Many of you have the opportunity to change your lifestyle, and start building momentum towards your financial goals just by making changes to your income/expenses. I am not talking about getting a second job, or even starting a business. I talk a lot about ways to create income streams, but what about increasing cash flow? Creating income can be a daunting task, that requires investment risk of one’s resources, and increasing cash flow requires discipline. Tuning your income streams and cash flow to the right frequency can make all the difference in receiving a clear signal to reaching your financial/lifestyle goals. Too much adjustment of one over the other can lead to that signal becoming fuzzy or distorted.
Understanding the differences between capital gains and residual income should be common knowledge for anyone, let alone an entrepreneur. Unfortunately, from elementary to high school, we are conditioned to accept capital gains as the most realistic means for making a living. Each have their pros and cons, but I want to make it very clear that it is a matter of choice as to how you make your living. I think people tend to lean towards capital gains for reasons I explained in “If Money is Too Taboo then Try Adding a Dash of Value”, where I was talking about how money is stigmatized as the root of all evil and how it should be “earned”. If you are self-employed and making a living at what you are passionate about, then I can see how that mentality could work for you. In “Entrepreneurs Create Options to Gain Control” I explain why entrepreneurs are interested in opportunities that create residual income. Residual income is about gaining control, and attaining control is about gaining freedom, but the best way to make that happen is to create options that offer value.
An entrepreneur is an individual who generates ideas or acts upon the ideas of others. One of the most important skills of any entrepreneur is their ability to raise the necessary capital to bring life to those ideas. Whether they’re trying to close a real estate deal, launching a new product, or starting a new business, there are several creative ways of financing a venture that can help the entrepreneur avoid having to put an idea on hold or miss an opportunity. OPM (other people’s money) is a cornerstone of creative financing, and plays an integral role for a healthy economy; as ideas & capital are the two factors that drive it.
All businessmen double as salesmen, but not all salesmen double as businessmen. If you aren’t able to sell then it is going to be very difficult to go into business for yourself. Selling in this context doesn’t just mean making money through direct exchange of tangible value, but also through the ability to sell ideas. The businessman is the individual who will create a system that can deliver that tangible value, and can bring ideas that were once only thoughts of one’s imagination, into reality. The following are some characteristics I have noticed, since becoming an entrepreneur, that help me identify a salesman from a businessman. The reason why I believe this is important is because each are driven by different agendas and if you are trying to work with others to reach certain goals, than it is imperative for the success of said goal(s) to make sure you are aligning with the right individuals that will help you reach those goals.
I have produced quite a bit of content in the past few weeks, explaining how one can benefit from an investment club economically, socially, and personally. Now, I want to illustrate an example of a solid business plan for a club, but in order to do that I will need to explain the principles behind a solid plan. Regardless of what your club focuses on for methods of investing, if this principle of true diversification is implemented you can feel better assured that consistent growth is possible.
We've learned how investments clubs help folks, even those with just a small amount of cash, gain financial leverage through strength in numbers. This act of synergy and collective contributions create opportunities for all the club members to build a portfolio of assets that they wouldn’t have had access to on their own and/or in much less time. Each member of the investment club could have their own personal reasons for contributing. The club as a whole, on the other hand, only has one function, and that is to increase the value of each member’s equitable stake within the club by trading/acquiring assets, and increasing dividends. What separates one club from the next is what/how assets are traded or acquired and dividends are earned. A successful club is comprised of members who share the vision behind the business club's investment plan.
Part one explained how mutual investing uses strength in numbers to create financial leverage. People utilize the synergy of an investment club for the purpose of building a portfolio in less time. This collective effort also allows individuals, with only a small amount of money to invest, the opportunity to own a piece of several assets that they would have never had access to on their own. How does an investment club operate? The portfolio’s investment focus vary, making each club’s operation unique from the next, but each club’s set up is similar in standards.
An investment club is a group of individuals who share a common interest in achieving their financial goals. A number of contributors pool their money together in order to create investing leverage with a larger lump sum of capital than if they were to invest individually. This creates the opportunity for a number of individuals to add assets and net worth to a portfolio in a short amount of time. There is a lot of room for creativity in developing a business plan for a club, and by the end of this series you will have an example of a plan you could incorporate with prospective partners.
Learning how to negotiate a deal is a priceless craft that will help you build your multiple streams of income. Negotiating a deal is like an art form, like an actor of the performing arts must put themselves in their character’s shoes to understand how to play the role. You may understand how a successful deal will solve a problem, but use these three tips and you will make great deals that create a win/win situation. I always strive to not only solve a problem, but to finish the deal with the parties involved receiving a gain, because that is just good business. Building a reputation for doing “good” business is what brings deals to you instead of you having to hunt for deals.
An income stream is a source that creates a cash flow that covers any and all expenses derived from it, and leaves you with profit in your pocket. Understanding how cash flows and having the ability to identify the different streams of income you could tap into, is the beginning of building a world of abundance around you. Most people live in a very small “world”, because the only stream of income they can identify with is their job as an employee.
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