What is network marketing?
Network marketing is a business model in which a company chooses to pay independent representatives to use and market their goods and services, as opposed to paying a dedicated sales force. This business model allows the individual to put as much time, effort and energy as they desire into the business to achieve their desired results, rather than being told what, when and how to work. Although network marketing sometimes has a negative connotation, there are a lot of large, reputable companies that use it for their compensation model.
Is it a pyramid scheme?
Though network marketing has often been misrepresented as a a pyramid scheme, they are quite different. A pyramid scheme is an illegal investment scam designed to funnel money to the top of the structure while “ripping off” those underneath them. In a pyramid scheme, there is no commerce of goods or services, only promises of large returns on investment with “little risk.” New investor’s money is used to pay the original investors and the money eventually runs out when new investors cannot be found.
Looking at any corporate structure you will see a shape that resembles the shape of a “pyramid.” As long as a company that uses a network marketing business model sells a good or service, and money is made on the sale of those goods and services, it is generally legit. But with that said, there have been a fair share that have come and gone due to bad management and/or illegitimate products or business practices. But as the saying goes, don’t throw the baby out with the bathwater. There have been countless restaurants shut down due to unsanitary kitchens, that doesn’t mean that all restaurants should be shuttered.
What to look for
In evaluating a network marketing opportunity, you should look at several factors:
Longevity – Has the company been around a while? Longevity in the marketplace shows that the organization is a legit business and in most cases financially sound, with quality products and a track record of success
Product Quality – If you are going to market products for an organization, you should ensure the products are high quality. Don’t get caught up in marketing the “next big thing.” Ultimately, if you are going to market something you want to be able to have faith in its quality
Training – The value of a quality network marketing company is the level of training and support you receive. It doesn’t make sense to launch a business if you will not receive the training, support and mentorship needed to be successful.
Good Compensation Plan – You want to be involved with an organization that provides a good compensation plan and rewards the person who does the most work for their efforts. You also want to ensure that the monetary rewards are associated with sales of products and not “sign up” bonuses.
Community Impact – A company that invests back in the communities they serve shows that they care about more than just making money.
Why choose network marketing?
Network marketing offers the fastest way to move cash flow into the B quadrant. In most cases you are able to launch a new business that checks off the top traits of an ideal business listed in the Dow Theory Papers for very little up front cash. With the right amount of training and effort, that initial investment can be earned back very quickly.
It also allows people of any socioeconomic class a fair and equal opportunity at success. Moving into the B quadrant through an avenue such as real estate is financially out of reach for the vast majority of the population. Network marketing allows a person at any financial level to own a proven business system with the ability to scale rapidly while earning uncapped income.
Plain and simple, network marketing done right – in a professional manner with a legit company – for many, is the only way to earn the time and financial freedom that they seek and dream of.
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