Recurring income

If you are in business you either buy (manufacture) or sell goods, or you deliver a service based on your personal skills.

If you buy or sell goods there is no reason to believe that once you have achieved a sale to a particular person of business, they will return to buy again. Unless, what you sell will eventually “run-out” and the buyer will return to buy again. Importantly, to make subsequent sales of goods you will have to manage stocks and a delivery function.

If you sell services that fix one-off issues – say remove a dead tree – once the service is delivered, unless the customer has a forest, it is unlikely they will contact you for more dead-tree removal issues.

However, if you are contracted to mow acres of lawn for a local authority, as long as you don’t fall foul of spending cuts or other issues your contract to provide these services will reoccur.

Again, to deliver these recurring services (as with repeat orders of goods) you will physically need to maintain equipment and supply labour.

In all of the above cases, where there is a recurring element to repeat business value can be attributed, but something has to be done in order to deliver the repeat business.

What if you could build income streams based on an initial effort, but no follow-up activity (or very little) to maintain the income stream?

For example:

  • you could write a book and enjoy royalties
  • create a subscriber list for your news copy
  • buy and let a property
  • invent a product and receive licence fees

In all the above there is the possibility to leverage the benefits of your initial actions that will enable to receive income while you are “on the beach”.

Original post by Latest Taxation News and many thanks to them and their entry and picture of their BMX Bike