The Definitive Guide To Choosing The Right Home Based Business - Part 3 of 6

The definite guide to choosing the right home based business opportunity simply boils down to the questions you ask yourself before you start your search. Understanding your goals for success, and how your perceive a home based business to get you there, will have a profound impact on your decision making process. In fact, knowing what you need ahead of time will make the process go much more smoothly, allowing you to weed out unsatisfactory business opportunities rapidly.

Note: There are no specific businesses listed in this article so your use of this guide is not hindered by a constant sales pitch. If you would like to discuss specific ideas, please contact the author within the profile area where you read this article.

The following lists distinctive aspects of a home based business that you should consider:

1. Primary Prospecting Source: Internet, Phone, or Direct Mail
2. Prospect Application Process: Free, Paid, Non-Existent
3. Commission Structure: Up-Front and Residual       <-- This Article
4. System: Organization, Support, Accessibility, and Content
5. Leveraging Time, Capital, and Experience
6. Marketing Style: Anonymous Sales vs. Personal Branding

3. Commission Structure: Up-Front vs. Residual vs. Both

Ah, commissions! That's the real reason why you are searching for an internet business, admit it. This section is surprisingly straight forward.

If you are interested in selling a product, then your commissions are generally up-front, meaning you get paid immediately. Exceptions would be if you sell a product that has unique parts that wear and can only be replaced by your business. You would then get residual commissions from the sale of the replacement parts.

Another way to combine up-front and residual commission payments when it comes to selling a product is by offering upgrades. The products best suited for the upgrade structure are software and eBooks (electronic books in PDF format). Many eBooks offer a lifetime of free upgrades, in the case of educational media specific to an evolving product or service (like eBooks that educate you on Twitter, a social medium that upgrades and changes constantly, forcing eBook authors to update their material just as frequently to stay current). Those free upgrades, however, can be offered on a web site that contains other related products or services for a price. If your eBook upgrade is an actual reproduction from start to finish with a lot more content, then offering the updated eBook for a fee is reasonable.

Software upgrades are also offered either for free or paid depending on how extensive the upgrade is (free maintenance release that fixes common bugs or paid full production release with new features), the popularity of the application, or the level of necessity of a specific upgraded feature within your customer base. As with eBooks, you can still get paid a residual income from free software upgrades by placing the download link on a web page that contains relevant links to other paid products and services. In the case of software as you product, your residual income could be a service fee for a back office suite of educational tools, tips, tricks, forum, etc. that helps the customer get the most out of your product.

If you are interested in marketing a business opportunity, then your opportunities will fall into 1 of 4 commission payment categories:

• low up-front and low residual

• low up-front and high residual

• high up-front and low residual

• high up-front and high residual

When searching for a home based business, commission structure is very important. You want to match the commission structure that best conforms to your personality. If you are a college student and are looking for a home based business (or dorm based business :-) that will attract other college students, then you want to stick to the low up-front and low residual model, since your prospect base will have little available funds to pay up front and each and every month. As an example, a popular business opportunity in the low up-front and low residual payment model is the internet domain affiliate business.

The low up-front and high residual payment model best appeals to the "low risk, high reward" personality, where the business opportunity centers on a needed service in high demand that requires professional to perform them. As an example, a very popular business opportunity in this current economic climate are mortgage loan modification and debt settlement affiliate businesses, where attorneys are used and take a large residual retainer fee per case submitted. The up-front costs are low and consist of web page setup and minor start-up costs. Commissions are generally multiple streams including up-front affiliate member sign-up, up-front product or service sales, residual member fees, and residual fees based on your members' completed service or product sales. This is a very powerful commission structure for the person new to home based businesses and want to start with a little money and has the time and dedication to build the business through marketing, marketing, and more marketing. But after just a few months of dedication, the residual income is well worth this initial effort and time spent on the business may be reduced.

Business opportunities that center around the sale of a popular product instead of a service generally fall into the high up-front and low residual commission payment structure. Many product-based affiliate programs fall into this category. For example, an affiliate program that offers a popular tax filing software application could offer it at a high up-front cost. As a business opportunity, you may be required to purchase the product as well, then add to your start-up costs by setting up your internet customized web sites and auto-responders (and maybe 800 toll free voice mail box). The residual aspect would be to offer the affiliate program as well to other customers. You would then get a small monthly membership fee and a small percentage of their product sales. These types of businesses thrive the best in niche markets where the high cost of the product is not only justified, but expected (such as tax software, grant publishing products, software that writes software, stock advising books and products, etc.).

My personal favorite is the high up-front and high residual commission model. You are most likely thinking, "Of course the author likes this payment structure! Who wouldn't?" Ah, but the reason I like business opportunities that fall into this payment structure is because it best matches my personality, period. Therefore, I am best at marketing to other people who value high up-front and high residual commission models and are more than willing to pay the higher up-front and monthly fees because they see this business as I see it, a real investment in yourself. These types of businesses generally require the most work in the first 3 to 6 months, but that initial work sets up the automation that will run the business with high residuals from then on. These businesses also attract a different customer base so you should be certain that your personality matches it before marketing to them.

The reason a high up-front and high residual business requires a lot of work in the beginning is because a prospect will only pay thousands of dollars on a business that is personally branded by a leader, mentor, and coach that they can get to know and trust before they pay for the product and joint the business. In order to be seen as a leader in your field and build that trust, you must delve deep into social marketing and personal branding with content related articles, videos, press releases, and on and on with at least 100 pieces of relevant content to your name. In order to be successful in a high up-front and high residual income home business model, you must be willing to put your face and name to your business and not rely on a general system or some celebrity. Once you have successfully branded yourself as an expert, you can transition from free social media marketing to paid advertising through Google AdWords (or similar advertising from Bing, Yahoo, Adster, etc.). At that moment, you can let your business run 24 hours a day 7 days a week in over 150 countries will you do other things. Of course, your business model must contain an effective system for marketing and training, as well as a high-demand product, such as a complete financial education series on debt elimination, investing strategies, asset protection, tax strategies, health and wellness programs, and so on.

Understanding the characteristics of commission payout that best matches your personality is a critical component in determining the right home based business for you. Ask yourself tough questions early in the process and you will find managing a well selected business both enjoyable and profitable.