Leverage in Network Marketing and Residual Income A “Pension” when you need it.

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Creating a flow of residual income is a key goal for any network marketer. The central philosophy of network marketing is leverage. Let me explain.

How hard can you work in any job? Let’s assume you’re not lazy but neither are you a workaholic. You are willing and able to work for, say, fifty hours a week. If the return on your labour is $10 per hour you will make $500 a week. You can increase your earnings by working longer but you are limited by the number of hours in the week.

Suppose you work in network marketing and you have ten people in your down-line who you have personally recruited. They each work fifty hours a week and make $500. On average, you spend ten hours a week supporting them and take 5% commission on their earnings. You make $250.

Suppose they have each recruited ten people and you take a further 2.5% on their sales. (10 x 10 x 500) x 2.5% = $1,250. You make a total of $1,500 (1,250 + 250) for ten hours work. That’s $150 per hour!

Obviously this is an over-simplification of the process but it illustrates the principle.

The concept of residual income arises from the successive layers beneath the people you personally recruit and the contribution they make to your income without any further effort on your part.

Don’t be under any illusion that this happy state of affairs can be achieved over-night; it will probably take between five and ten years. Once you have achieved it, however, you can choose your own balance between life and work and, more importantly, have a “pension” style income for when you can’t, or don’t want to work at all.