Passive income is an earning received on a regular basis, with a little bit effort required to maintain it.

In the offline business, passive income does not require direct involvement and materially participate from the owner or merchant to maintain the business. Already established systems running the business.

Regarding Internal Revenue Service (IRS), income can categorizes into :

1. Active Income, earnings from wages or active business participation.

2. Passive Income, earning from non active business participation.

3. Portfolio Income, earnings from dividends, interest or capital gains.

For example, you can get passive income in the form of :

1. Earnings from rental property

2. Royalties from publishing a book

3. Royalties from licensing a patent

4. Royalties from licensing an intellectual property

5. Earning from residual income

6. Pensions

The passive income is usually taxable, because it as an income obtained as a result of capital growth or in relation to negative gearing. To make sure your taxes are filed correctly, it would be prudent to check with the IRS or a tax professional on this matter if you have a blend of active, passive, and portfolio income.

Usually people do business or work or career to get active income which sufficient for daily life. However, there are times when a business or job or career can become unhealthy. That is why you should be building multiple streams of income like passive income. You can leave an unhealthy work environment awhile, so that you can focus on the new income streams.

In the offline business, automation is the use of industrial control systems with applications of information technology to control industrial machinery and processes.

The goal of automation in the offline business is to reducing the need for human intervention, so that it can minimize human error, physical requirements of work, mental requirements, human sensory and pressing production costs. Improve safety, increase productivity and profitability. In the industry, automation is a step beyond whereas mechanization provided human operators with machinery. With automation systems and processes can be automated.

In the online business, automation is the use of product marketing systems with applications of information technology to control marketing process.

The goal of automation in the online business is to reducing the need for human dependency, which can minimize the human labor.

For example, if you want to market a product, you can create an automatic website which contains :

1. Sales Letter

With Sales Letter, you can enchant the visitor so you can :

1.1. Fishing Attention

Make visitors want to read the material products that you offer.

1.2. The Interest

Visitors will need these products.

1.3. Generating Desire

Make visitors want to have the product.

1.4. Make Moved to Act

Make visitors want to immediately order the product and feel sorry for if the delay or ignore your bid.

Sales Letter must be written in a systematic, easy to understand and flow. For more convincing visitors, usually contains testimony from people who already use the product and money back guarantee.

For example, if you store owners, you will need some salesman who will offer visitors the goods and services. With Sales Letter then you have thousands of salesmen who are ready to serve visitors at any time, even when you’re sleeping though. Sales Letter reliable able to change visitors become buyers.

Market Share is the percentage or proportion of the total available market or market segment that is being serviced by a company that can be expressed as a company’s sales revenue divided by the total sales revenue available in that market or as a company’s unit sales volume in that market divided by the total volume of units sold in that market. Unit can be a product or services.

For example, in the 2008 there are 1000 units 2000cc sedan sold in a country. Toyota sells 600 units of them, then Toyota has a 60% market share for 2000cc sedan in 2008 at that country.

Because different companies may charge slightly different prices for the same cc of sedan. There is another method for calculating market share won’t always provide the same answer.

For example, in the 2008 Toyota sold the 2000cc sedans for a total of $10,000,000 and the people in that country spend a total cost of $17,000,000 for the same cc of sedans, then the market share of Toyota is S10,000,000/$17,000,000 or 59% for 2000cc sedan in 2008 at that country.

Market share for the next year can be predicted from the previous year. Generally necessary market research to estimate the total market size and a company’s market share. The market leader must have a strategy to maintain its market share. For the others, must have a strategy to take over. Market share is very influenced by macro environmental variables such as the state of the economy, changes in tax policy and others.

In the business, market share is used to :

1. Determine company’s competitive strength in a market segment as compared to other companies in the same segment

2. Measure the company performance relative to competitors

3. Accurately assess company’s performance from year to year

4. See if the company is doing better or worse compared to other companies that are facing the same challenges and opportunities that it is

If the company don’t take into account the market conditions that may has improved or decreased  their sales. Their sales may has gone up because of increased popularity of their product or services, or their sales may has gone down because of a drought or recession or other economic conditions.

There are some specific reasons that a company may seek to increase its market share :

Operating costs are the recurring day to day expenses which are related to the operation of a business.  In this case, offline business and online business in the normal business operations. Also called operating expense, operating expenditure, operational expense, operational expenditure, opex. Sometimes called non-discretionary budget.

Than there are in the operation of a business, opex also be in the operation of an equipment and a facility. Opex counterpart is capital expenses (capex), is the cost of developing or providing non-consumable parts for the product or system used in operation of a business.

For example, the purchase of a printer is the capex, and the annual paper and ink cost is the opex.

Opex is responsibilities of management that management must contend with is determining how low operating expenses can be reduced without significantly affecting the firm’s ability to compete with its competitors.

Shareholders or investor want to make sure that management to keep these operating costs in control as well as maintaining their bottom line.

