What is residual income? Residual income is a type of income regularly received after a one time investment of money, time, and effort. When an author writes a book, he will spend time working on it. When the book has been written, he will publish it online or offline. During this time, he needs to spend some amount of money in order to publish and advertise it. He might create a website for that purpose, or look for another one where he can post and advertise such a product. At first, it’s all money out. There is no actual income at this point in time. But over a period of time, people start browsing and clicking the websites in which he advertised his book. When visitors get interested in his book and buy it, he will start making money especially when he becomes popular in his niche. Because of this, he receives a regular income even if he does not any more spend his time making another book. This type of income is called residual income.
Common to everybody, we have to work hard to earn some money. We all know that what we earned is commensurate with our work. It’s an income, isn’t it? This type of income is called linear income. Many are already satisfied with this income model because it’s quick and guaranteed. Aside from that, we can control and anticipate the amount of income we can earn for a period of time and that gives us a basis for budgeting. However, it is limited because it is also based on our energy and time. Every day, we are awake for 16 hours. Assuming, we earn $25 per hour. We work 16 hours a day so it gives us a daily income of $400. After a month, we have $12,000. Of course we need to eat and take a shower every day. We change clothes and go to work while being stuck in the middle of the traffic jam. On top of that, this work includes Saturdays and Sundays. Even if we enjoy this busy lifestyle, where can you get any more time to earn more?
Residual income is a better alternative for people who want more. With less effort, you could earn $5k, $10k, or $20k a month depending on how you set it up. Therefore, residual income is a business. But unlike most traditional businesses, residual income business can be set up without having to set aside your linear income. Since residual income business is still a business, you may need to spend a little effort from time to time. But that does not require you to give up your regular work if you still wish to work continuously. In fact, you don’t have to.
What are the types of residual income business? Residual income business is more common with artists such as singers, music composers and movie actors and actresses. They are paid for the work they have accomplished. After a certain period of time when their films or recordings are distributed in the market, they will receive a royalty fee. Every time a single copy of their work is sold, they earn a residual income. The entertainment industry is just one type of residual income business.
If entertainment is a residual income business, creativity is another type. This type of residual income business entails knowledge and intelligence. Inventors, scientist, and designers such as engineers also receive an income based on the agreed amount equivalent to their output. When another institution or any business entity uses the patent of their work, they may earn a huge amount of money. The only challenge here is that nowadays, most companies have their own R&D department that develops their own patent.
Most of us must have forgotten that a franchising business is also an example of a residual income business. This kind of business requires so much time and money. It involves risk during the start-up stage. However, when the business grows and becomes popular, people who want to engage in business would prefer to have the same. Businessmen willing to use the franchise name will benefit from the same market where it is the leader. On the other hand, the owner of the franchise earns a residual income from the franchise fee every after the expiration of a franchise period. Common businesses that may sell a franchise are fast food chains and retail shops.
Online business is the hottest residual income business nowadays. We can earn a residual income from various income models. As a beginner, we spend more time browsing and researching some related information on how to earn money online. By doing so, we become bombarded and loaded with a lot of options to begin with. The most popular one we may notice is the affiliate marketing business. And a person engaged in this business is known as affiliate. An affiliate is someone who looks for a product online not for the purpose of buying it. He sells it online. He gets into a number of websites offering some affiliate programs. This includes advertising the products from the said websites to many different links and web directories. An affiliate earns a commission upon from the sale of the product bought by online visitors. It requires a lot of effort and trials in the beginning stage. When it’s all set, residual income follows.
How does it work? We may find our niche or a particular specialization based on our talent and skill. Afterward, we can create a niche website or blog and write some articles related to our expertise. In order to draw the visitor’s traffic to our sites, we optimize the search engines using keywords in our article content. This formula is known as SEO or search engine optimizer. Through this, we might gather an optimum number of visitors who may like we say and who, eventually, may want to learn more about we have and what they should buy to go deeper. From there, we can search for some websites selling products related to our expertise. We should apply for a membership and select the niche products which we can promote on our site. Through this, we can lead the visitors to those sites using a link. Once a visitor gets interested to buy the product, he will just click the link and get directed to the sites where he can make a purchase. When a sale is done, an affiliate will earn a commission. This process can happen repeatedly even if an affiliate is offline. Your site and the links in it will do the rest for you. Sometimes, an affiliate must exert his extra effort to sustain and strengthen the traffic. But if an affiliate has started it right, there will only be little effort needed.
On the other hand, you can create your own online products and let the affiliates promote and sell them. Instead of just an article, you may be an author of a book. Make sure that the books, you should make, is related to your niche. At first, you should build your credibility as an expert in your niche. To do so, you should also do what affiliates do.