Residual income is the ability to generate income without having to expend significant effort. You may be most familiar with the term as it relates to glamorous fields, such as acting or writing. Many online, and offline, business opportunities and work at home schemes make claims for residual earnings. This article will help you determine if those claims bear any weight.
While some effort is required to generate some income, money earned residually will require minimal effort. For example, you may know a professional (perhaps your lawyer or doctor) who earn a very good salary, but who also must put in long hours, be on call, work weekends, etc. They have a very prestigious position and can afford a lavish lifestyle, but are in many cases also bound to the job and the hourly requirements. If they don’t work, they may find themselves in foreclosure!
Residual income, by contrast, does not require long hours and time commitments. However, all income will require some upkeep and management. For example, a stock portfolio has to be managed professionally, but overseeing that does not compare to working 14 hour days.
If an opportunity makes claim for residual income, evaluate the following:
1. Longevity. Residual income can support you in your golden years. But, if the business opportunity has only been in existence for 3 years (or less), how can you be sure it will be around in 5 years, 10 years, or 20? It is extremely important to look for longevity in a business that promises residual earnings.
2. Company net worth. Does the company have the ability, based on it’s worth, to pay out residually for years to come? You will have to dig a little bit here, but here is one area where the Internet age can help you easily acquire the information you need. Always search to find out if any complaints have been filed with the Better Business Bureau. Use Google to search for reviews. Acquire as much information as you can.
3. Consumer targeted. Is the product or service being sold to the members or to consumers? A company that markets solely to, or primarily to, its members is a company whose reach is severely limited. Residual income may be more difficult to attain and maintain unless sales come from outside the company.
4. Multiplied effort. True residual income begins when you earn not only for your efforts, but for the efforts of others. Does the opportunity reward you when you refer others? Some companies may offer a one-time commission on referrals. True residual income is generated again and again and again, so that should be built into the compensation plan.
5. Diversity. Some companies only offer one product or a very small product offering. The more products or services the company offers, the better the opportunity for increased sales and retained customers.
6. Excellence in service. Evaluate the presentation, the web sites, emails, everything that has been presented and look for one thing – excellence. If anything strikes you as second rate or not quite up to par, pay attention to the flag. A company that promises income to sustain you for years will bear the mark of excellence.
Taking a look at each of these six areas, doing your research, and paying attention to your instincts, will help you stay away from those programs that promise much, but never deliver. The Internet is full of many get rich schemes. Careful consideration can save you the loss of both time and money when the bait of residual income is being offered to you.