Why Network Marketing is the Business of the Future
With an increased number of people realizing that they do not have enough money in savings by the time they retire awareness about alternate channels for earning money have sprung up apart from doing a regular job or investing your savings in a mutual fund.
In many alternate ways, the people try one idea that is seen to have a potential is the network marketing business. It is a method of direct sales in which goods and services are distributed by independent agents. These agents are encouraged by the company for whom they are selling and distributing the product to build a sales team under them and manage and train them. This model can simply be explained as a pyramid structure where its participants get paid whenever they, or the person below them, make a sale.
Usually, these participants are paid on a commission basis. This commission is directly linked to either of these tasks:
- The participant themselves make a sale of a product or service
- The recruits make a sale of a product or service or make lead generation
- The participants are successfully able to hire recruits under their wing
Although network marketing can get a little rough and the model would fail if commissions were entirely based on recruiting others rather than selling the company’s products and services. This concept and idea of recruits of a representative are termed as a downline. This is because the sales done by them help generate income for those who are above them in the program.
Network marketing business is also referred to as multilevel marketing (MLM) which is becoming the future of every business. It is a multi-billion dollar industry, that even though has been banned from some countries because of it serving as a vehicle for consumer fraud, it is still highly popular among individuals who apart from their jobs are looking to invest their time and money in some part-time, flexible business. This business features a low up-front investment that offers you the opportunity to sell a product line directly.
Although this small investment might look attractive in the beginning you should keep in mind that this business is exempt from business opportunity regulation which means that you need to run your own checks and do your part of the investigation before investing any money.
Some of the best companies all around the world that are known to have successfully following this business for the distribution of their products and services include Avon, Amway, Nikken, Mary Kay Cosmetics, and Tupperware.
Characteristics of Network Marketing Business
Network marketing business has a model that has its own unique features and characteristics that makes it a system full of opportunities for people who are interested and willing to invest in it. Some of the most important characteristics are highlighted as under:
- It is highly useful for organizations that do not have and neither do they want to establish a well-defined channel of trade. Rather they transfer this responsibility to participants, who are non-employed individuals, who after recruiting a team under them receive a commission every time any one of them makes a sale.
- These participants of the organizations are basically called Independent Business Owners (IBOs) because they work as if they are promoting their own business.
- The selling philosophy of marketing is followed, whereby the main focus of this network marketing business is to make as many sales as possible and not to build any relationships. This is done because the underlying motive is to earn as much commission as possible.
- The business works as a pyramid or a hierarchy. This is because; if for example sales rep A works under you make a sale you too would be entitled to receive a portion of the commission. In order for sales rep A to earn more money, he sure would be willing and trying to hire someone else also under them which in turn make the system a big hierarchy.
- Organizations that opt for network marketing business as one of their primary distribution strategies would then have to invest less in advertisements as they know they are able to make enough sales through personalized contact which has a much more convincing power than advertisements.
- The organization for this distribution strategy does not even have to pay these participants and their sales representatives as this is a commission based network where everybody is paid according to the specific task that he or she performs.
- The accountability factor is restrained to one’s own self and the organization has nothing to do with it.
- The participants on joining the system and the network marketing business for selling products and services of certain companies are even given discounts and other attractive offers.
Why Network Marketing is the Business of the Future?
Network marketing business is a business model that is there to help those who are in need of promoting themselves directly to their target audiences but are not really willing to invest much in advertising. It is a strategy that helps an entrepreneur competes directly with huge multinational corporations in the world of business. It is that multilevel marketing that because of its evolution and better design has bypassed many of the negative connotations and moved into a place of respect.
By many people who have been working in the industry for many years who have had also been running local businesses or franchises alongside believe that network marketing business is the best business model without any reservations by far.
What increases this business’s demand in the future includes many reasons but some of the most respectable ones are what you can read below:
It has Low Risk
When compared to the traditional model of bricks and mortar, the network marketing business has got all that you’ve been looking for. For opening a physically present franchise it is a requirement for you to pay the fee that is required and give a certain portion of the gross revenue to the franchiser. You also have to sign a lease with the franchiser for a certain period of years and buy all the equipment, fixture, and inventory involved. This makes it a hefty investment into the business that is not always available to all. This is why most often you would hear that the barrier to entry in business ownership is lack of start-up capital.
All this information when compared with network marketing business it shows that it has a relatively low risk which is a blessing in disguise for those with financial limitations or has a low-risk tolerance. This is because this business can be started off with as low as $500 or even lesser than this sometimes.
Even though this makes the network marketing business look more attractive as it can be started off easily but one drawback is that some people view it as a two-edged sword. This is because they think when people have invested a lot they automatically are more inclined towards giving their best to it and making it a success rather than to something they have less capital invested and are only giving a try.
It Offers the Flexibility of Time
Flexibility is a huge benefit with a network marketing business. This quality makes it a feasible option for those to try who already have a job but are looking for more sources of income. When you enroll in a business like this you basically are the boss of your own business as you report it in the Form 1099 or as an Independent Contractor to IRS.
This business allows you to fix your time and this business in your daily busy schedule wherever you want or you can dedicate your weekend evenings for this purpose.
Time flexibility is imperative for those who have a job (or jobs) and full-time commitments to an employer as well as other responsibilities such as family.
It has its Own Proven System
Just like it is said and known that if you own a franchise you are definitely going to learn and succeed along the way because of the proven system that it has established over the years, the same can be said about the network marketing business as well. A solid business of this system will offer you a step by step process that enables you to learn along the way while also teaching those under you that how can you grow this business together.
Much can be learned from the company itself whose products and services your business is ought to promote, distribute, and sell. The owner, or the participant, themselves designs such tools and training that help support the representatives under them and teamwork is followed at all times that support the goals and ambitions of the new associate.
This experience that is gained from the team members and by experienced people who have had the expertise and chance to run a business is invaluable and this is what makes the network marketing business a demand for the future.
It Doesn’t Need to be Leveraged
One of the most attractive and appealing aspects of a network marketing business is that the staff, the participants, and the representatives, gets paid commission according to the sales they are able to make. This is the approach that many organizations look forward to following in the future.
This is because this does not burden them to look for investors or leverage their position. In a traditional business model what most owners want is that other investors invested in their business through which they could grow by recruiting more people. These people would then be trained and mentored so that they can enter the market and expand the business for the owner.
In network marketing business, the scalability is simple because firstly as explained earlier the barriers to entry are low because of low investment requirements and all sorts of training and tools are available for the new associate who is entering the market. Therefore, it can be explained as such that the leverage in network marketing is basically defined as the participants and their representative who are working for them. These are the people who are non-paid employees of the organization who are only paid for the number of efforts they do in favor of the organization while on the field. This aspect of the business is what attracts most of the organizations to include this model in their future strategy.
It Offers a Regular Stream of Residual Income
If you are up to adopt network market business then let us tell you that this business has a huge potential and a life-changing benefit which is basically receiving residual income after doing something once. You get paid over and over for years even if it’s a small amount. However, if some other business, for example, wealth management advising is concerned, your payment is tied to your ability to perform and earn a profit on client’s money by investing it carefully and tactfully in the market. This shows that if you are not able to perform your hourly, weekly, monthly or whatever wage, salary, or commissioned job, which is actually your income starts to go away if not immediately then yes, eventually.
You cannot understand the network marketing business perfectly until you experience it yourself which is the very reason why many big organizations and companies have started to leverage their marketing model by offering people an incentive in return for marketing and distributing their product.
Originally published on www.anthonyvallonejr.com