What is Network Marketing? Is This Business For You?

Starting your own home business is something that just about anyone can do. While researching various home based opportunities, you may have asked yourself, “what is network marketing”? “Will it work for me”?

Network marketing (also known as MLM or multi-level marketing) opportunities provide you with a way to start your own business from home, for a fraction of the cost of traditional business models such as franchising. In network marketing, you can usually get started for less than $500, and considering the income potential it’s a very good deal. I don’t know of any other home business with full-time income potential that you can start with so little cash up front.

Starting out in network marketing is easier if you spend time initially to learn more about the business model, and what it takes to earn income and achieve success.

For everyone, personal development and growth is essential to success in MLM. Always be a student and prepared to learn more. This is one of the secrets of the pros and top income earners.

If you’ve been considering this type of business, I’m sure you have quite a few questions. I’d like a address a few of the more common ones in this article.

What is Network Marketing, Anyway?

This is a business where you typically make money two ways:

1) Retailing products to direct customers (or referring them to an online catalog and you get credit for the order).

2) Sponsoring others into the business and earning commissions and bonuses on their sales and product consumption.

Many people think it’s all about pestering your friends and relatives. While it’s good to notify your “warm market” about your business, ultimately you’ll need to attract others who are looking for an opportunity to make money from home. Good companies and strong upline support teams will teach you how to do this, even if you have no previous business experience.

Here are some other common questions I frequently hear.

What is the first thing to look for in a network marketing company?

Look for a company that markets products that are quality and fairly priced. Your products are the foundation of your business. Without great products that people want to use and purchase, the best compensation plan in the world is meaningless.

If you are talking to someone about starting a business and all they will talk about is the potential income (little regard for the products), consider that a warning flag. Great products and services are what drives outstanding income and long term prosperity.

A friend told me that MLM network marketing was about a “pyramid scheme”.. Huh?

There is often confusion about this. A classic pyramid scheme (which is illegal) offers quick cash typically earned by recruiting others who pay a substantial fee to get involved. There is usually a “product” involved to make it look legal, but the key is that the product has little real worth or value. The money is made on recruiting and collecting chunks of the signup fees. When the number of participants starts to drop, the whole thing collapses.

A legitimate MLM network marketing opportunity will have real products of value, and money will be made when these products are sold or consumed. The primary long term income will not be from signup or participation fees.

I’ve heard you have to get in on the “ground floor” of these deals or you won’t make money?

Not true at all. All companies go through a “momentum” phase when fast growth occurs, but if the products and pay plan are solid, you can make great money at any time. The key is genuine quality products that people want to use.

Getting in with a new startup opportunity is risky. Many home business opportunities start up and fail each year, for many different reasons. Poor management, low quality products or services, inability to meet increasing demand, and things like that. It’s typically better to wait until a new company has solid footing and a track record before getting involved.

What is network marketing doing so far as how they pay their distributors?

There are various types of network marketing and MLM compensation structures. Some of the lingo you’ll hear includes “breakaway”, “matrix”, “unilevel”, and “binary”. There are other types that are hybrids or combinations of the best of these.

It’s quite realistic to build a profitable business with any of these. If you have a great product, enthusiasm, and persistence you’ll make money no matter what type of plan it is. Look more at the stability and history of the company and the management team than at the fine details of the compensation plan.

Do I have to buy and keep products on hand?

I spoke with someone recently who heard a story about a guy who lost a lot of money in network marketing and had a bedroom full of products he couldn’t get rid of. This happens sometime when people are encouraged to buy and stock up on products to meet some sort of quota or level in the marketing/compensation plan. This isn’t good practice.

What is network marketing….it isn’t a front loading deal….even though some do it. They are wrong.

In some cases, having a small product inventory makes sense if you have retail customers. If your home business is built around retailing products mostly, you would need some inventory. Normally, this is not the case and there should be no requirement to inventory products at all.

Can I build my MLM business online?

Yes. However, if you don’t already have substantial online marketing experience, it’s best to work in your local area and learn the fundamentals of the business. At the same time, you can go online and begin learning the ropes, but while you are learning focus on prospecting among people you know and meet locally. That will give your business a faster start. And, it’s all about making money as soon as possible, right?

A Closing Thought About Our Business

If someone asks me what is network marketing, I could avoid all the details and just say “it’s a fantastic way to leverage your time and build lifetime residual income, something you will never get from a traditional salaried or hourly job”. And that, folks, is the bottom line.

 

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