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A recent response to a forum post brings up a good question and tells you....

The Truth About Residual Income

"Is the residual income story a Myth or are there alot of people who are recruiting alot of followers into the group, but don't train enough leaders? (This questions refers to a network marketing company.)

Can people maintain long term residual income? Yes.

But there are some factors that need to be in place for that to happen.

1. Overall growth and stability of the company as a whole is critical. Too many companies fold within the first five years, leaving their representatives scrambling for a new home. The potential longevity of the company is crucial for building long term residuals.

2. Another factor which is outside of your control are any compensation changes a company may make. There have been many instances where the compensation plan changes, and adversely affects those who spent many hours building it in the beginning, but are looking to take it easy and cash their checks years later.

Several tweaks have been done to plans which dictate ongoing minimal recruitment or sales on a monthly or quarterly basis.

I'll give you a perfect example. I was on the phone with a client two weeks ago. The man is in his 70's and has done quite well in a stairstep breakaway program. However, he called me in a panic because one of his distributors promoted above him and it cost him a $10,000 bonus for the month! He is scrambling like crazy - 24 hours a day - trying to regain that lost income. I don't know about you, but I don't relish doing that when I'm 70!

*3. Are you the "personality" of your organization? While it is good to be seen and "out there" as a spokesman for your company or team, you must be careful that people are joining the COMPANY and not just you. As you have seen when the so-called "legends" start or move to other companies, droves of people are attracted. Why? They want to associate with the legend.... not necessarily the company.

If your organization has no life without your day-to-day involvement, it would be difficult to return and maintain the same level of income.

My suggestion, if this is a concern, is to be sure to pass the baton to other leaders and up-and-comers in your organization whenever you can. Have them participate or conduct training calls, webinars and/or local meetings. This build a higher level of teamwork, as well as giving your organization confidence that many people - not just you - can guide and support them in the future.

4. Lock your legs. You cannot count on long-term residuals. In fact, I'd venture to say it's an impossibility.

What do I mean by that? You should develop three levels of leadership (it may be a certain pin level, might be number of reps, etc.), as a minimum, for each of the legs in your organization. Having this depth of serious leaders in each leg will help ensure the growth of your overall organization - at least in those legs - should you decide to start limiting your involvement.

5. Understand that attrition is just a cost of doing business. While your residual income may not disappear over time, it may go down a bit. This may be dependent on how much of your organization's growth was your personal efforts vs. your team's effort.

For instance, if you recruited 70% of the new reps in your organization and you decide to sit back, the future growth of your team will go down unless your other leaders pick up the slack.

In addition, I don't care who you are who or what you do, there will be a percentage of people who will not stay with the company forever. You must have a contingency plan in place to address this, whether it's working part time or making sure you lock those legs and develop your leadership talent before you go off to the beaches!

The key is to develop a long range plan to meet this goal. Talk to other business owners (in and outside of MLM) to find what and how they maintained their sales volume in permanent or semi-retirement.

For instance, my dad semi-retired at 50, working just 2 days a week. He did that for 5 years before selling the business to my brother. However, he had developed the management structure and systems to grow that business even through his semi-retirement.

The key is, don't believe the B.S. when people tell you that you only have to work a year or two and then you can retire forever. Any serious businessperson will tell you it takes work, effort, and a good long-term plan.
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