstances may overtake. Let's be honest, there may be problems with the passive income itself. Overcoming them is the ability that opens new perspectives.

Financial planning - future success

You may resent and say that you need money now, and you can think about the future along with planning later. This is misguided financial behavior. It needs to be drastically changed. Set a goal for yourself. It will be the light at the end of the tunnel to define and agree on an action plan. Go through a simple registration to support you on your way to your goal, your dream and to financial freedom. The desired future is close with the correct projection of thinking.

Recently, I listened to Alex Yankovsky's webinar. I liked one of his statements: "Passive income is a disciplined thing." Yes, I agree with that. There is no doubt about that. Entrepreneurship by definition assumes discipline in terms of finances. The laws of doing business determine the need to divide profits into parts: for investments, increasing working capital, forming a reserve for planned purchases, etc. With careful planning, an entrepreneur will be able to “pinch off” a little from his business to create a passive income project.

Fact: Passive income is about discipline, mindset and lifestyle.

Potential problems for entrepreneurs

A promising idea, goal setting, daily hard and selfless work - is this enough for a secure future? Problems for entrepreneurs begin at the stage of taking money out of business. It is necessary to create an alternative source of regular and sufficient income. Not everyone can easily separate personal finances from business money. The withdrawal should not be at a loss. Otherwise, the risk of lack of funds for business support increases. With proper asset allocation, fatal mistakes can be avoided. If you are not sure of the actions, use the help of financial advisors to avoid possible difficulties. The following possible problems can be highlighted:

• lack of free time to develop a passive project;
• inability to exit the business operating system;
• high risks of doing business without the ability to create a personal "reserve" fund;
• wrong choice of an investment segment.

Important: the problems of differentiating income from active and passive business activities are complemented by an imperfect taxation system.

You need to assess risks in advance

I propose to consider several investment options for entrepreneurs. The classic way to earn extra money is by depositing it at the bank. The profitability is low, although relatively stable. The disadvantage is the need to freeze funds for a long period. You should also take into account the fact that the bank for some reason may lose its license at any time. To reduce risks and possible financial losses, it is recommended to distribute money to accounts in different banks.

Rental property is another popular option for passive income. It may be difficult for an entrepreneur to use it due to the need for a large amount of money. And here comes the problem of withdrawing money from the business in an amount enough to purchase an apartment or commercial premises. If you act spontaneously, an entrepreneurial business may be left without working capital. This means only one thing - collapse. If real estate has low liquidity and profitability, its acquisition and maintenance will become an unnecessary item of expenses. Intellectual property development, investment - any way to create an alternative source of regular income requires preliminary analysis. Otherwise, liabilities can become active problems.

An entrepreneur must assess the risks of business and passive income equally. Simple financial planning and savings can not only save you from unnecessary costs, but also ensure business expansion. Pay attention to the numbers. The working capital must include an amount 20% more than necessary to cover force majeure events. Surplus can be safely taken out of business to achieve the goal of creating passive income.

Let’s draw reasonable conclusions and work

Entrepreneurship is creativity in its purest form. Of course, this is not the same as painting on the canvas, but just pragmatism will not be enough. The idea that passive income should come without involvement and paying attention to it is more a myth than reality. I do not advise you to be negligent in financial planning and control, and reduce the level of responsibility. A businessman who came out of the operating system and successfully delegated responsibilities to managers should keep abreast. Yes, he can use his free time for other projects, but he will not be able to remain uninvolved and only get a profit. Periodic control of processes, reporting, payment of taxes, account status, approval of the development strategy can not be avoided. Should you blindly trust directors and managers? It is a dubious question. There are always risks.

Deposits in banks need to be reissued or extended; when renting out real estate, you need to look for adequate tenants; when investing, you need to regularly adjust the contents of your investment portfolio – your participation is required everywhere. An entrepreneur with passive income can avoid mistakes and problems only in one case - it is to steer the wheel, but with less labor and time costs. And the absence of problems for an entrepreneur always depends on his rationality and ability to assess risks. Learn, try new opportunities, implement your plans and go to your goal. All in your hands. And don't forget to dream. John Rockefeller said it was very helpful.

You have read to the end, which means that you also strive for financial independence. If you have experience creating passive income, tell us about it in the comments and share the article with your friends on social networks.

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