Residual Income – What is It?

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Passive, or residual, income is exactly that: you do the work once and then receive income over time that was/is generated by that initial work. One of the best examples of this is a direct marketing business. There are others, but for this article direct marketing will be the example.

A truly golden direct marketing business (there are many of them with products that range from candles to perfume to soap to vitamins) is one where you invest (usually) a small amount for sign-up and then sell the product. You use the product, love the product and tell others about it. You generate retail income – however this is not passive income – retail income is active income.

The other element of a direct marketing business is that some of the people you tell about your wonderful product will either 1) desire to become a distributor so that they can purchase wholesale from themselves thus saving money, or 2) they like the business model and want also to generate residual income.

The income generated that is the “residual” income is the commissions from sales from everyone you sponsored as a distributor, everyone they sponsored and so on. In a really good direct marketing business model it is possible to see unlimited potential.

What makes the potential for income unlimited is a combination of factors including the marketplace in which the product sits (market share), the viability of the corporation/management team behind the distributors, the quality of the actual product, the timing of the product into the marketplace and the business model itself – how aggressive is the compensation plan – how much of the corporate profit goes back out to the distributor force?

The “truth” about residual income is that in today’s economy, it could be the retirement plan many of us simply don’t have and won’t have available to us. The “truth” is that passive, or residual income, can make dreams come true.

Joyce Penner, shares this story/definition of residual income:

-There is a bus driver we’ll call him Joe, who drives his bus on his regular route every day, five days a week. He works hard and he gets paid for every hour he works. But, when he hangs up his hat for the day, he also hangs up the income. While he’s at home, while he’s sleeping, what is happening to his income? It stops! The only time he makes money is when he is working.

That’s called linear income and we can all relate to that!

In another example there is a surgeon, we’ll call him Dr. Bob, who goes into surgery on a regular basis five days a week and sometimes on the weekends for emergencies. But when Dr. Bob goes home to eat, sleep, play or relax what happens to his income? It stops. The only time Dr. Bob makes money is when he is operating.

So we’ll all agree that the income difference is huge when you compare Joe, the bus driver to Dr. Bob, the surgeon…but, in essence, they are in the same boat. When they are not working, they are not getting paid. That is the definition of Linear Income.

Residual income (or as I’ve heard it referred to as RocknRoll income) is when you do the job right, once, and you get paid for it over and over again.

Here’s an example: There is a famous basketball player and his name is no surprise to most. Michael Jordan! Michael negotiated a contract, posed for a few photos, did a few commercials and now he is collecting a nice residual income. Every time you buy a product with that special logo on it, Michael collects a check. A residual income or RocknRoll check!

Example #2 – Do you know who Lisa Marie Presley is? Well her dad, Elvis Presley, many years ago wrote, recorded and performed some songs and his daughter, Lisa Marie is collecting those residual income checks every time one of her dad’s songs sell. That is residual income!

Doing the job right, just once, and getting paid for it over and over again equals residual income. There are many, many more examples of people who are living off of, and making a good income from, work done right, just that one time.

At first this depressed me as I have no talents like Elvis or Michael. I can’t sing (anyone who has heard me will confirm that for you) and my slam dunk is dismal. But then I realized that network marketing would allow me to do the job once, do it right and I, too, would be collecting a residual or “RocknRoll” income!! Then I got excited.

Keith Cameron Smith, in his book, “The Top 10 Distinctions Between Millionaires and the Middle Class,” [quote used with permission] in his discussion of net worth says:

“…Millionaires look at assets as the things they own that have value and earn passive income for them. A middle-class person may have small assets that have some value, but these assets typically don’t produce a passive income…Working for a paycheck is not wrong or bad, it’s just hard work for most people – and it is risky…” He goes on to describe ways of building passive income, one way is by starting your own business “…One way of doing this is to join a network marketing company. Direct sales or network marketing companies are a great way to start your own business…”

Residual Income is income you earn from work done now. You build the business [write and sell the song, sign the licensing agreement for the use of your name, purchase real estate...there are other ways to earn residual income], you follow the plan and you reap the rewards of continuing income.

Linda C Smith
http://intlnat.com

Author: Linda C Smith
Article Source: EzineArticles.com
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Two New Ways to Increase Residual Income

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In today’s world, more and more women are becoming financially savvy and looking for new ways to increase residual income. When I was younger, I never heard of the words “residual income”. My dad worked hard, earned little and struggled financially.

Many of us don’t even know what this means! Many of us dream of not having to be chained to a job, or having the freedom to travel, take a day or a week or even a month away from work … but we’ve never taught HOW to do this.

What is residual income, and why would you want to increase it? In a nutshell, residual income is income that comes in even when you are not working. It sounds too good to be true, but it is exactly what many smart women have learned to do.

One of the myths that women are taught is that you should get a good education and get a good job. That method of developing right livelihood and a solid financial future may have worked way back in the 20th century, but nowadays does not longer offers the financial security that women of today are seeking.

There are several ways to increase residual income that are “tried and true”.

• Artists, writers, inventors, film makers and other people who create something unique are paid each time someone buys their work. This is known as royalties … they did the work once, and are paid every time someone enjoys the fruit of their labors. Residual income continues to come in even many years after the work was done. An artist will increase residual income by creating more art, writing more books, or by expanding the number of people who buy their existing work.
• Another way people for many years have learned to increase residual income is to become a real estate investor. Purchase an apartment building with high net operating income and you can be paid a profit each month. Real estate investing does require a great deal of business know how, and a good chunk of money to get started unless you are able to manage a “no money down” method.
• For the very few, some lucky souls are born into or acquire large sums of money. If the money is invested wisely, the money will pay interest and can increase residual income over time.

In recent years two major breakthroughs in the world of business have emerged which allow more people to increase residual income, even those who are not artists, authors or inventors. These have leveled the playing field and are allowing many more people to earn income even when they are not working.

1. The advent of the internet has opened up a whole new world of business possibilities, allowing anyone with a computer and internet connection to put themselves online and share information, products and services. The internet has allowed many women to increase residual income in the following ways:

   You can write e-books or develop software products that can be sold online. Once the product is developed and marketed, sales continue to occur long after the work is done.

   You can build websites, build traffic to the website, and place advertising or affiliate merchant links on the site. Once the site has steady traffic, you are paid any time someone clicks on an ad, or purchases a product recommended on your site. They can increase residual income by building traffic to the side, adding more information to the site, and eventually developing other websites.

   You can create a membership website that offers valuable information and services to members on a high demand topic. Members pay a monthly, quarterly or yearly fee to access the services, and you can increase residual income by bringing in more members to the site.

2. The relatively new industry of network marketing and direct sales allows business owners to earn residual income from the repeat product sales of their customers, and from the customers of those customers. Network marketing is a thriving industry, though it developed a questionable reputation when improperly trained distributors abused the relationship marketing aspect of the business. Nowadays there is a more healthy approach taught to network marketing distributors, and the industry is gaining more credibility. This is a difficult business to succeed in, as you need a positive, outgoing attitude and great persistence, however there are many thousands of people earning five and six figure incomes from their network marketing business.

With so many ways available nowadays to increase residual income, the possibilities are endless. Education is the first step! Learn as much as you can about yourself, your gifts, talents and unique strength, and learn about the different kinds of business opportunities available that may match your abilities. Then, go for it!

Tamara Esgoode is a business consultant and writer for http://www.homebizwomen.com, an online mentoring community which offers free courses, free advertising resources and online support for home based business women with heart

Author: Tamara Esgoode
Article Source: EzineArticles.com
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