For example, if a company not operation in their bottom line, certainly, the company must be in the wrong line of business. Companies should never ever be operating at a loss. If a company is operating at a loss of course will not be sought by prospective investors.

Avoid Cutting Expenses

To avoid cutting expenses is usually done with a raise profits and increase the bottom line, among others:

1. Raising prices

2. Finding new markets

3. Create product channels

4. Reducing product quality

That can initially boost earnings and may even be necessary in cases where a company has lost its competitiveness.

5. Increase operating margins

In the offline business, as an employee, you will be working for other people, in supervise other people. Let’s say Supervisor. As an employer, you need employees who tend complaint about salary, working hours, the demand for additional welfare, threatening strikes. Your employees will be working on working hours, beyond that will require over time incentive.

In the online business, you will be working for yourself, you don’t have the supervision. You don’t need employees that many requirement. Your employees are your laptop and some software. Your employees will be working for you nonstop, 24 hours a day, 7 days a week. They will serve the guests who come to your website, while you’re sleeping though.

Here is a glimpse of the offline business Supervision and you can see what is not needed in the online business in general.

Supervision can be done by :

Supervisor

Foreperson

Team Leader

Overseer

Cell Coach

Facilitator

Area Coordinator

Lead Hand

Supervisor is an employee that have responsibility for a few things and authority to do some actions of other employees. Supervisor as a member of management. Supervisor as a middleman and buffer between the employees who actually do the job and the rest of the organization.

Differences between the Supervisor and Manager is :

1. Supervisor doesn’t typically have “hire and fire” authority. A Supervisor may not recruit the employees working in the Supervisor’s group nor does the Supervisor have the authority to terminate an employee. Supervisor may participate in the hiring process as part of interviewing and assessing the employee candidates. Human Resource Manager have actual hiring authority.

Such as that discussed previously, in the offline business, you and your employees or you, your colleagues and your boss must comply with Standard Operating Procedure that have been agreed.

In the online business, you determine your own kind of procedure you want to do, whether while drinking, eating, relaxing. Even if you only wearing the underwear, if you want :p. However, some online business still need Standard Operating Procedure.

A Standard Operating Procedure (SOP) is a set of written instructions that as a guide or detailed work instructions or effective way and safety in the process of doing a job, such as plans, regulation, compliance, policies, protocols, instructions, worksheets, and laboratory operating procedures. Clearly describe what staff are expected to perform the job in the workplace, routine document, repetitive activity that compliance with organizational, must be in the periodic review.

SOP to overcome how a work process should be done, provides information to perform a job properly, avoid confusion among the employees , who should do, who gives the approval, what’s document should be prepared, various other problems that can be reduce the overall effectiveness and efficiency of work.

With apply the SOP, you can improving performance, comparability, credibility, legal defensibility, planning, the needs, prerequisite, responsibility, guidelines and administrative procedure, organizational results. Reduced work effort, miscommunication, variations. You can consistent implementation of a process or procedure within the organization, refine current processes, the action step, emergency response operation, frequently used it as checklists.

SOP must be implemented in :

Military

Clinical research organization

Manufacturing 

Information technology industry

Health and Safety Policy

Logistic (Procurement, Inspection & Recipient, Goods Storage, Distribution) Etc.

For example :

SOP on the procurement of goods to submit Bill of Quantity (BoQ) to Inspection & recipient of Goods. SOP on the inspection & recipient of goods to see if the packaging, specifications, expire date in accordance with the procurement of goods contracts between supplier and buyer, and see the quantity of goods is.

SOP on the storage of goods to see the type of goods and how the best way to storage the goods and enter all the data items one by one to the recording system in the stock of goods in the warehouse stock records system in the form of warehouse records manually and with the online system. Where is the system of recording on-line have been prepared by the Information Technology.

SOP on the distribution of goods to requests a number of goods in accordance with the needs of the user. At each stage the issue Receipt Form.

In the offline business, employees are usually working in the office location. But sometimes for a need certain employees to work outside the office location. For example, when employees must work at client locations, employees are traveling or even employees who are assigned to work at home.

In the online business, employer and employees usually work anywhere, including at home.

There are fundamentals differences in both the business views of workplace and working time, note the differences.

Offline Business

Working in the office or shop, on the way, the location of the client, at home.

You had to go to work, stuck traffic congestion.

You must meet your customer one by one.

You and your employees bound by the working hours

Online Business

Working at home, anywhere.

Workplace will come to you, can work anywhere, free of traffic congestion.

You can find thousands of your customers at the same time.

You determine your own working hours, your employees will work 24 hours for you.

Next issues the workplace and working time that can be found on those working during traveling, working on the location of the client, and working at home going on online and offline business where some data cited from the survey carried out by Eurofound :

Flexibility Workplace and Working Time

Homeworkers or Telecommuter can determine their own working hours, when work starts and when finished. Based on the data, most of them certainly doesn’t determine when work should begin and when should be finished, they are usually free determine their own working hours and rest.

