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The

Individualpreneurship

Seminar

The individual as an enterprise

Why?

What?

How?

The individual as an enterprise ● Why? ● What? ● How? The Center for Business Leadership

The Center for Business Leadership Development

1

Objectives

Explain what individualpreneurship is

Explain why it is important

Discuss how to get involved

Why individualpreneurship is important?

Individualpreneur develops multiple income streams from many sources

Thus better hedged against uncertain economic, regulatory, and social conditions than those who rely upon once source of income

What is individualpreneurship?

Activity whereby an individual (the “individualpreneur”) behaves like an enterprise (the “individualprise”)

in their own right

In business for themselves – unlike a solopreneur, can have multiple businesses and can employ other persons

Types of sources of an individualpreneur's income

Employment

Entrepreneurship/business ownership

Investing

What is entrepreneurship?

Entrepreneurship is a competency required to start, develop, and assume risk for an enterprise

Who is an entrepreneur?

An entrepreneur is an individual who organizes, operates, and assumes risk for an enterprise with the intention of transforming innovative ideas into products and/or services for a profit

Who is a lifestyle enterprise owner?

An owner of an enterprise in a local community – may be:

Founding entrepreneur

An active owner-manager

A passive owner with a management team in place

Enterprise

Undertake for prize or cause

Group of activities intended to produce income organized as a:

Business of any type or size

Not-for-profit association

Government agency

Non-profit enterprise has exemption for tax purposes

Types of income

Gross income

Wages from employment

Revenues from entrepreneurship/business ownership and investing:

Commissions

Fees

Dividends

Interest

Rents

Royalties

Sales

Types of income

(cont'd)

Gross income

(cont'd)

Capital gains from entrepreneurship/business ownership and investing

Types of income

(cont'd)

Net income

Gross income

Less: cost of revenue

Less: expenses required to generate revenue

Cash flow generated from net income generates wealth for investing and supporting a personal lifestyle

Income and assets of the majority

Income from employment

Full-time job, sometimes supplemented by a part-time job

Exchange time for money

Active form

Home is largest asset – not income- producing

Residual and passive income is best

Residual income results from an initial transaction in the past for which an ongoing cash flow is received

Passive income results from transactions where the individualpreneur is not actively involved

Residual income examples

Enrolling members in systems where downstream commissions can be earned

Selling items

Where subscription is automatically renewable

Consumables where ordering is handled by third- parties

Affiliate programs

Examples of individualpreneurship activities

Having a full-time job

Having one or more part-time jobs

Being a trader on online auction sites

Being a trader in securities

Being a part-time real estate agent

Owning a lifestyle business, such as a restaurant or a retailer

Owning a network marketing business

Managing a real estate investment portfolio

Managing a securities investment portfolio

What is Plan B?

Plan B is an alternative course of action in case Plan A fails

For most individuals, Plan A is having a good education that leads to a well-paying job

For some individuals, Plan A is achieved through entrepreneurship/business ownership

Individualpreneurs blend Plan A with a strong Plan B

An effective Plan B begins with the notion of an individual behaving as an enterprise in their own right

and

thus working on Plan A and Plan B at

the same time generating multiple income streams from many sources

Individualpreneurs blend Plan A

with a strong Plan B

(cont'd)

Plan A may involve full-time employment or entrepreneurship/business ownership

Plan B may involve:

Part-time employment

Home-based businesses (Physical businesses not encouraged)

Investing in real estate and/or securities

Tax return is the income statement of the individualprise

Sources

Wages Interest (schedule B)

Dividends (schedule B)

Business income (schedule C)

Capital gains (schedule D)

Supplemental income from rents, royalties, partnerships, and subchapter S corporations (schedule E)

Tax return is the income statement

of the individualprise

(cont'd)

Types

Wages – all forms of compensation for full or part- time employment Interest on investments

Dividends on investments

Capital gains on investments

Net income from active revenue generation – commissions, fees, rents, royalties, and sales

Net income from passive revenue generation – primarily rents and royalties

Types of business forms

Sole proprietorship

Partnership and limited liability company

Subchapter S corporation

Subchapter C corporation

Achieving Plan B through individualpreneurship

Part-time employment

Developing a home-based business on a part-time basis that has the potential to become full-time (lifestyle to upwardly mobile) – sometimes based upon a hobby or passion

Earning fees and commissions from referrals through affiliate marketing relationships

Achieving Plan B through

individualpreneurship

(cont'd)

Earning fees and commissions from referrals through affiliate marketing relationships

Earning royalties through writing and speaking engagements

Achieving Plan B through

individualpreneurship

(cont'd)

Investing in real estate for rental income and capital gains

Investing in securities for interest and dividend income and capital gains

Plan B income generation

Business development and marketing capability – everything else can be outsourced

Active trading in investing activities (real estate and securities) to ensure that capital gains can be properly realized

Focus on residual and passive income where possible

Keys to business development

Understanding people

Understanding their behaviors

Frequency

Recency

Value

Eventually trends, patterns, and ratios emerge

27

Understanding personal styles

Understanding personal styles 28

Four Personal Styles

Challengers – who appreciate action and adventure

Causals – who appreciate creativity and relationships

Stabilizers – who appreciate law and order

Visionaries – who appreciate innovation and understanding

Blending residual and passive income

Enrolling customers in membership systems where commissions are earned from ongoing sales of consumables, for which the ordering and distribution is handled by third-parties – this activity generates residual gross income and is a form of network marketing

Blending residual and

passive income

(cont'd)

Investing residual income in an investment portfolio that diversifies risk, and generates cash flow from interest and dividends – this activity generates residual gross income, which is passive if the portfolio does not require active management through trading

Plan A versus Plan B

Shorter-term objective of Plan B is to provide a hedge against Plan A

Longer-term objective of Plan B is to gain financial independence through income producing assets and activities – generating wealth to cover all professional, physical, and personal expenses – wealth is a source of capital for future investment

Plan A versus Plan B

(cont'd)

Achieving Plan B also means eliminating debt

Unsecured such as credit cards

Secured such as automobile and housing

Famous quotes

Earl Nightingale: “we become what we think”

Jim Rohn:

“Profits are better than wages”

“Wages make you a living; profits make you a fortune”

“Formal education will make you a living; self- education with make you a fortune”

Frank Feather: “think globally; act locally”

Pursing Plan B through affiliate/direct marketing opportunities

Direct marketing is a relationship-based form of business development

Usually involves commissions earned on sales of products to customers and those of their referrals - commission structure equivalent to overrides in sales organizations

The

Individualpreneurship

Seminar

The individual as an enterprise

Why?

What?

How?

The individual as an enterprise ● Why? ● What? ● How? The Center for Business Leadership

The Center for Business Leadership Development

36