“Lever Rank” is a term that I use to rank the amount of leverage a specific business model or specific business tool gives you when building residual income. At Levered Income, I discuss the varying amounts of leverage of different businesses and tools that build residual income. Focusing first on the different business models that deliver the most leverage for your time is critical to building lasting and growing residual income. I assign Lever Rank to both the business models as well as to the specific tools that help you grow these income-generating residual income businesses.
Understanding Lever Rank
Lever Rank can range from 1 to 100. A Lever Rank of 1 is given to anything that delivers a 1 to 1 ratio of time to income. This is primarily your paid job (hourly or salaried), where you get paid only while working. This not only applies to a W-2 employee, but also to freelancers that charge by the hour/ job and are paid by the hour/job. If you only get paid while you are working and only for the work you are currently doing, the Lever Rank of that activity is a 1.
A Lever Rank of 100 is given to an activity that magically puts money in your bank account for absolutely no reason. I do not count inheritance or trust funds in our ranking system. To get a score of 100, it must be an unrelated person or company that just deposits money into your account for no reason whatsoever. In other words, it doesn’t exist.
Lever Rank for the different tools and businesses can change over time depending on changes in the business environment and technological changes. I update the rankings as conditions change or from what I experience operating these businesses.
Current Lever Rank Rankings for Businesses and Tools that Build Residual Income
Current Lever Rank Ranking for Businesses that Build Residual Income
Below are my current Lever Rank Rankings for various residual income businesses that I cover. This graph is constantly updated as I add new businesses to create more levered income.
Click on the residual income generating business type for a direct link to a review or information on how to get started building that residual income business.
- Hourly or Salaried Work 1% 1%
- Direct Real Estate Investing – Vacation Rentals 10% 10%
- Digital Marketing 20% 20%
- Direct Real Estate Investing – Residential Rentals 25% 25%
- Direct Real Estate investing – Commercial Rentals 35% 35%
- Cryptocurrency Mining 40% 40%
- Dividend Stock Investing 45% 45%
- Digital Real Estate 50% 50%
- Cryptocurrency Masternodes 50% 50%
- Real Estate Crowd Funding 55% 55%
- eCommerce 60% 60%
- Real Estate Investment Trusts 75% 75%
- Affiliate Marketing 85% 85%
- Someone You Don't Know Deposits Money in Your Account 100% 100%
Current Lever Rank Ranking for Tools that Build Residual Income
Below are my current Lever Rank Rankings for various tools that I use to enhance productivity and build more residual income. This graph is constantly updated as I add new tools.
Click on the item in the bar graph for a direct link to the tool or review.
- WordAI – Artificial Intelligence Written Content Generator 40% 40%
- Copysmith – Artificial Intelligence Written Content Generator 40% 40%
- Rytr – Artificial Intelligence Written Content Generator 45% 45%
- Article Forge – Artificial Intelligence Written Content Generator 45% 45%
- Quickbooks Enterprise – Accounting Software 50% 50%
- SiteRubix – Website Hosting 65% 65%
- Jaaxy – Keyword Research Tool 65% 65%
- Elegant Themes – WordPress Themes – Plugins 65% 65%
- iThemes – WordPress Themes – Plugins – Education 70% 70%
- NodeHub.io – Cryptocurrency Masternode Hosting 70% 70%
- Astra – WordPress Themes – Plugins – Complete Website Templates 75% 75%
- RankMath – Complete WordPress SEO Platform 80% 80%
- Wealthy Affiliate – Complete Affiliate Marketing Platform 80% 80%
- GoDaddy – Hosting – Domain Registrar – Domain Marketing 80% 80%
- Bluehost – Hosting – Domain Registrar – WordPress Hosting 80% 80%
- ChangeNow – Turn-key White Label Cryptocurrency Exchange 82% 82%
- Grammarly – Writing Assistant 85% 85%
- Dropbox – Collaborative Tools – Document Sharing 90% 90%
- G Suite (Google Apps for Business) – eMail – Calendar – Collaborative Tools 90% 90%
- Vendasta – Digital Marketing Platform – Education – Training – Turn-Key White Label Digital Marketing Business 95% 95%
Ranking Businesses and Tools that Build Residual Income
When ranking businesses and tools that build residual income, I look at a lot of different factors to come up with the overall Lever Rank. Factors like cost, risk, time, effort, longevity, and growth all play a part in the overall analysis and a specific business or tool’s Lever Rank.
Some of the factors have higher weighting than others in determining the overall Lever Rank. For example, a business that has no ability to generate residual income, is very competitive and requires a high time commitment (freelance web design is an example), gives it a very low Lever Rank. On the other hand, a business that only generates residual income from previously performed work (affiliate marketing businesses are an example) have a much higher Lever Rank.
