What is true Monthly Repeat or Residual Income and why you want it!

"What is true Monthly Repeat or Residual Income? And why you want it!"

Most small business entrepreneurs and almost all employees do not have a profound understanding of residual income and its importance. That was why this podcast episode was created.

Those who listen and get it will be glad they spent 10 minutes doing so.

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Transcript

This episode of The Rabbi Who Got Rich on Sunday podcast reveals one of the major ways to tell if the expected or promised repeat or residual income from a home business or a side hustle is likely or unlikely. Residual Income is a topic that's incredibly important for entrepreneurs, business owners, and anyone looking to achieve financial freedom. We'll cover what residual income is, the benefits it brings, how to create it, and how to distinguish real opportunities (or real residual income) from fake residual income.

I’m Rabbi Dave, and every week, we do a deep dive into one aspect of the challenges and triumphs of running a successful home business or side hustle. In this podcast episode, we take a look at What is True Monthly Repeat or Residual Income & why you want it!

Residual Income Story

At the beginning of my entrepreneurial journey, I was excited by the promise of repeat or residual income that I heard about in the presentations and marketing of more than one home-based business opportunity or side hustle. It took years for me to learn that sustaining repeat income is sometimes something that only looks good on paper but is not real. 

Everyone I talked to said that their opportunity was the best and that I would get rich quickly! I asked to be introduced to a part-time person, who had not been given a unique position, making at least a few thousand dollars per month who could show me proof that their income was ongoing. I wanted to see that the repeat income was real and lasted. 

I learned that people are sometimes set up to win so that the company has a great story to tell about someone making the big bucks. I had seen it done by encouraging people to make relatively large purchases that had nothing to do with the consumption of products that must exist for real residual income. Almost every time I sought proof I never heard back from the person showing me the business!

If they could provide proof, they passed the first test. Then I wanted to know if their customers were average people buying every month because to build a reliable residual income you need to have real customers who are buying real products every month over an extended period of time. If the majority of the product is not being consumed by nonparticipants in the business you can forget the promise of residual income, as your income is built on a house of cards that can collapse quickly!  

Next, I wanted to know the company's track record and financial stability, as most companies fail in their first few years. If you are going to earn residual income, the direct selling company you represent has to stick around.

I wanted to see company managers with experience in running Fortune 500 companies. If the people in management had been with businesses that failed or were direct selling representatives who tried switching to management, I knew it was a bad sign.

While I believe in learning from mistakes, especially for home business and small business entrepreneurs, if the direct selling company management's only real qualification is learning from their mistakes my residual income could be at stake.

It's tough enough to build a part-time residual income once, never mind twice!

I also wanted a business with no or a very low entrance fee. Inventory loading created fake high earnings in commissions and bonuses but not real residual income

Low customer attrition is important, too. If customers are leaving you will not earn your residual income for long and there must be a reason for it. Are the products overpriced? Because if they are, people will go back to Walmart or wherever they shop.

Are the independent reps allowed to post the brand all over social media? If they are, the brand gets overexposed surprisingly quickly.

I also wanted to see a solid money-back guarantee on purchases. A 30-day or less money-back guarantee is not great but a 90-day or more guarantee shows the company is not afraid of people turning the products due to their lacking quality and believes in their business.

The tests above and lessons below are what I learned in my journey over three decades.

Defining Residual Income

Residual income continues to be earned after the initial effort has been expended. Unlike active income, where you trade time for money, residual income keeps coming in with minimal ongoing work. It's often referred to as passive income, although it's not completely hands-off. It requires an initial investment of time, money, or resources, but once set up, it can generate very significant revenue.

Types of Residual Income

1. Consumer direct marketing: This involves earning a percentage of product sales directly from the manufacturer any time a customer you refer purchases for the lifetime of the customer.
2. Royalties from books, music, or patents: This involves earning a percentage of sales whenever your work is sold.
3. Dividends from investments: When you invest in stocks, you can earn regular dividends from profitable companies.
4. Income from rental properties: Owning real estate and renting it out provides a steady stream of income.
5. Subscription-based businesses: Offering a product or service on a subscription basis ensures regular monthly income.
6. Affiliate marketing and network marketing: Promoting other people's products or building a network can bring in ongoing commissions.

