Network Marketing – The Business Model
Network marketing is a multi-billion-dollar business. As a business model, it is taught in major universities around the world. The Wall Street Journal stated, “Between 40% to 65% of all goods and services sold in this millennium will be through network marketing.” It is a business model that is perfectly suited for the information/digital age!
What Is This Business Model?
Network marketing is a way of doing business that is different from the traditional model used by most consumer-packaged goods, food and drug companies. It is one of the most promising income opportunities in American today. It is the idea of many people each doing a little work, as opposed to a few people doing a lot of work. To quote J. Paul Getty, the world’s first billionaire, “I’d rather have 1% of the efforts of 100 people than 100% of my own.”
Rather than using the customary distribution process of moving products from manufacturer to wholesaler to retailer to consumer, network marketing companies use a network of independent marketers to move products directly from the manufacturer to the consumer. Further, the cost structure of a network marketing organization is different than a traditional packaged goods marketer.
With a traditional company, millions of dollars are spent on advertising to entice consumers to buy that company’s products instead of the virtually identical product from another company. With a network company, the advertising expense is channeled into sales commissions for distributors who promote the product through “word-of-mouth” advertising, i.e. by telling other people about the product. In the traditional business model, money is spent BEFORE the sale in the form of advertising; in the network marketing model, the money is paid AFTER the sale in the form of commissions. Which model seems to make the most sense from a business standpoint?
With network marketing, you have two sources of income:
1. Direct commissions from sales that you make yourself.
2. Commissions from sales made by people you introduce to the business. This type of income is called residual income. You can invest your time and money once and get paid multiple times for the effort. It means getting paid for the work of others.
In network marketing, you can build a down line of 100, 1,000, or even 10,000 people, most of whom you will not know nor ever have contact with. This is because most of the people in your down line will be people who know somebody, who know somebody, who know somebody, who know you. By having a down line that is working with you, and for you, you can multiply your efforts many times. The earning potential of a down line of 1,000 people, each putting in only one hour a day five days a week, represents 20,000 hours of work in a month. It would take one person 10 years to produce the same amount of work. That’s the power of a network.
It’s estimated that more than 50,000 people start a home-based business every week in the United States. The average person owning a home-based business earns more than $50,000 a year (often working part-time), while the national average annual household income is less than $45,000. Additionally, a home-based business owner can qualify for many legitimate tax breaks, and tax experts suggest that the average person can save between $2,000 and $10,000 on taxes every year just by starting a home-based business.
How is this possible? Well, consider these two tax structures: a wage earner first earns income, then pays tax on that income, and then pays for expenses with after-tax income. A business owner first earns income, then pays for expenses, and then pays tax on net income after expenses. In other words, a business owner can legitimately reduce the amount of tax he or she must pay because business expenses are paid with pre-tax income, not after-tax, income.
Network marketing is a $50 billion dollar industry in the United States. More than 12% of the approximately 8,000,000 millionaires in America today have earned their fortunes over the previous 10 years through network marketing. Conservative estimates show that network marketing in America is creating an estimated 60 new millionaires each and every month!
For people who are interested in starting a home-based business, supplementing their income, and providing greater security for retirement and for their children and grandchildren, network marketing is an obvious choice.
Network Marketing For Believers And Non-Believers Alike
There are thousands of experts out there who will tell you how to succeed with network marketing. Some of them really do know what they’re talking about, even if their message is often delivered in that rather ‘consultant speak’ manner that makes so many of us cringe and shy away.
After many years of watching the rise and fall of ‘the next big thing’ here are a few observations for any would be online marketer to think about – more a case of how not to go about things, which, hopefully, might save some of us a lot of pain.
1. You get very little in this life for free. If only everyone would accept this simple truth, the network marketing arena would be a happier place. By free, I’m not just talking in monetary terms either. There is no doubt that the internet is still a place where you can find success with minimal initial outlay, but for the most part, the people who have had the greatest success are those who have put a lot of thought and/or effort into their business, along with some investment.
2. A business means a product or a service. You can’t sell thin air to people, other than the downright stupid ones. When the next flash website catches your eye and promises you all the wealth your little heart desires, remember that they know what buttons to push to ignite your interest and talk has always been cheap. If nobody is expected to sell anything, there won’t be any money.
