A Leveraged Home Based Business is completely opposite of the traditional sense of earning income.
In the traditional sense of going to school, getting good grades, and getting a good job that you can work at for 40 years and retiring and be set for your golden years. (Is that option still available?) You will go to work, punch a clock and get paid for the time that you worked or you may be on a salary bases. No matter how you look at it you will receive pay based on time spent. There are only 24 hours in a day, so you are limited to the amount you can receive based on the time spent. This approach appears to be a good idea on the surface, but are you really getting anywhere?
- Are you really only worth what your employer tells you?
- Why is it that some people do really, really well, while others appear to be stuck?
- Are you just tired? Tired of being tired?
- Generally it is just a situation of “What else am I supposed to do?”
What if there was a better way?
There is and it’s a Leveraged Home Based Business
The Key word is leverage.
J. Paul Getty said – “I’d rather have 1% of 100 people’s efforts than 100% of my own efforts.”
When you start to understand this concept of leverage, there are no limits! In any business you will be applying the concept of leverage, unless you are self-employed and doing it all yourself.
A traditional business comes with huge start up costs, and very large monthly overhead. This is a good way to go if you already have the skills and financial backing. Most people don’t, that’s why they work for those that do. Have you really looked into the costs of owning a business?
Have you ever had a savings account and got excited about watching it grow, both from your contributions and the interest earned? (If you haven’t, I would recommend opening an account and regularly contribute to it and watch it grow.)
Have you ever thought about what it is going to take to retire? You can leverage your money and put your money to work for you. But that is not the purpose of this writing. I do however want to make an analogy to compare to. (And you definitely want to start looking into investments once your business starts to grow.)
On today’s date you can receive annual interest on a 5 year CD of 2.25%. If you invested $55,000 into it after one year you would have earned $1,238 in interest or $103.16 per month. Now that’s not a lot of money is it? But how hard did you work for it? You didn’t your money was at work. So… are you able to put $55,000 in the bank to receive the monthly return of $103.16?
Well the following year it compounds. You put the money in once and you continue to receive interest, not just on your principal but also on your interest. The next year you receive total interest of $1,265 in interest or $105.42 per month. Still not very much, but it’s growing! This continues to maturity and the fifth year, you earned $1,352 in interest or $112.67 per month. You can go to Bankrate.com to work your own calculations if you would like. How much would you have to have to earn $2,500 per month in interest?
The whole idea of a home based business is to do the work once and get paid over and over again. We’re talking about royalty income, the type of income that inventors receive, musicians and actors receive, authors receive, most of us do not fall into that category.
Would you be willing to apply some sweat equity to your home based business on a part time basis, receive an initial bonus for your efforts and then receive royalty income on a monthly basis. Can you get excited about watching your royalty checks grow?
Let’s look at product sales from your home business as an example: Let’s say you have a product that is $40.00, you pick up a new customer and they are on the autoship program. You earn a monthly royalty of 5% which equals $2.00. So you would only require 50 customers at that rate in order to receive $100.00 per month in royalty income. That is almost equivalent to having $55,000 in the bank earning interest. And of course you don’t have to do it all at once.
“One Customer is like Depositing $1,000 in the Bank!!”
And this is only based on your efforts. Remember we are talking about a leveraged home based business.
Now we want to take it to the next level. Just like any business you need to put your team together. But rather than employees, your team will consist of people just like you who want to have their own home based business. This way everyone is in business for themselves, just not by themselves.
So let’s say that you order $40 per month and you have 5 customers that order $40 per month at 5% that is $12.00. Then you find three other people that also want their own business from home and they order $40 per month and have 5 customers that order $40 per month. Now you have your efforts and your teams efforts. (Remember what J. Paul Getty said?) Now that’s 24 x $40 = $960 x 5% = $48.00. Your efforts only produced $12. Isn’t it exciting watching it grow!
So let’s say that it’s growing perfectly, which it doesn’t, some you will find will be more and others less. Let’s assume that your three business partners do the exact same thing. Now we have 78 x $40 = $3,120 x 5% = $156 per month. Now you would have to have More than $55,000 in the bank to produce that. Let’s take it to 9 levels.
4. 240 x $40 = $9,600 x 5% = $480 per month
5. 726 x $40 = $29,040 x 5% = $1,452 per month
6. 2,184 x $40 = $87,360 x 5% = $4,368 per month
7. 6,558 x $40 = $262,320 x 5% = $13,116 per month
8. 19,680 x $40 = $787,200 x 5% = $39,360 per month
9. 59,046 x $40 = $2,361,840 x 5% = $118,092 per month
Now this is just an example of a low ticket item and minimal participation by everybody that is everyone has 5 customers plus themselves and 3 distributors personally enrolled. What I want you to see and understand is the compounding effect of leverage. I also wanted to set the proper expectations by comparing to a savings account. Because in the beginning of your home based business journey it is a little slow going. Just like in the beginning of saving and investing.
Unfortunately we live in a society of instant gratification, that is why most people have a hard time saving/investing and investing time into their own home business. Part of the problem is the way that it is presented. So many times I believe that it is presented in a way for someone to believe that they can just sign up and they are going to get rich. That is not the case. You will require a part time effort in building your business and if you keep in mind the analogy of a savings account, it will become very exciting watching your team grow along with your royalties that just keeps on coming in month after month.
Most home based business models have a way to be paid bonuses to help in the short term while building the long term residual income. But it is this long term residual income, that is attractive and where true wealth is built!
If you have any questions about the leverage of a home based business please comment below or contact me. Also please comment below if you found this informative and/or helpful in any way.
To your Home Business Success!!
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