Most home businesses are a mixture of Direct Sales, Network Marketing and Multi-Level Marketing (MLM). In fact, these terms are used interchangeably and are pretty much the same, although some business models focus more on recruiting than selling and others focus more on selling than recruiting.
Direct selling is the sale of a consumer product or service, person-to-person, marketed through independent sales representatives who are sometimes also referred to as consultants or distributors. Direct sellers are not employees of the company. They are independent contractors who market and sell the products or services of a company in return for a commission on those sales. And the truth in any business is… unless a product or service is sold, there is no money to be made.
I believe a steady residual income in the long term requires a good balance of both selling and recruiting. Passive income in network marketing is your reward for building a sales force or distribution channel where large quantities of your company’s product gets into the hands of many happy, loyal customers. Retailing your product brings you that immediate income, and team building is the residual income that will give you the lifestyle you really want long-term.
Doctors, lawyers… even auto mechanics can make pretty good money, but they are still limited by the number of hours they are physically able to work. They are trading time for money.
So what is residual/passive income? Most people can relate when they think about song artists or insurance brokers. When you record a song, every time that song is played on the radio or a record or CD is sold, you earn a royalty payment. The same is true when you write an insurance policy for your customer. Every time that customer renews his policy, you also earn a commission.
Franchises work much the same way. If you were McDonald’s Corporate, you would earn a passive income from every McDonald’s restaurant in the world. This is paid in the form of franchise fees and are usually a percentage of the sales of that store. But the advantage of that is you don’t have to work any more hours. Say there are 2,000 McDonald’s stores in the world which are open 18 hours per day. That means McDonald’s Corporate would earn from the efforts of 36,000 hours per day. And which would you rather have – 10 cents for every hamburger you sell in your store, or 1 penny for every hamburger sold in the world!
To get that type of residual income you need to build a team. When you have a downline of thousands of people – all with the goal of selling products and benefitting from those sales, and also building a team – then suddenly you can take time off and give yourself the freedom you want. Your income will keep coming in even while you’re sleeping or on vacation – that’s true freedom!
Long term residual income is built by first creating and serving a loyal customer base, then multiplying that customer base through a distribution channel of your team members. The larger your team, the more residual income you'll receive!
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By Lynn Huber