WORKING FROM HOME II (Renewal Income)...
In our previous article we encouraged you to move ahead with your plans to create and grow a home-based business. And we provide you with some thoughts on how to create a firm foundation for your business. Now we present the value of renewal income.
What is Renewal Income?
Renewal income is getting paid many times over for something you did one time only. It has several advantages over transactional income. Transactional income is what you get paid when you work. For example, our wedding business (A Beautiful Florida Wedding) is lucrative as long as we are planning or performing ceremonies. The more ceremonies we perform, the more money we earn. When we are not presenting ceremonies we don’t bring in income.
Renewal income, on the other hand, can take several forms. Insurance and financial planners, for example, are paid directly on the sale of new policies (transactional income), and then continue to receive commissions on the renewal of policies annually (renewal income). J.K. Rowling, the incredibly successful author of the Harry Potter series, not only received a financial advancement on each book (transactional) but continues to receive royalties as long as the books sell (renewal) and has been collecting additional royalties from the movies and souvenirs based on the books. We can attract wealth from our efforts. In this case, Rowling, a single mom who is now the richest person in Britain. We can attract great wealth in many forms but a renewal income can bridge the years we have spent in a career or profession that generated only transactional income.
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What are the benefits of Renewal Income?
Long-term financial security is the most important result of renewal income. Being able to leverage income allowed us to leverage time and talent so that we could indeed make “time for what matters”: family, church, social and business relationships, leisure time, and charity work.
Let Cynthia tell you briefly about her earnings experience before she realized the value of renewal income. She owned two wellness centers that focused on individual, couples and family therapy from a body-mind perspective. As the client base grew and income increased (transactional), she hired and trained an increasing number of therapists and holistic practitioners to serve her client base. She had been taught that hard work and a good education would provide her with financial security. She discovered otherwise.
About every 18 months, one of the therapists she had welcomed and trained would announce their departure to begin their own “private practice”. She lost an investment (time and therapist) and part of her market (those clients who went with her) and had to begin all over again to maintain her client base and income. This was not renewal income but “redoable income”. Here she had to do it all again just to keep up let alone move ahead with new growth.
Most work-from-home business models follow this “redo-able” income pattern. Indeed, the pattern she experienced in her counseling centers paralleled the “breakaway” phenomenon characteristic of most multi-level marketing companies (MLMs). Breakaway occurs when a business-builder you recruited becomes as successful or more successful that you then “breaks way” taking their organization with them to create a new business. You are faced with rebuilding that hole in your business fast or face a significant loss of income. The effect on the original business builder can be wuite disillusioning and despairing. You believed that you were building a team with a “team spirit” and that you could all grow together, only to discover that competition rather than collaboration was the spirit of the business. The result is a feeling that “my business owns me” rather than I own my own business (see www.timeforwhatmatters.com video). How can you avoid such a “high risk venture” that has such a stressful outcome?
In the financial arena, a renewal income is like a dividend that one receives over and over again for a good initial investment. In the past, many investment products came with a high level of risk and, like ourselves, many people paid the consequences of that high risk. Today, however, there are investment vehicles that insure one’s principle and are therefore less risky and more likely to generate a reliable renewal income. If you expect to be in business for yourself for the long term, it’s also important that you plan for the long term.
Let us share with you in our next article how we discovered a reliable renewable income source when we established a plan to retire and live in Florida.
