Network Marketing, also referred to as MLM or Affiliate Programs, has been around since 1945.
This form of product distribution allows a company to sell their products through independent distributors via sales commissions and bonuses. There are numerous ways in which independent distributors can be compensated, and highly creative programs exist.
For the sake of this blog, we'll use “representative” as to define the "sellers of product" via a company compensation plan.
- Independent Representatives are paid based on their amount of product sales.
- Representatives earn $$ by purchasing products for wholesale from their parent company, and re-selling that product to friends, family or “cold customers”, aka, anyone they can sell to.
- The number of products sold can be increased should an independent representative encourage others to join their sales organization. By increasing the size of their sales organization, the representative can earn bonuses from those in their organization that order products through the parent company.
So, representatives earn by personally selling products and developing a sales organization that orders products through the parent company. The size of organizations are unlimited. The larger an organization, the more bonus potential.
At my peak, there were over 100,000 people in my organization and it took roughly 6 years of constant effort to reach those numbers. I obtained great income, bonus cars, travel perks, much notoriety, best selling training materials, speaking engagements and many fun times.
I enjoyed the opportunity to somewhat design my own schedule while helping people increase their income and lifestyle. I met some great people and had a marvelous run however, when ownership changed after 10 years the party ended. This is the reason I stress the lack of control within this income generating format.
The good about MLM / Network Marketing / Affiliate programs
- Usually the products are good and exciting enough to use personally.
- Representatives can sell without concern for schedule deadlines or being supervised.
- Representatives typically have support from those that introduced them to the product and sales program. The person that introduced the product and program earns $$ from your efforts, so it makes $ense for them to encourage and offer support.
- Once you reach some level of success within the compensation plan, most companies have banquets and events that are enjoyable, while also recognizing your achievement among your peers. These events can be fun, rewarding and encouraging.
- While it can be difficult to grow a large sales force, it is possible, and some make it “to the top” of the company’s bonus compensation plan. This can lead to life changing income.
The “not so good” about MLM / Network Marketing / Affiliate programs
- Representatives have little or no control of product pricing, availability, or quality. If a parent company changes manufacturers or chooses to compromise the product, a representatives’ livelihood can quickly be negatively affected.
- There is much competition nowadays with the internet exposure. It is hard to have a product that can’t be located for less money and similar value by shopping on the internet. This reduces the value of an independent representatives’ product sales and income potential.
- Parent companies can change compensation plans, company ownership, products, etc. on their own demise. Many companies have come into the MLM arena and made great $$ off the efforts of distributors that worked hard to secure a future with the company. Once the company’s owners made their $$, they simply folded shop and left many without an income. The key here is to remember that you are an independent distributor and not an owner. You are vulnerable and exposed by the decisions of the parent company’s ownership.
- When you base your efforts on developing and leading a sales organization, many within that organization are trusting you and your leadership capabilities. To be successful, you will have earned that trust based upon your efforts and relationships developed. It may prove better to invest that effort in a business whereas you control more of the pieces to the puzzle.
- For the effort it takes to build a highly paying sales force for another company, you can nurture your own business whereas you have full control.
Viable options for the entrepreneur spirit that lacks capital
- Seek out a “conventional” company that offers great compensation and benefits and have a good, solid history.
- Take your chances with MLM, Network Marketing, Affiliate companies and hope they “do the right” thing and don’t alter your success once you’ve developed your lifestyle.
- Start your own business. What’s your passion? Make sure you use every bit of information, passion, desire, and willingness to go “all in” on your endeavor!
No matter the path chosen, there will be significant challenges to reach a great lifestyle. Remember that less than 10% of society achieve financial freedom and less than 2% have the time to enjoy their wealth.
Be careful, responsible, passionate and seek the best guidance possible before entering your business adventure!