3. It’s staggering what some people can be convinced will make them money. We mentioned products and services, and if we accept that they form the basis of any business, there is much more we have to accept. Before rushing into an online venture just because it says on the screen that millions of people want to buy what they are asking you to sell, think about it carefully. Would you want to buy what they are selling at the price they are selling it at? I mean, come on, you must have known people who have got involved in a network marketing company and tried to sell you on it too. Vacuum cleaners, cleaning products, beauty products, miracle potions, timeshares, beef jerky, online shopping malls, etc, the list is endless.
4. A web page of your own to promote your business! Sounds great in theory for people who don’t know much about websites or marketing and they just can’t seem to get enough of them. I know we all have to learn and start somewhere but I say this because if it weren’t true, we wouldn’t be seeing these awful pages with a low resolution grainy photo of the ‘marketer’ either sitting in their dingy little living space peering in a hopefully vacant way at their monitors or, even worse, a cell phone snapshot of the site ‘owner’ with their little rat like dog. Remember the old saying- “Would you buy a used car from this man?” It applies here in spades. Like it or not, in this world, image is everything, so think about yours and that of the business you are trying to promote. Showing me a video of some smug fool in a rented sports car does not make me want to be like him, nor does it inspire any belief in what he might be doing. Remember that in advertising yourself and your business, your audience have a huge variation of aspirations and are looking for someone to provide what they need. Bragging shamelessly about your own success makes many people want to hit you upside the head rather than aspire to your not so lofty ideals. If you want people to trust you and your business, get yourself a domain name, learn how to build a website of your own and you are already many steps ahead of thousands of affiliates and would be marketers. Oh, and when you write your ad copy, make sure you proof read everything.
5. Which leads on to a quick thought about offline promotion. Maybe you’ve seen it too- “Want A Part Time Income Of $6000 Per Week?” plastered across the trunk of a 10-year-old car. Uhm…..need I say more? If the driver of a top of the range luxury car did it, maybe you’d believe them, but then you’ll never see such a display. In the same vein, all those flyers taped to light poles or slapped on your windshield while you’re at work. What am I getting at? One word – desperation. It will not inspire people to flock to an ‘opportunity’ because it smacks so loudly of desperation and the fact that by believing your sales pitch, they too may well be reduced to wandering parking lots at night, furtively slapping flyers on windshields. Hardly a business success model is it? You are demonstrating only one thing with these tactics – your own lack of funds or willingness to even invest in effective advertising. Keep your offline efforts professional too. If that means restricting yourself to business cards and small ads so be it, your credibility will at least be intact.
6. Okay, it’s time for a little positive relief. There are some good opportunities to be found online. I don’t know about them all and space prohibits a long list of the good, the bad and the ugly here. When you do find something that you think can work for you, don’t be afraid to try it. As the saying goes- “If you think you can do it, or if you think you can’t, then you’re absolutely right.”
Take the time to learn from the people who are already involved and try to find out just how much help you can expect. A good network marketer understands the need to help others in his organization and thus enhance his own business and income. There should be no secrets, and people must be team focused. Most people give up on network marketing because they never get any support from their up line, the people who recruited them.
7. Once you’ve taken the plunge and start to work on your program, don’t be disheartened after the first week if you don’t see any visible results. No matter what anyone tells you, it takes time.
8. The hardest parts of network marketing for most people is the advertising, marketing and recruiting. These 3 activities will take up more time than anything else. This is where having a helpful up line will pay dividends, so get involved with the team and find out how they do it. Overcoming the skepticism of potential customers/members will also be a regularly occurring theme in your days. It’s a fact you just must accept and it’s thanks to all the cons that have been perpetrated in the past by un-reputable organizations. Many organizations/programs make things a little easier by having/offering matrix builders that help you to grow your down line/business.
9. Give your strategies time to pay off, but if they’re not working, try new methods. Doing the same old thing day in and day out will produce the same results. When you get new sign ups, help them as much as you can and don’t jealously guard your knowledge, no matter how hard won it may have been.
10. If you want to change/improve your finances, network marketing is a viable option to do just that. It will take time, hard work, and patience, but people do succeed, and there is no reason why you can’t be one of them!
“Dream about it. Make real plans. Take the necessary actions. Live the life of your dreams. It is possible. Believe in yourself!” Michael “MJ The Terrible” Johnson – Founder & Owner – Masters of Money, LLC.
Everything You Ever Wanted To Know About Network Marketing II – https://www.mastersofmoney.com/everythingyoueverwantedtoknowaboutnetworkmarketing2/