Why? First, let’s explore what “residual” is referring to.
The idea of residual business model
If you are in the world of affiliate marketing or involved in performance arts or movie productions, you should be already familiar with residual income model.
In essence, residual is referring to a certain amount of payment made to the respective, eligible, recipients every time their products or services are performed.
In movie productions, this payment is made to the creators every time recorded broadcasts are replayed. In affiliate marketing, residuals refer to payments that are made to the affiliate marketers each time their downline or their referred members are selling the products or services they are affiliated with.
To me, residual income model also comes in other forms, such as royalties in franchising, royalties for authors of a book, royalties received by a rock band every time their music is purchased, and so on.
Why residual business model is well sought after
All in all, the key benefits of residual business model are passive income, lifetime income and viral effect.
Every business opportunity offering a chance to earn a percentage of what others are making or have purchased without your direct involvement in sales creation is a residual business model.
The beauty of residual-based business income is the viral effect of it – Consider this: Suppose you are a member of an affiliate program selling a widget that offers you an opportunity for residual income. The income structure of your joined affiliate program is two-tiered (most common), with the following details:
Your cut in every sales you made: 25%. Your cut for every sales made by your downline: 5%
So, here’s what you should do: Sell the widgets yourself AND refer as many prospects as possible. Selling 10 widgets ($10 each) for $100 will get you $25. But referring one active downline selling 100 widgets ($10 each) will get you $50 in passive income. And you will continue to make this passive income as long as your downline is keep working diligently for YOU – All you need to focus is on managing your downlines.
This model is adapted in many business models: MLMs (multi-level marketing), member get member business, and even the illegal pyramid schemes, where the higher level referrers will always get more than their lower-rank downlines.
Some residual-based business ideas
- Join multi-tiered affiliate program: Not every affiliate program is created equal – Find those that offers you multi-tiered, residual-based affiliate marketing.
- Write a book: If you are an expert in your niche, consider writing a book. When yours hit the best selling list, you will enjoy considerable lifetime, residual, income – hands-free.
- Create creative arts: If you are a painter, every reproduction of your painting is made, you will receive a payment. If you are a song writer, you will receive residual income every time your song is adopted by a music artist. If you are a soon-to-be Steven Spielberg, you will receive a residual each time your movie is replayed or rerun.
Ivan Widjaya
Residual business