What I Residual Income?

When starting a home based business in a network marketing venture one of the most important things to consider is the possibility for lifetime residual income. What exactly does that mean?

Many companies offer services that require the consumer to pay premiums, memberships or any of a number of terms that mean the consumer pays for the service on a regular basis. What this means for someone looking at work from home opportunities is they will receive continual commissions on a regular basis as long as the consumer they signed up continues using the service.

The key here, when you are trying to figure out how to work from home, is to be able to build a financial base that will serve you for years and years to come.

After all when we are starting a home based business we all expect it will be a business that will allow us to spend more time with our families and have the freedom to work when and how we want to work. More importantly we hope that it will help us build the financial future we all hope to achieve.

This is why residual income is so important. I will give you real world example from the home business I personally run.

I have two ways to earn residual income and build a base income then have it grow.

1. I recruit, train and help people enter the business and in return I am paid a commission of $15 per month as long as that person is in the business.

2. I help people obtain a much needed service that is extremely affordable to the consumer and in return I am paid a commission of 30% for as long as the consumer I signed on remains with the service. The basic service is only $19.99 a month to the consumer so I receive $5.97 a month from each.

How A Little Becomes So Much More

I know the commission numbers stated above do not seem like much but you have to look at the long term prospect as well as the retention rate of consumers for the service you are offering.

Remember when starting a home based business you want a product or service that is needed or perceived to be needed. In my particular case the service is a discount dental, vision, prescription & chiropractic plan. The key to this business model is I am offering a service that 70% of the population of the United States currently does not have.

A Service That Is Needed Or Perceived To Be Needed - 70% of the population does not a plan? I would say we have this one covered. Huge potential customer base.

Retention Rate Of Customer Base - A plan that covers the entire family for $19.99 and covers dental, vision, prescription & chiropractic. I would say these are things people will always need and provides a very good chance of long term customer retention.

Getting Back To The Numbers

Part one was helping IBO's (Independent Business Owners) get started in the business. Let us just assume that we can help two people a week get started in their own business. After all there are millions of people looking for work from home opportunities and we have a pretty good business for them to start. (2) IBO sign-ups a week @ $15 = $30 times 48 weeks (we want 4 weeks off a year) = $1440 a month.

So we have built residual income of $1440 a month from our IBO's starting a home based business.

Part two was helping people get the services that 70% of the population needs and we are going to assume every new member benefit customer we sign up only subscribes to the basic plan of $19.99

Let's say we only help (2) people a week get the service they need and remember we are only going to work 48 weeks and take 4 weeks of this year.

(2) member sign-ups a week @ $5.97 = $11.94 times 48 weeks = $573.12

So with our (2) new IBO's and (2) new member benefits customers a week we have built $2013.12 a month in lifetime residual income. This means if we do nothing else and these folks stay on with the company and keep the member benefits services we will continue to be paid $2013.12 a month for doing nothing. That is not bad.

The Snowball Effect

Of course we know we are not going to stop and just do nothing after the first year. What if we continued for the next 5 years at the same rate? $2013.12 times 5 = $10,065.60 a month or $120,787.20 in annual residual income. This does not include bonus commissions we will receive from all the new IBO's we have signed up over the years and we get override commissions on them and the people they help bring on as well.

Maybe we only sign up (1) new IBO a week and (1) new member a week and after 5 years we are only getting a little over 60k in annual income. Maybe we get 5 or 10 a week. Would that not be awesome.

You Wanted To Know How To Work From Home?

Building that ever growing and continual income is what starting a home based business is all about. After all if we are just going to work from home and put in the 8,10,12 hours a day without out building the financial freedom then we might as well just keep punching the time clock for someone else right?

A service that is needed or perceived to be needed and retention of customer base while we grow the business. That's what working towards financial freedom is all about.