Why profits are better than wages

Dan explores some fundamental questions: what is the difference between residual income and linear income in both providing security and motivation?

This is a tough issue.  We are in a culture that has taught us to expect wages for our time.  The person who makes $10/hr wants $12 and so on.  The attorney who makes $100/hr wants to work his/her way up to $200.  Whatever the level, we’re talking about wages, or linear income.  Is your income linear or residual?  Here’s how you can tell.  Just ask yourself this question:  “How many times do you get paid for every hour you work?”  If you answered, “Only once,” then your income is linear – you are making wages.  Salaries offer linear income. Doctors and dentists earn linear income.  Linear income is very time dependent – when you don’t show up for work, or take a day off, your paycheck stops. 

With residual income (profits), you work hard once and it unleashes a steady flow of income for months or even years.  You get paid over and over again for the same effort.

I continue to see people who are being let go by major companies. 

Many are angry in that after 20-25 years of working for “security” they are now left out in the cold.  I want to tell them they were not secure; they only had the illusion of security.  Working for someone else, unless you own a piece of the company, is not security.  It’s just the “illusion of security.”  Working for a company is fine, but you must understand it will never give you security.

Investing, real estate, licensing an invention idea, writing a book, marketing personality profiles, software development, having a course online, recording an audio message, and having affiliate links are just a few examples of potential “residual income.”  Fortunately you can do both.  You can work for a company and still start your own “profitable” business.  But there’s something that changes when you start working for profits rather wages.  I’ve seen the guy who’s too tired to go to work, stay up all night placing his baseball cards for sale on eBay.  Or the lady who is depressed and exhausted at work but will spend 40 energetic hours on the weekend writing her first novel. 

I’ve seen a person’s attitude, voice and face change to send a new message.  The possibility of profits is empowering and releases the very deepest reserves of creativity and energy.  Working for wages is limiting – the temptation is to do the very least to maintain the predictable and limited reward.

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