This is a benefit for those who homeworkers. They can also change the order of their task. They are more flexible than office-based workers. They also have greater opportunities to handle personal problems during their working day compared to if they work in office-based colleagues.

Offline Business

As business owner, you will get the payment after the completion of other activities in a certain period of time. E.g. after your employee successfully sell some product or service completed during the year. Payment in the form of a dividend, which is the work result you get a year ago.

As employee, you will get the payment after you complete an activity in a certain period of time. For example you as employee, you will get the payment after you complete the routine tasks for a month. Payment in the form of salary, that you get is the work result of a month ago.

As a professional, you will get the payment after you complete a skill without bound with the period of time. E.g. you as a professional, you will get the payment after you check the patient, designing the website, programming the website, graphic design, editing a book, writing a book, and others at any time. Methods of payment can be honorarium, fee, loyalty, that you get is the work result recently.

Online Business

As a direct seller for your own goods, you will get the payment after the completion of other activities on a certain period of time. E.g. after your website is successfully sell your goods for a month.

As a webmaster, publisher or affiliate marketer, you will get income or commission after the another person completed an activity without bound with the period of time. For example, after somebody making a payment for products or services in order on your website or blog, after somebody click an ad or an affiliate link on your website or blog, at any time.

As a direct seller for other people products, telecommuter, outsourcer, dime collector, surveyor, data entry operator, you will get the payment after you complete an activity or skill without bound with the period of time. For example, after you successfully sell other people product, complete the work given to you, complete the work of others, to click the ads until the payment threshold, provide feedback, data entry was given to you, at any time.

Here are time payment for some profession on the internet :

1. Webmaster

In the offline business, income for the corporations is revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Income for the individuals is money earned through employment and investments. Income also called earnings.

In the online business, income is money earned that you specify your own way, amount of earned, and how to achieve. There are so many different ways to earn online income on the internet. You should be aware of the different ways to earn online income. You don’t have to waste time and money trying different ways that you may not succeed at. Be sure to ask for your mentor or coach their recommendations. You should be participate in online business forums. You can learn much by just reading what others are posting.

Here are some ways to get online income on the internet :

1. Sell your own products or services

You become a webmaster. You have to create a website or blog to sell your own products or services, and be open for business 24 hours a day. It could be your second income while you are gone to work for 8 hours a day to get your primary income.

2. Sell your own goods

You become a direct seller. You don’t have to create your own product. You have to keep availability of goods at any time. You have to create a website and keep the content up to date. You  have to handle all orders, shipments, and customer service. You have to handle many things, should be assisted by some employees. You need to have warehouses, vehicles, and couriers. You don’t have to share commissions with other parties, but must prepare the cost of sales, operating expenses, and taxes. Operating expenses includes warehouse rental, employee salaries, and vehicle maintenance.

For example :

* YourShop.Com

3. Place their ads on your blogs or websites

Pay Per Click of Affiliate Program, you become a publisher. You must have to create your websites or blogs. You don’t have to sell anything. Your account  will increase whenever someone clicks on the ads at least 30 seconds that they brings up on your website. Your task is to make your blog or website have a lot of traffics. There are requirements that must be fulfilled, your blog or website to have at least 10 articles. 

To run a online business required initial capital without the guarantee for success, it’s the risk. Although the initial capital is smaller compared with the offline business, however, this is a risk that must be minimize.

In the offline business, business risk is a factor that can have any negative impact on operational and benefits to be gained by the company. An investment, usually different returns with the expectation. Including the risk of losing some or even all of your initial investment. The impact of the business risk is the company where will not have adequate cash flow meet operating expenses.

Risk business can be generated from internal conditions, and several external factors. Internal conditions are usually a change in the desire on the goods and services produced by the company. While external factors are the change of the global economic condition, are factors beyond the control of the company can not be avoided.

In the online business, although many options are available and have several advantages compared to the offline business. However, there are some risks you must face. You should be aware that any chance have any definitive risk. The most important is to find ways to minimize risk.

If you choose to sell a product or service, make sure the product or service is not used for illegal purposes. To avoid the risks you in problem.

If you choose to get earn through PTC or PPC, make sure the company is not included in the Scam Alert list or Watch list. To avoid the risk you are not paid after you meet the payment terms.

If you choose to become affiliate marketer an affiliate merchant, make sure the company is there, and pay all its affiliates. To avoid the risk your commission will never sent. There are several affiliate merchants share the 50 50 commission with each affiliate for sale of its product. Make sure that every purchase order that you go through, 50% is paid to your account, not to accounts of others. Direct contact the people who purchase order the product, to avoid the risk that you got the purchase order but the paid to another person.

If you choose to shop online, make sure you have a stock on the goods listed on your website. Make sure your site is always up to date. Make sure items in the order will be delivered to the location of customers on time. To avoid the risk losing your customers, could be potential customers.

To build a online business is not easy that often you see on the ads that deceive. The characteristic of websites are many paragraph in its yellow highlight and load much testimony. Strangely testimony identity hidden so that you can’t contact them for clarification the truth.