What is the “three legged stool”?

What is the “three legged stool”?

What is the “three legged stool”? 1536 864 Chris and Susan Beesley

three legged stoolThe “three legged stool” actually means different things to different people

It was fascinating researching for this article (especially images) and how others have used the phrase “three legged stool” to describe so many different concepts.

The most popular from search engine results [the three legged stool] was the three legged tool retirement income model ….

The “Three Legged Stool” Retirement Income Model

The “three legged stool” was a retirement terminology from the past that many financial planners used to describe the three most common sources of retirement income for a retiree during retirement – Social Security, employee pensions, and personal savings.

Times have changed though and so has the three-legged stool. For younger workers, one could say that there still is a three legged stool, but the legs have changed. In place of costly pension plans, most employers have moved towards 401(k) plans which require workers to defer a portion of their own pay check into the 401(k) retirement account (USA)

This actually leads nicely into our favourite which is the three legged stool income model and one which we use in our business and which was used by many successful entrepreneurs in their more traditional businesses – entrepreneurs like Sir Richard Branson and Lord Alan Sugar to name but a few.

The “Three Legged Stool” Income Model


When we first got started online back in 2010 we were taught from day one that we should always look to build  multiple streams of  income and to look for systems and platforms that had within them multiple streams of income.

From this concept we trained on this model using our Three Legged Stool TM  (Something Chris was already familiar with from a previous business)

The constituent parts of our “Three Legged Stool” are Residual Income, High Ticket Income and Affiliate Income

The Three Legged Stool – Residual Income

1068044Residual income (also called passive, or recurring income) is income that continues to be generated after the initial effort has been expended. Compare this to what most people focus on earning: linear income, which is “one time” compensation or payment in the form of a fee, wage, commission or salary.

Residual income can be earned in many different ways but we will be looking at residual income earned online and usually through affiliate programs and network marketing programs or opportunities (which is also the third leg of the three legged stool – affiliate income)

This is one of the most critical components of the three legged stool model since it provides a regular income (like a salary or wage) to replace your salary or wages in the longer term.

One of the great advantages of residual income is that once things are set in motion, you continue making money from your initial efforts, while gaining time to devote to other things… such as generating more streams of residual income or high ticket or affiliate income!

We often explain residual income using the mobile phone contract metaphor.  If you have a mobile phone the chances are you have it on a contract for 12 months or more and pay for it every single month.  The mobile phone provider only made the sale the one time but they get paid by you ever single month that you retain that contract.

Similarly, if you purchase a property and rent it out and receive rent every single month as the landlord for as long as that person rents it then that is also residual income.

In the online business world residual income would be from a product or service that you have to pay for each month to continue to receive it.  A membership site subscription would be a classic example of this.

In our business we have three residual incomes from membership sites.  We make the sale one time and the customer continues to pay for that every single month for as long as they continue to require the service

The Three Legged Stool – High Ticket

We usually refer to high ticket income as being income that pays a minimum of $1000  in commission per sale and can pay $3,000, $5,000 and even $10,000 in commissions or more per sale.

This works very well for promoting someone else’s products and services that you have not had to create yourself.

Just by making one sale a month, you would be earning $1,000 in commission or more depending on the high ticket business/product of your choice. However there will be months when you may sell two or maybe three.  Of course you may not sell any.

To find out in more detail we expand on the subject here

The Three Legged Stool – Affiliate Income

plain three legged stoolThis is the third of the three legged stool income model and whilst it can be stand alone –  selling affiliate products where you earn anything from 20%-50% commissions (or even 100% commissions) on each sale, it can also be a component of residual income and high ticket income.



One of your income streams (albeit not necessarily online) should be your current job, profession or occupation.  The income stream which pays you money to support you and your family and/or lifestyle. You may be shocked to hear this but we hope that you see the sense of it.

In fact, many people will disagree with us on this count but we think it is veryimportant NOT to give everything up without gaining the skills and knowledge to help you succeed in your chosen business endeavour.

Time and again we have seen people throw themselves into a new business without consideration for having a steady stream of income coming in (which in fact could support a new entrepreneurial adventure if you think about it with the right hat on).  In actual fact, this is exactly what we did when we got started and we would 100% suggest that you do the same.

Our driving force to give up that particular stream of income (our successful management consultancy business) was our lack of time freedom.  That being said we didn’t just throw in the towel and quit “just like that“.  We got started with our online business part time whilst still earning our principle income from our management consultancy business.  We put aside some of that income with a view to it supporting us for six months when we were ready to say we were going online full time. Only when we were ready did we give notice to our clients and go full time online.  Even then it wasn’t all plain sailing and there were times when we wondered if we could do it.

You will almost certainly have these feelings at some time and we want you to be aware of them and find the courage and mindset to work through them.

In fact we did exactly what we now teach  – spent 2 hours a day building your business part time (this really is the minimum in our opinion) and even more hours at the weekend as we wanted to move forward as fast as we could.

What is the “three legged stool”?

Chris & Susan Beesley

We’re former accountants and management consultants ‘of a certain age‘ with 5 great kids, 5 grand-kids, 1 grand-dog and a little old cat called Vincent. We love skiing, the mountains and travelling the world and we’re passionate about helping others to start and build successful businesses online to generate them a full or part-time income to support their retirement lifestyle.

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