3 Steps to Quickly Get A Residual Income Stream - Passive Income

Would you like to quickly and fairly easily get a monthly check that pays your household bills? Would you like to do work one time and then get paid over and over again? Follow these 3 steps and you can have those benefits. Don’t follow the 3 steps and you can plan on going back to work every week in order to get your monthly check.

1. Own The Right Kind Of Business. Notice that I did not say that you did not have to work for the income. Important point if you are looking for a get rich quick scheme. The work I am talking about though is not difficult and can be done with speed.

Would you agree with me that we should seek and take advice from people who really know what they are talking about? J. Paul Getty, who was one of the richest men of his time, recommended in a book “How to Be Rich” that you should own a business. His point was that you want to deal with products that get used up and bought over and over again. His point was that the product should be consumed (eaten), go down the drain, or go up the smokestack. The ordering over and over again concept is the key to residual or passive income.

Insurance sales are a perfect example of this concept. An insurance policy, like property insurance, is sold once but the customer needs it again every year. Every time the policy is sold, a commission is paid. The salesman does not usually need to sell the policy again but the renewal will be made over and over again.

A food business can be another example. The food is consumed or eaten and then must be replaced so that it can be eaten again. If a commission is paid, the commission is paid over and over again.

So own a business in which the sale is made once but the commission is paid over and over as the product is re-ordered with minimal involvement by the seller.

2. Have A Great Big Funnel. If you could add to your business every month while keeping the sales volume you had in the previous month, would you think that was a good idea? If you start your business this month and have $500 in sales and those customers are going to need to buy again next month, would you want more customers next month?

Compare that to some businesses where they sell a customer one time and that customer does not need or want to reorder next month. For example, a lawyer fixes a problem for a customer. The customer pays him for the work or advice. But the problem is fixed. The customer is not going to reorder next month. For the lawyer to make as much money, he will need to replace that customer.

In your business when you add a customer, you are not replacing a lost customer. So when you add a customer, you are not just maintaining your business but adding to your business. The bigger your funnel to bring in new customers, the better.

3. Get Leverage In Your Business. Mr. Getty also said that he would prefer to have 1% of the effort of 100 people than to have 100% of his own effort. There are only so many hours in the day, so if you are trading your time for money, your income is automatically capped.

Let’s go back to the insurance example. The salesman is putting new and additional business on the books every month. His commissions are directly related only to his efforts. Every agent though works for a general agent. The general agent helps and trains the agents. The general agent may or may not do her own sales. The general agent is paid 4% of the commissions paid to each agent to compensate for training and helping. The 4% is the passive or residual income stream you are seeking.

When you apply these steps in the right business, you can quickly and easily develop a residual income stream.

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James Montgomery is a successful lawyer and business owner who helps and protects people buying and selling businesses. Find out about the six systems that your business must have at http://yourexitstrategy.blogspot.com. His advice on business ventures is also at http://howtostartabusinessfromhome.com and http://residualincomestream.blogspot.com.