What Is Residual Income?
Residual income is also known as recurring or passive income. It is significantly different from earning a regular wage which is directly proportional to the number of hours that you put in your job. The best thing about passive income is that it contributes to long term wealth and you don’t have to worry about economic conditions or putting in long hours to earn that money.
Differences Between Residual Income and Regular Wage
A lot of people have difficulty in understanding the concept of residual income. They are used to going to a job working 40-60 hours a week, in order to earn money. More often than not, their work lives are dictated to them…when to come in, what to do, when to go to lunch (if any) and when to come home. Earning a wage means the hours you invest in your job coorelates with the money you earn. Plus it is a known fact that you stop earning as soon as you stop working. If you want to earn more, you need to work overtime or get a promotion. Even then, there are limits to the amount of money that you can make from your job.
In the case of residual income, you continue to make money long after you have completed the job or made an investment. Often there is no limit to the amount of money that you can earn and for certain types of investments, the amount of money that you earn actually increases over time. So you get significantly higher returns for the time and money that you invested initially.
Best Sources of Residual Income
There are several sources of residual income and you need to choose an income stream that you are most comfortable with. The popularity of the internet has given rise to hundreds of different ways to earn passive income. Thanks to the internet, it is now possible to earn a consistent recurring income without investing a large amount of money. For instance, you can make money through what is being deemed the wave of the future…network marketing.
How To Increase Your Residual Income
The best way to increase your residual income is to choose an opportunity carefully and invest your time and money wisely. Not every opportunity is created equal, so you must be able to distinguish between profitable and non-profitable opportunities. Also, you must be willing to work hard in the beginning so that you reap the benefits of your hard work in the future. Once an opportunity starts to make money for you, you should replicate it to increase your recurring income. The key to getting wealthy is to continue building your sources of passive income over a period of time. The good news is choosing the right opportunity means you can condense a 40 year wage earning career into 3 years of working only part time.
How Do You Find The Right Company?
Harvard Business School developed 3 criteria that a network marketing company must have in order to make it a desirable opportunity.
- The company must be at least 18 months old. 90% of all network marketing companies that fail do so in the first 18 months of operations. Lack of adequate financing and inexperienced senior management are two of the more common pitfalls of start up companies so be sure to find out what you can about the MLM’s funding and management.
- The company must have a product that is both unique and highly consumable. Meaning it must be an exclusive product that can be purchased only from your distributors with repeated sales thereby guaranteeing customer loyalty versus a one-time sale and having to locate new customers.
- It needs to be a “ground floor” opportunity. Harvard Business School suggests that in order for the opportunity to qualify as a ground floor type, the number of existing distributorships should be less than ½ of 1% in the country where this network company exists. In the U.S., this figure is equal to 1.5 million people. Harvard Business School also stated that if there were less than 500,000 people involved, you would be on the cutting edge of a great opportunity. If the company has less than 100,000 distributors, Harvard Business School considers it to be a once in a lifetime opportunity.
The Harvard Business School study also stated that there are 4 distinct stages of growth in a network marketing company – Foundation, Concentration, Momentum, and Stability. The Momentum Phase is when the company experiences phenomenal growth. Both retail and distributorships explode in terms of expanding growth. It is during this period that the company virtually sweeps the nation. When a company’s sales reach about 50 million annually (4.2 million a month), they reach what is called “critical mass” (sales go vertical right off the graph). Also, approximately 2/3 of the company’s growth of new distributorships occurs during this period of time. Let’s assume you have an organization which is producing an override bonus check to you of $1,000 per month. When the company reaches critical mass, distributors almost automatically experience a ten-fold increase in their earnings. In other words, $1,000 per month becomes $10,000 per month. This is the reason for getting involved on the ground floor, so you will experience the benefits of explosive growth.
Rodan + Fields was the focus of this study. The conclusion? R+F is a “Once in a lifetime opportunity.” Where else can you own a micro enterprise without franchise fees and without a large investment? With low start- up costs and high profit potential with a soon to be global boom company you can design a life on your terms. Maybe you just need an extra $5000 a month or you want huge retirement income of $100,000 a month. It’s up to you and if you take advantage of this opportunity, NOW while we are just approaching momentum then you’ll realize why FORBES is calling it the most lucrative business model on the planet.
I m looking for expansion in the United States and Canada and eventually globally. It is not a sales job but to evolve this brand into a household word. Work it part time or full time around your schedule. It is up to you.