Do youwant to continue working 50, 70, 100 hours a week the rest of your life?

Good!Neither do I.

Do youwant to be able to take time off whenever you want to, without worrying aboutwhat's going to happen to your business?

So do I!

There'sa saying in the corporate world: "Don't make yourself irreplaceable. Ifyou can't be replaced, you can't be promoted." As an entrepreneur, this isstill true in its own way. Let's think of "being promoted" as earningmore and working less. You can raise your prices, but until you can removeyourself from being directly involved in doing the work that generates theincome, there's always going to be a limit to how much you can earn, and it canonly increase very slowly.

Passiveincome, on the other hand, is income that does not require your directinvolvement. Some kinds of passive income you may be familiar with includeowning rental property, royalties on an invention or creative work, and networkmarketing. If you want to earn more, work less, and have a decent retirement,you're going to have to start creating income streams that do not require yourdirect involvement. Whether you're just starting your business, or you've beenrunning it a while, the sooner you start thinking about how you are going toshift your business model to create more passive income, the sooner you canachieve personal and financial freedom.

Let'slook at two basic types of passive income, and a third type of income that,while technically not passive, is a key strategy for earning more and workingless.

Residual Income

• Residual income is revenuethat occurs over time from work done one time. Some examples include:
  
• An insurance agent who gets commission every year when acustomer renews his policy
  
• A network marketing or direct sales rep's income fromher direct customers when they reorder product every month
  
• An aerobics instructor who produces a video and sells itat the gyms where she teaches
  
• A marketing consultant who creates a workbook and sellsit in e-book format on the Internet
  
• A photographer who makes his photos available through astock photography clearinghouse and gets paid a royalty whenever someone buysone of his images
  
• A restaurant or retail owner who has grown to the pointof hiring a trustworthy manager
  

As youcan see, there are many different ways to generate residual income across awide variety of businesses. It may be recurring income from the same customers,or the sales of a product to new customers. It may require no personalinvolvement whatsoever, such as an e-book sold on a web site, or it may requiresome personal interaction, such as the insurance agent calling the customer toremind them about their renewal and ask them if they want to change any oftheir coverage. Often, it's something that you can delegate to an assistant.

Notethat this is different from merely recurring income. Recurring incomemay still require your involvement to earn the income, e.g., a coach orconsultant on a monthly retainer, or a caterer who delivers lunch every Mondayto the local school board. While this "active recurring income"offers welcome stability, it also tends to tie you down, and you still havelimits on your earning capacity based on your own personal production capacity.

Leveraged Income

• Leveraged income leveragesthe work of other people to create income for you. Some examples of leveragedincome include:
  
• An e-book author selling her e-book through affiliateswho promote the product
  
• A network marketer who builds a downline and receivescommissions on the sales made by people in his downline
  
• A general contractor who makes a profit margin on thework done by sub-contractors
  
• Franchising your business model to other entrepreneurs(the ultimate leveraged income)
  

Again,there are many different models in many different businesses. The key is thatyou are making money off of other people's labor, rather than primarily yourown. Note that leveraged income may or may not also be residual income. Whenyou combine them, that's even better.

Active Leveraged Income

This is a term I use to describeincome that requires your direct participation, but that you can make moremoney by having more people involved. This generally involves a one-time event,such as:

.       A seminar or class

.       A conference or convention

.       Concerts and dance recitals

.       Raves and other parties

Althoughthese require your direct participation, your earning potential is much higherthan if someone were just paying you a direct hourly rate. Fill a room with1,000 people paying Few Rs. for each and you can cover your facility cost, promotional cost,and staffing fees and still have a nice chunk of change left over.

Applying It

Now is the time to thinkabout how to apply this in your business. Can you create a product that peoplewill buy over and over again? Can you engage others to sell your product? Howcould you make money off the work of others?

The sooner you answer these questions, the sooner you'll havefinancial and personal freedom.