What is it? We hear the term ‘residual income’ talked about a lot in network marketing, but it’s a concept that confuses many people. If we have a look at the general term ‘Income’ it can be thought of as being divided into three main groups:
1. Earned Income – that which we would earn from our job, with a weekly or monthly salary. When you stop working, you stop earning.
2. Passive (or residual/recurring) income – money received on a regular basis with little effort required to maintain it.
3. Portfolio income – such as we might receive from a portfolio of stocks and shares.
Residual income can therefore come from a number of sources including rental from a property, royalties from publishing a book or even, some might argue, a pension. Many recording artists receive residual income in the form of royalties; Sir Paul McCartney might have left the Beatles many years ago, but he will still receive an income from the work he did whilst part of the band. In sum, it reflects an ongoing payment for work that was done some time ago. Harry Potter might be the name everyone is familiar with, but the recurring income from all the hours and hours of work that went into creating him will go to J.K. Rowling.
In the world of sales and network marketing, residual income is therefore the repeat regular income generated from the payment of a product or service, that must be renewed on a regular basis in order to continue receiving its benefits.
Psychologically, the idea of creating and receiving a residual income for life is a powerful motivator for many internet and network marketers; particularly if they don’t already have excellent pension plans in place, or if they are looking to put all their energies into building up a successful network marketing business so that, after a few years, they can either quit their full time job, move to part-time, or even retire early with a monthly income to look forward to.
If you are an internet marketer and wish to generate a residual income, there are a number of ways to do this, but basically you would create a website and fill it with affiliate content as well as something that you have created yourself, such as an e-book, that you can sell. In theory, it could practicaly run on autopilot.
If you are a home based network marketer, you would generate a residual income from selling your products or service to customers and, at the same time, encourage new distributors into your business. You will then create a residual income from the repeat sales to your customers, and also from the sales generated by your distributors.
Sounds easy? In theory it is, but in practice you need to make sure that you have a product that people want, and will continue to want despite changing trends. For example, would Sir Paul still be receiving royalties if no-one bought the Beatles music, or J.K. Rowling if no-one ever read a Harry Potter book or watched a film?
The simple answer is NO. Every product or service needs an audience. So if you have a great website it won’t make you any residual income if no-one visits it, and you won’t make any residual income in network marketing if you never offer your product to anyone, or its so obscure that there is only a small market for it.
The key to success is Marketing. One of the main reasons why people fail at network marketing, or only generate a tiny residual income, is that they give up too early. Network marketing is a game of longevity. Build your business from the ground up. Offer your products to as many people as possible (by whatever means suits you best). Bring new distributors into your business and TEACH them how to be successful; let them learn from your mistakes. But, most importantly of all, don’t give up at the first hurdle. Some network marketers are quick off the starting blocks but run out of wind easily, and others pace themselves all the way round the track. Who hasn’t heard the story of the tortoise and the hare?
Do these things, and you will generate for yourself a solid residual income that will allow you to set your own goals and achieve your own dreams.
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