Recurring Income is another term for residual income. In a nutshell, there are
three (3) types of income streams that you may have coming into your business.
- If you do a one-timejob, sale or performance contract, you get paid once and the income stops there.
- If you do a normal 9 to 5j ob, you will continue to get paid as long as you continue to work for your employer—often called a linear income. This is the type of income that the majority of workers “enjoy.” Even if you are a neurosurgeon, lawyer or engineer, you are only paid as long as you continue working. You stop working and the bank account dwindles.
- The third type of income is the recurring income where you are paid even after you have stopped working. For example, you wrote a book and as long as your book continues to sell, you will continue to receive royalty income for a work done once.
Majority of rich and affluent people created wealth through a form of recurring income stream. Take singer Michael Jackson for example; he still continues to receive royalty from the sales of his records made decades ago. He can even repackage the same oldies and sell them to generate new income. He doesn’t have to spend time in the studio to record new songs in order to have the cash keep flowing in! This is the most ideal situation of the three. We would all like to work once and get paid over and over again. That is the power of recurring income!
The majority of professionals that enjoy this type of income belong to the creative fields such as actors, writers, singers, and inventors.
Unfortunately, not many of us are blessed with the talents Michael Jackson had, let alone the opportunities to be in the lucrative industries. However, there is one budding opportunity for any ordinary individual today to enjoy residual income today in.
You’ve guessed it: it’s none other than Network Marketing. Now network marketing is not the only way to get recurring income, another way via affiliate marketing (or your own business) are services that bill Monthly or Yearly on a subscription type basis and you get paid every time a customer renews.
One such Example In the Digital or Online Space is for example You create a website once and the owner pays you for it each month or every year for as long as they remain a customer. (this does not need to be difficult and you don’t need to know how to code or be tech savvy. Take a look at This Example
Network Marketing Reviewed
The field of Network Marketing or Multi-level Marketing (MLM) has also been instrumental over the past 60 years or so to make the recurring income concept very popular and attractive.
Here, you can build a network of distributors, referred to as your down line, and generate income outside of your own immediate effort. Working for Network Marketing company is one of the most feasible places where you can generate recurring wealth, and so we will now take a look at the secrets to being a successful network marketer.
Choosing a Network Marketing Company
According to a respected journalist, Richard Poe, in his book Wave4 – Network Marketing in the 21st Century, Network Marketing is responsible for moving over a whopping **$100 billion** of goods and services yearly on the global front. It is therefore very likely that you have already come in contact with some type of Network Marketing product or service. The concept of moving goods through an army of independent distributors has earned its place in the marketing world despite the negative publicity suffered by the industry. Network Marketing is here to stay; the question that remains is, “How do I choose a company?”
Here are some very important pointers that would guide you in the right direction. Any company that you can find passing these criteria will be a great company to line up with.
1. A company that has been in business for at least 5 years and has great financial backing, excellent management and a ‘distributor first’ philosophy. The company should also have a long-term development goal and not just be out for the quick cash.
This may be a pretty tall order to reach but considering that the great majority of start-up Network Marketing companies fail within their first three years you don’t want your income stream to suddenly dry up! It’s no picnic to discover that after you’ve spent time, effort and money to build a solid organization the company closes down because one of those essential elements was missing.
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There is the prevalent myth that the best time to join a company is at start- up—the so called ‘ground floor opportunity’—, but if the truth be told, the ground often caves in leaving many people very unhappy. This does not mean that you should wait for five years to see if a company would do well, because logically, this would mean that no Network Marketing company will ever get started. The point here is that you should assess your risk and know that the chance of losing your money is higher with a new company than with a company having a proven track record.
You know the saying that the proof of the pudding is in the eating; just so the proof of the stability of a Network Marketing company is in the duration of survival. In fact, in over 60 years of Network Marketing history and after tens of thousands of Network Marketing start up companies, only around 42 companies have made it to their 5th birthday.
