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There are a great many programs being promoted at the moment offering residual income although many of them do not really explain what they mean by residual income. The correct definition of residual income is an ongoing (usually monthly) income generated by continuous repeat business from your client list or downline in MLM (Multilevel Marketing), Network Marketing or Matrix programs. This can be in the form of repeat product purchases or a monthly subscription. Of course in reality you need an ongoing influx of new customers to compensate for the inevitable drop-outs from any program. This would usually be a relatively small number if the program or product being purchased were good value. We do not normally consider occasional purchases as generating residual income even though they may be repeated at some stage. We all ideally want a regular and predictable income on a monthly basis and any fee that is connected to occasional purchases is not likely to produce that. Residual income has long been associated with MLM (Multilevel Marketing, Network Marketing and Matrix programs. They apply the concept of "do it once and get paid forever". If you are earning a commission on a customer's repeat business then, within limits, that is what you can achieve. Introduce the customer and as long as they keep buying you keep getting paid. What I find now days is many promotions offering "residual income" and yet the product or service is a one time payment or, at best, a product or service that is repeat-purchased infrequently. The only way to get a regular income from such a program is to have steady flow of new customers every month. If this happens then we do indeed have a regular income however it is not a residual income. With a true residual income the effort of finding a customer does not have to be repeated the next month for the amount of income that customer produces. In the one time of infrequent purchase programs each customer must be replaced each month to ensure the regular income continues, . and this of course does not fit with the concept of "do it once and get paid for ever". Clearly what is happening here is the promoters are attempting to cash in on the benefits of residual income. There is no doubt that the promise of residual income will increase the number of prospects looking at the offer. The promoters seem to have no problem in re-defining residual income to suit the program they are pushing and presumably hope that nobody will question their use of the term.


Apply some business basic thinking and do not fall into the trap of believing all the hype. If you get paid once from each customer because they only buy once then you do not really have a residual income. Even if you are getting more than one payment, to qualify as residual income you should be getting regular repeat business from the same customers. It could be less frequently than monthly, for example quarterly but it must at least be regular.

Ken Briggs © Copyright, all rights reserved, Kenneth Maxwell Briggs 2007. This article may be distributed or given away for free providing it is unaltered and the below resource box is included. Ken Briggs is a qualified accountant with many years experience in business and over 12 years experience in online businesses. His book "Business Basics for the Internet" was written to assist people in applying business basics to online business opportunities and from the knowledge gained be able to identify the programs that are doomed to fail for most and those that have a high probability of success for participants. This makes it - The book sponsors do not want you to read. [http://businessbasicsinternet.com]

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