What is Network Marketing
Like we said last week, network marketing is a business model similar to franchising (like McDonalds, Anytime Fitness, etc.), but it’s online based, so you don’t have the overhead of a brick and mortar building, or the costly expense of employees.
It’s an untraditional path that will require training and to develop new skill sets that you may not have.
Essentially, the way you earn money is through the sales of a particular product or service. Side note: there has to be a product or service and a tax ID a company to be legitimate. If it does not have products or services, and is based on recruitment, then it is illegal. We also do not get paid recruitment fees, or make any income from the act of registering someone in business. The only time you earn money is through the sale of products and services.
The more volume your business creates, whether through customer sales, or team growth, the more money you earn. Every company, traditional or not, works on the principle of more volume creates more income.
The more people that buy a car from your dealership, the more people that download your app to their phone, the more members that sign up for your gym…it all leads to increased sales and revenue for the company providing those products and services.
This idea is the same in network marketing, only with the direct sales model, you are able to expand your reach and duplicate your efforts by building a team, which in turn increases your overall business volume.
Volume = Money
Expanding your team and helping others create their own business is how you earn the most money (because remember, more volume equals more money, and 10 people building a business is more volume than one person can do alone).
“Wait Scott, this sounds like one of those pyramid things…”
In a “pyramid”, the guys at the top always make more than the guys at the bottom, and there is little room to move up. Most people in the corporate pyramid burn themselves out or make questionable character decisions trying to get to the top where few positions are available.
Pyramid schemes are illegal and have no product or service when money is exchanged. A legitimate network marketing business model is shaped like a ladder, where anyone can be on any rung of the ladder they choose and work for.
This is what I love about the business…it doesn’t matter what date you started, you have unlimited opportunities for growth. Even if the person who helped you get started has built their business for 3 years, if you build a team and move more volume than that person does, you make more money! It is performance-based, not position-based (really exciting for those of us who are competitive!).
More work, effort, and success equals better pay. If that isn’t fair, I don’t know what is!
Most of the issues arise because people are not properly trained or vetted through the process. We have to change people’s mindset, which is challenging, from an employee mindset to a business owner mindset.
When most people get started, they are left to figure it out themselves or try to pay their way to the top levels of the business. That will leave anyone frustrated, broke and believing this type of business model isn’t viable. I hate that these couples or individuals have to experience this, but just like any business, you have good and bad business owners.
Make sure you do yourself a service and ensure there is a good training system in place, you have others who are willing to mentor you on the skills needed to be successful, and they have good, sound products or services.
You should NOT, I repeat…should NOT go broke because of the business, and you also shouldn’t expect extraordinary payoff if you’re giving mediocre work. It’s hard work to succeed in this type of business, but potential long term gains are worth it…if you’re willing to be coachable and learn from those who have succeeded before.