The Asset versus the Transactional Model

The transactional model focuses on making money now while the asset model is more concerned with not just money earned now but can also produce income in the future. One of the characteristics of an asset is the ability to generate future revenue. To operate using the asset model, you need at least 3 systems as shown in the diagram below:

It is very important to capture the value of what you do and be able to consistently replicate it without your direct involvement. For example, Ray Kroc does not have to be at every McDonald for it to run. Without capturing replicable value, your model looks like this:

The asset model is more sustainable over the long run.

The transactional model earns income from the customer once without no way of repeating the sale. This is detriment to your financial freedom goals. If you are going to use your business as part of your financial freedom plan, you need a way of building recurring revenue. While the transaction model is a good way to start, it is not a good place to stop. To build financial freedom with your business, you need to work diligently at creating assets surrounded by system which in turn churns income.