Starting A Network Marketing Or MLM Business?
The number one stumbling block in starting a business is capital. The great thing about a network marketing or MLM (multi-level marketing) business is that it opens doors of business opportunities to aspiring entrepreneurs.
The main reason why most people decide to start a network marketing business is the income potential.
Benefit: Compared to traditional businesses or franchises that involve lots of time and money to begin with, starting a network marketing business requires only minimal start-up costs with the potential to make it big.
Usually, you can already become a distributor or member with a network marketing company by just using some of their products (about $50 or 3,000 pesos or less). Becoming a distributor gives you access to further discounts and the right to sponsor people into the business.
After that initial investment, you can already start making money through the different incomes in network marketing:
- Earned or working income – when you have personal sales
- Passive income – when someone you sponsor or in your team makes a sale
- Residual income – when the customers and organization you have built continue to produce sales
Disadvantage: The low capital advantage combined with the big income potential is often used as a selling point by most network marketers. Now, that’s ok because it IS a big advantage for someone who seriously wants to start a business and lacks the capital.
Since capital won’t be an issue anymore, almost anyone can begin a network marketing business. Now this might look like a good thing, BUT the average person is actually trained to think like an employee, not a business owner.
An employee earns working income, NOT residual income. As an employee, I came to work almost every day in order to receive a regular paycheck (working income). A business owner, on the other hand, may have to build his business for years before he starts receiving residual income.
Get Rich Quick
Most network marketers start as employees who were never exposed to or taught how to earn residual income, so a lot of network marketers have the false premise to get rich quick.
Network marketing is NOT about “getting rich quick,” although with the right opportunity some people make a fortune in quite a short time.
Please don’t make the mistake of pushing the network marketing concept to others without understanding the residual income principle behind it.
The big earnings in network marketing actually come from residual income, NOT working income. As stated above, residual income comes when the customers and organization you have built continue to produce sales. It’s the same with the royalty income of authors, inventors, and musicians; they receive residual income even long after their work is done.
Residual income in network marketing will come to you after the work is done, after you have built your organization, which means helping the people under you create their own teams as well.
It’s not enough to sponsor 2 people, then sit back, relax and wait for the money to come in, as what they say in most opportunity meetings.
You have to do your work!
Most of those who fail in network marketing either chose the wrong company or just quit too soon because they were still thinking like employees expecting to get instant results (15th and 30th pay).
Don’t Be Gullible
There are network marketers who don’t know any better and still pitch the “get rich quick and easy,” and there will always be gullible or greedy people who will fall for it and get hurt.
When they don’t make money the first few months or even days, they quit and spread the word that “network marketing doesn’t work” or “it’s a scam.”
This is one of the reasons of the negative perception of network marketing. It’s actually the people doing the marketing who are misleading, not network marketing itself.
If you perfectly understand the concept, you will realize that achieving success in network marketing even after 3 to 5 years of part-time or full-time effort actually beats the 40-year plan of employment.
Once you have built your organization in network marketing and receive residual income, you will have the financial security and time freedom to do anything you want for the rest of your life!
Tip: My tip is to make sure that you’re joining a company that you can work with long-term. Once you find the company that’s right for you, act as if you invested millions to put up your business even if you only invested a small capital.
This way, I think you will do everything to learn everything about your business and work harder on it rather than just treat it as a hobby with no commitment.
My mom just started this kind of business. Just a week ago in fact! She plans on including me as one of her sponsors. Your article really helps! Thank you again Annette. =)