Residual Income Model: A Penny or Big Ten?
Many MLM opportunity seekers come from a history of direct sales where income depends on house parties, fundraisers, and retail sales. While this is a great source of cash, here’s a bigger picture: the residual income model.
Most MLM opportunity seekers don’t really understand how the residual income model works, so here’s a little story to demonstrate the concept.
Imagine, if you wish, a choice. A genie comes out of a bottle and offers $ 10,000 in cash, today, right this second, with no strings attached. You can take it and go, happily, forever. Or, he says, he may have just a penny, but not today. The genie will take that penny and double it, every day for 30 days, and at the end of the 30 days, you can have the final amount. You have 5 seconds to decide.
Now most people would, in fact, just take the $ 10,000 in cash and happily walk away, especially with such little time to decide. They would instinctively feel that the doubled penny represented a trick of some kind. But they would be wrong. Let’s see what would happen if the double penny scenario were pursued:
Day 1: 1c
Day 2: 2c
Day 3: 4c
Day 4: 8c
Day 5: 16c
Day 6: 32c
Day 7: 64c
At the end of week one, those who took the $ 10,000 are laughing and the MLM opportunity seekers who opted for the double penny are probably a bit embarrassed.
Day 8: $ 1.28
Day 9: $ 2.56
Day 10: $ 5.02
Day 11: $ 10.04
Day 12: $ 20.08
Day 13: $ 40.16
Day 14: $ 80.32
It’s been two weeks and our doubled penny hasn’t even reached $ 100. Halfway through and it doesn’t look very good.
Day 15: $ 160.64
Day 16: $ 361.28
Day 17: $ 722.56
Day 18: $ 1,445.12
Day 19: $ 2,890.24
Day 20: $ 5,780.48
Day 21: $ 11,560.96
Say ah! After three weeks, we caught up! I wonder what next week will bring.
Day 22: $ 23,121.92
Day 23: $ 46,243.84
Day 24: $ 92,487.68
Day 25: $ 184,975.36
Day 26: $ 369,950.72
Day 27: $ 739.901.44
Day 28: $ 1,479,802.88
At the end of the four weeks, you can see that the total is a far cry from 1 cent or even $ 10,000. Those MLM opportunity seekers who initially took the $ 10,000 are no longer laughing.
Day 29: $ 2,959,605.76
Day 30: $ 5,919,211.52
At the end of the month, the doubled penny is worth almost $ 6 million. It is difficult to contemplate that. But that’s the concept behind how the residual income model works. No, you don’t make $ 6 million in a month; This example really has nothing to do with an MLM company’s compensation plan.
But what happens is that you work longer, for what seems like too little income, to take home a much bigger prize in the end. And that award is not a one-time thing. Once you have worked to establish your long-term residual income model, you will receive your income month after month.
This example is what initially attracted me to the concept of network marketing. Of course, I chose a company that is not a one-size-fits-all company, and I suggest that you research companies and do that as well. MLM opportunity seekers want to go with a company where you can generate residual income through hiring and at the same time make a quick buck through sales. Find a company that offers both.
There really is no genius that makes money. It would be nice if that’s the way it works, but following a residual income model takes a lot of work and time. But for those MLM opportunity seekers willing to put in the effort, the rewards can be worth it.