I have separated high-level residual income opportunities (the “businesses”) from the tools used to execute those businesses (the “tools”). I view the tools used to enhance residual income opportunities as “mini-levers” inside of the larger Levered Income concept.
Ranking Businesses that Build Residual Income
Understanding that some business opportunities generate more residual income than others enables you to focus your efforts on the highest return residual income businesses. Here is a short list of some of questions I seek to answer when applying a Lever Rank to different residual income businesses.
Is there a market for this business?
This is an easy one. If there are no customers to market your products or services to, you don’t have a business. Does the opportunity have a marketplace? Are there buyers?
How much risk is associated with this business?
As I have gotten older, risk analysis has started to play a larger part of whether or not I move forward in a business opportunity. Risk is not just limited to your capital investment or time spent on a project. It is important to always understand what you have to lose. Insurance is critically important.
How long in the future is the business expected to pay residual income to the business owner?
Is the concept long-lasting? This plays a large part of total earnings. Will the concept still be viable in 5 years? Residual income is all about duration of the income stream. As you shorten the time horizon, it becomes closer to being a job.
Is the amount of residual income fixed or does it grow over time?
Growth of the residual income stream is important to overall earnings and should be used in comparisons. With a 3% inflation rate, $100 is only worth $97 the next year. The best residual income streams are the ones that grow over time.
How much investment is needed to start up the business?
This has a large impact on the rankings as I take into account the effort to acquire the capital. Sure, purchasing a $1,000,000 commercial net lease property with a 7% return pays you $70,000 per year with no landlord responsibilities. Sounds like a great source of residual income until you add in the work it took to make the $1,000,000 after taxes in the first place. Consider an affiliate marketing business that cost $2,500 to start up that pays you $5,000 per month? Which is the better return?
How much money is needed to run the business?
This is intertwined with the investment amount and risk. Will you need to contribute capital to keep the business running? Capital intensive businesses (think oil and gas) can have multiple “capital calls” to continue operations or complete projects.
How much time and effort is needed to start up the business?
This typically has an inverse relationship with the amount of capital invested. If you are launching a new business with low startup costs, you can typically expect to spend more time on creating the new income opportunity. For example a digital real estate business (domain sales) can be started for less than $100. You will need to spend the time to research the best domain names to purchase, as well as market the domains to potential buyers.
How much time and effort is needed to run the business?
If it takes a lot of time to operate the business, it is not a business that generates residual income. It is a job. I have worked 16 hours a day in companies I have owned. Believe me, it is a job.
Can this business lead to other symbiotic or support businesses in the future?
This is a big one for me. I have found extremely lucrative business opportunities that have been “branches” off of the original business. If you keep your eyes open, the more you become familiar with an industry, you will find niche markets for new businesses.
Is learning this business model helpful to starting other businesses?
I believe in continuing education, and I try to learn something new every day. Writing this blog teaches me something new every day. It forces me to articulate ideas and concepts that I did not even realize I was using, and helps me to understand them better.
Ranking Tools that Build Residual Income
How much time does this tool save?
A tool is a shortcut. Would your rather spend 2 hours and a bloody hand trying to pound a nail into the wall with your fist, or spend $5.00 and buy a hammer? You would finish the job in 1 minute and can reuse the hammer. I have seen other business owners pay an employee $50.00 an hour to sit in front of an antiquated computer with a small screen that works at half the speed of a newer model. You do the math on that one.
How much does this tool cost?
Cost is relative. You can analyze payback, time savings (see the employee example above) or quality of work improvements. I have always viewed technology as cheap, and people as expensive. Always buy the best tools and upgrade often.
How much will you use the tool in the future?
I avoid “one time use” tools. I hire a contractor with the experience and tools to perform the task if it is a non-recurring item. The time to get up to speed with a new tool will cost you more.
Is the tool business-specific? Or can it be applied to multiple businesses?
This builds on “how much will you use the tool in the future”. Something that can be leveraged across 10 businesses only costs 1/10 of the price per business. Quickbooks Enterprise Edition is a perfect example of this as it consolidates all of our companies together for tax filings. The software costs approximately $2,000 per year and saves me over $10,000 per year in CPA fees alone.
Is there value for you as the business owner in understanding how to use the tool?
Learning how to use the tools that help your business function better also helps you learn how to run your business more efficiently. For example, learning to use one of my favorite WordPress themes (DIVI from Elegant Themes) helps me build better affiliate marketing businesses, better eCommerce stores, better online businesses and better online presence for my brick and mortar businesses.
Using Lever Rank to Build More Residual Income
Ranking businesses and tools that build residual income is a fluid process and changes over time. Use these rankings as starting point on your research into building residual income streams. I will update all of the categories and tools reviews as my experience operating businesses in these areas changes and grows over time.
Thanks for reading and I welcome comments below.