The Benefits of Residual Income

1. Financial stability and predictability: With residual income, you have a more predictable cash flow, which can help manage finances better.
2. Freedom and flexibility: Residual income allows you to earn money without being tied to a specific location or schedule, giving you more freedom to pursue other interests or ventures.
3. Potential for scaling and growth: Once your income stream is established, you can focus on scaling it without a proportional increase in effort.
4. Ability to focus on other ventures: With a steady income in place, you can explore new business opportunities or invest time in personal development.

Creating Residual Income Streams

1. Identify reliable manufacturers that offer repeat income: Look for exceptional products at reasonable prices.
2. Identify opportunities within your current business: Look for ways to offer subscription services or products.
3. Invest in assets that generate residual income: Real estate, stocks, or digital products can be good investments.
4. Build a subscription-based service or product: Think about what you can offer on a recurring basis, such as memberships, software, or content.
5. Leverage digital products and online courses: Create valuable content that people are willing to pay for, like ebooks, online courses, or webinars.

Real vs. Fake Residual Income

1. Real residual income requires an initial investment of time, money, or resources: It’s built on a solid foundation of effort. However, beware of large investments that provide nothing of actual value in return or purchasing large amounts of inventory that you can’t return. Carefully examine return policies as many don’t actually work.  When opportunities require large investments up front it usually means they can’t exist just from real customers purchases.
2. Fake residual income schemes often promise high returns with little to no effort: Be wary of anything that sounds too good to be true.
3. Lack of transparency is a red flag: If a company isn’t clear about how income is generated, that’s a warning sign.  There should be a document of the average actual income earned by individuals.
4. Evaluate opportunities thoroughly: Research the company, seek out reviews and testimonials, and ensure there is a legitimate product or service being offered.  Don’t rely on the company material, and at the same time, don’t believe negative reports on the internet, which are usually reverse marketing designed to get you to buy something else.  The best is to talk to people who are not at the top and did not start in the beginning and get their experiences with proof from their business reports.

Challenges and Misconceptions about Residual Income

A common misconception is that it’s entirely hands-off, but in reality, there are no residual incomes that are, they all require ongoing maintenance and oversight. Additionally, the initial effort and investment can be substantial. Challenges can include market saturation and economic fluctuations, which can impact the stability of your income streams. 

Another important misconception is that once you’ve decided your course of action you should remain loyal to it through thick and thin. Just because you’ve invested your time and money into something does not mean you should continue to do so if you are not getting the results you need.  Get an outside party to help you evaluate objectively on a regular basis.

Why do you want residual income?

Why do you want residual income? Simple. For the same amount of effort, there is no other type of income that requires less maintenance or oversite to keep earning income.

It is the ultimate way to earn full-time income from a part-time effort. In fact, once the business is built, a commitment of 10 to 15 hours of work a month will maintain it if you have real residual income.

Committing ten to fifteen hours a week should be enough to not only maintain your side hustle business but grow it. That is why you want residual income because it is a low commitment for a full-time income.  

Recap and Weekly Podcast Challenge

I hope you enjoyed “What is True Monthly Repeat or Residual Income & Why You Want It!” Here are some key points to walk away with. Residual income is a powerful way to achieve financial stability and freedom. By investing time, money, or both in the right opportunities and being aware of the challenges, you can build reliable income streams that continue to generate revenue over time. Remember, the initial effort is crucial, and distinguishing real opportunities from scams is essential.

I encourage you to assess your current and future efforts at creating repeat or residual income with the above guidelines. This week's challenge is to evaluate one such opportunity and share your experiences with me through social media using our dedicated hashtag #richrabbichallenge, or email me — I'd love to hear from you, and I’ll send you my suggestions!

Thank you for tuning in to The Rabbi Who Got Rich on Sunday. If you found value in today's episode, subscribe so you do not miss out on future insights and strategies to help you thrive. Don't forget to share this episode with a friend or colleague who could benefit from “What is True Monthly Repeat or Residual Income & Why You Want it?” Our next episode will be on How Mentoring and Mentorship Fuels Entrepreneurial Success

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