Any business owner would admit that the first years are the toughest. This is the period when the company is just establishing a footing and income is most likely low. If the company does not have the proper financial backing it is not likely to survive these years. You would not want to join a company that is depending too much on the distributors for survival. A Network Marketing company takes time to build momentum by the very nature of the business – word of mouth advertising, people telling people. Before it reaches top momentum it must have the financial backing to survive the early hurdles.
Customer support for the distributors is also a critical part of the company. If their distributors feel neglected then they will simply not stick around. Especially in today’s market where there are thousands of Network Marketing companies beckoning. The distributors are the consumers and salespeople, and to neglect them is to commit certain suicide.
A sad reality of the Network Marketing industry is that there are many scam artists that come along just for the quick cash just before they close shop and disappear. This would require that you do your due diligence such as checking consumer alert websites as FTC.gov and WorldWideScam.com among others. These scam artists will normally emphasize the compensation plan over the actual product—if there really
is a product—and apply high pressure sales tactics to persuade you to join the “ground-floor opportunity”. These criminals prey on human greed and have little sympathy for the naïve.
2. High quality (unique if possible), reasonably priced products or services that should be, ideally, consumable so users will have to buy over and over again.
Traditionally, Network Marketing companies are able to produce higher quality products simply because they don’t have to pay outrageous prices for advertisement. Just think about the millions of dollar paid per year by companies such as Nike to sports stars for a 30 second commercial. This money, if Nike followed the Network Marketing model, could go into developing better quality products and paying their workers better salaries. Because a large part of a normal company’s budget goes towards advertising, Network Marketing companies will deliver a higher quality product, all things being equal, per dollar spent.
Also remember that you want to be paid continually so you need a product or service that is consumable so the customer has to keep refilling his supply. Nutritional and telecommunication companies fit this requirement very well.
Apart from being consumable, another important factor is how ‘needed’ this product or service is. The negative side of pushing nutritional products is that most people are only concerned about their health after it is already failing! (You’ll do well recruiting at the local hospital). If you are marketing a service such as web hosting, medical coverage or legal services you are more likely to have less attrition in your down line.
If the company is selling a product that you can pick up at your local department store, then you’re not likely to do very well. A unique or proprietary product will do better since you’ll have less competition—you learn very early that there is no such thing as zero competition although some companies will want to make this claim.
The “acid test” question to apply to the price of the product or service is, “Would I purchase at this price if there wasn’t a compensation plan attached to it?” If your answer is “No,” then you are looking at a potential pyramid scheme where a product is just attached to the compensation. plan to make the opportunity appear legitimate. In these cases you will always find that the compensation plan becomes the selling point and the product or service rarely mentioned.
3. A Compensation Plan that is fair to both fulltime and part-time distributors alike with leadership bonuses for those who build large and productive teams.
We have already mentioned that a successful Network Marketing company will have a “distributor first” philosophy. In no other place should this be exhibited more than in the compensation plan. It takes only some simple arithmetic to see how many sales or distributors you need in your organization in order to be in profit. Most people don’t take the time to do the math and sometimes are “deceived” by the fancy potential income charts that are put out by the company.
The point here is that you need to read between the lines and the fine print to be sure what you are paid for your effort. Most people will skim this section because it may read like a tax code and who likes to do their taxes? That’s why we hire accountants.
Compensation plans fall into basically four types: I will not go into detail explaining what each of the four types are or how they work (as you this is already a long post, and you MUST read and understand the compensation plan of a particular network marketing company you may be looking at carefully… but basically there are the following types..
(a) The Break Away Plan
(b) The Unilevel Plan
(c) The Matrix Plan
(d) The Binary Plan
There are variations of these plans that have come along such as the straight-line plan where you are paid on every one that comes in after you. Companies that follow these plans don’t seem to survive very long since most people just join and stand by waiting on their checks. There is no real incentive to work the plan.
If a company intends to be deceptive it will be in the compensation plan; so study it well!
You should take a look at your income sources and evaluate them to see how many are recurring and how many are linear.
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. Especially as a small business owner this can be critical to your survival.