How to Make Passive and Residual Income as an Entrepreneur | The Ambition Show | Episode 28

Being a freelancer or contractor can be unpredictable. The same goes for being a full-time employee. You can live from paycheck to paycheck just as quickly as from gig to gig. There isn’t a fundamental difference between the two. Today, we will go through a few of the opportunities you have to leverage technology to generate residual income and get the most from your time. Right here on the Ambition Show.

What is Passive and Residual Income exactly
Why is it easier to generate passive income as a full-time employee than as a business owner
Methods to create passive income and residual income as an Entrepreneur

What is Passive and Residual Income exactly
- Passive Income defined by the IRS
  - Passive income is obtained with little or no work and is frequently produced by individuals and businesses, such as through investments or peer-to-peer (P2P) lending. It is distinguished from earned income by the Internal Revenue Service (IRS) as money generated from an entity with which you have no direct involvement.
- Residual Income Defined
  - Residual income refers to the money you have after you've taken care of ongoing expenses like your mortgage, credit card bills, utilities, groceries, and car payments. This extra money can go toward investments, debt payoffs, savings, or a vacation fund.
Examples of each form of income
- Passive Income:
  - Income earned from affiliate marketing on websites that you own
  - Create a course that requires people to purchase it after you produce it and post it for sale
- Residual income:
  - For example, assume that a worker earns a salary of $5,000 but faces monthly rent payments and car payments that add up to $1000 and $500, respectively. Their Residual Income is $3,500 ($5,000 – ($1000 + $500)). They did nothing additional to earn this income; it is only what is left over after their expenses have been paid.
This is why most people confuse residual income with passive income. They are not the same at all.
Passive income is really what most people work for, which is more challenging for business owners (entrepreneurs, freelancers, and small business owners alike) because they spend more money to start making money.

Why is it easier to create Passive Income when you’re an employee:
- Easier to prove income
- Easier to use residual income to fund passive income sources
- Passive income examples
  - Dividends from stocks
  - Real Estate investments (easier to acquire funding due to more accessibility to show proof of income)

Methods to Create Passive Income as an Entrepreneur
- Create a course or tutorials
- Create a blog with affiliate marketing, advertising, and sponsors
Income from e-commerce is a form of residual income, NOT passive
- Cost for materials
- Cost to create, manufacture, and/or produce products (Cost of Goods Sold)
- Dropshipping or Print-on-demand is more aligned with Passive Income

WHAT TO READ “Entrepreneurs Playbook to Passive Income” by Ehren Muhammad

About the author
- I have been an entrepreneur my entire life. And since I was young, my focus has always been earning from my passion and creativity.
How it relates to our topic
- I created these processes to help generate income for my team and me between gigs, pay bills, and bring in more revenue to reinvest into the business. These plays are designed for the ambitious working in any industry.
Three (3) key takeaways from the book and how it helps the listeners
- How to create passive income processes
- Understanding all the tools available to you no matter how much money you have
- Leverage your current skills and knowledge to profit from

TAKE-A-WAYS = FREE OFFER(S)

Best websites to learn about the basics of stocks and investing
- Bankrate - https://www.bankrate.com/
- Investopedia - https://www.investopedia.com/
- Stash - https://www.stash.com/

How to Make Passive and Residual Income as an Entrepreneur | The Ambition Show | Episode 28

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