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  • 12-09-2010

    Pros & Cons of business types

    There are a number of different business models or types which are available to budding entrepreneur. Let’s have a look at the Pros and Cons for the three most common types for small business opportunity .....

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What is Residual Income or leverage?

Residual income has been around for many years in many businesses and there are different forms of residual income, but what is it really?

The insurance industry has been a great component of residual income, and agent will sell you an insurance policy makes a commission on the policy when you make your first payment. After usually twelve months, each time the policy is renew the agent will receive a residual commission, which is usually less than the original commission. Even many small traditional businesses create residual income. An example of this would be your local new car dealer, who once has sold you a new car will then sell you insurance, finance and servicing. The servicing of your vehicle is probable the biggest residual income for the dealership, although it requires extra work to create this income stream for the dealer, it is still a form of residual income.

Another example would be a retail business selling you a water filter unit, you buy the complete filter unit and have it installed, and then every six months you replace the filter cartridge, which you probable purchase from the same retailer, creating a residual income for that business.

There is one factor that these example businesses rely on to get that income and that is service. If you are happy with the service you receive then you are probable not going to question the cost of the products or services you continually purchase.

Thus we can conclude that residual income is closely related to perceived service in traditional businesses.

This is also true with NM and MLM businesses. Yes, the NM and MLM companies are generally great exponents of residual income and they have compensation plans that can produce great results. In some cases you can earn more from residual income from your distributors than what you make directly yourself.

Then why is this not always the case, that the majority of network marketers do not achieve great residual income? The reason is service, nothing comes for free and it requires work and the ability to assist team members through quality and thorough training. The only way good residual income is achieved is by helping your team achieve their business goals, so that your goals can also be achieved.

This is not rocket science, just simply a fact of team business life. Yes most NM and MLM businesses are team businesses, people helping people for a common goal to improve their lives through the development of a business and an income stream.

Many NM and MLM companies appear to have a culture of what I would call “single minded development”. This is where help is only giving in a very basis form from the up-line, including the company leaders. What appears to be a lot of information really lacks good detail on how to implement strategies and particularly in the area of marketing, which is so vital for a distributor or associate to succeed? If it produces more questions than answers then it probable lacks good detail.

When doing your due diligence on a NM or MLM company to see if it’s a good fit for you, find out if their training is comprehensive and what the leadership attitude is toward sharing their “so called secrets”. Contact the person who has introduced you to the company and evaluate how much they or their team can help you. Also most NM and MLM companies have a joining fee as an associate or distributor, which is usually below $100. If you feel that the company maybe what your looking for, then invest in the joining fee as this in most cases will give you access to their training and conference calls, which I have found this the best way to evaluate what the companies training is really like.

Remember nothing is free in life, for a small investment you will get your questions answered and get a feel wether the business is right for you or not, if its not then you have only lose a small investment, however you have learnt something.