Understanding MLM

 What if you found a great product or service and you loved it so much you decided to go into business marketing it?

You earn a small commission for the ongoing purchases of those you refer to this product or service, so you could make a little money selling it yourself, right?

And, what if the company was willing to pay you to develop a team of others who each sell a little of the product and find others to do the same?

So, you would also be paid a small commission when you introduce this concept to others, and they refer people.

Pretty ingenious, huh?

And, the best part is that this concept can create true, passive, residual income for you and your family. And, you can touch the lives of hundreds and even thousands of other people.

Many people just don't understand the concept of Network Marketing. Let me explain the way this works and then think about this a little as you evaluate your options within our industry, or, as you explain the concept to others.

The concept of Network Marketing consists of three major components.

TIME LEVERAGE; RESIDUAL INCOME; SYSTEM OF DUPLICATION

Time Leverage

This is the ability to get paid month after month on the work that you do one time.

A good analogy that you are already familiar with is the franchising industry. In franchising, the franchisee, or one who purchases the rights to do business using a well-known business name such as McDonald's, pays a royalty fee every month to the franchiser, or parent company. It's always a percentage of the profits earned.

The parent company, or McDonald's, has incredible time leverage. The more McDonald's stores they have around the world, the more money they make.

But, the parent company certainly doesn't do all of the work. If they have 5,000 stores, each open 18 hours a day, 90,000 hours are worked daily on their behalf.

The concept works in much the same way with our business system, except you don't have to pay a royalty fee each month!

For instance, let's say you start your own Network Marketing business and begin by investing five hours per week into your business. You introduce your business system to Mike and begin working with him. He also puts five hours a week into his business. You now have 10 hours per week working on your behalf, although you are only putting in five hours yourself.

If you and Mike each bring in a new partner, who each commit to five hours, you will soon be benefiting from 20 hours per week. Remember, your actual time involvement is only five hours each week.

By the end of the first month, you have forty hours each week working on your behalf. At the end of the second month, over 640 hours will be invested into your business each week, but not all by you. You are only putting in five.

Do you see the beauty of time leverage?

In network marketing, we are paid for opening "outlets" and teaching those "outlets" to be successful.

And, remember, franchising was thought to be a scam in the '70s, when it first began.

Now, let's talk about residual income.

Residual income

This is the ability to get paid over and over for the work that you do one time. It's also called "royalty pay."

There are very few businesses or industries today that pay residual income.

Musicians, authors and insurance sales people are a few professions that do earn a residual income.

If you were to write or record a popular song, each time that song played on the radio, or a CD was sold, you would receive a commission, or royalty payment.

Residual income in Network Marketing is income you continue to earn based on efforts you put forth initially. This income is based on the sale of products and services. And, these products must continue to generate repeat sales.

This is one reason why "consumable" products are the most effective in Network Marketing. Consumable products are those items that are bought, used up and then replaced, over and over again.

If you are marketing a product that is a one time purchase product, you will have a harder time generating residual income.

Residual income is desirable in Network Marketing, because this is what allows you to put forth a lot of effort in the beginning, and reap the rewards of that for months and years to come!

And, by building an organization of people working toward a common goal, you can ensure a strong residual pay-out that will last for years. This is why it is important that you understand this pay advantage, and invest your effort, energy and time in other people.

Earning residual income requires a few things - first that you take action to get momentum going in your organization.

Second, you continue building on that momentum, and teach others to do the same.

Finally, you learn and develop leadership skills that will provide the foundation that supports your entire organization.

People follow people, and leadership skills are developed. Leaders are created, not necessarily born.

In the beginning, you have the "privilege" of working lots of hours for a little pay. In the end, you have the "joy" of working little hours for lots of pay.

People ask me all of the time how much I made my first month in the business. The answer is - "I don't know. I don't know because I still get paid each and every month on the efforts I put into that very first month." That's the power of residual income!

Get started and then build on your efforts each and every month. Be a leader of others and watch the residual income roll in.

Duplication and Geometric Growth

Finally, we are at DUPLICATION AND GEOMETRIC GROWTH.

Another exciting concept, and probably the most exciting concept!

Have you heard the "Penny a Day" story? This is a good illustration to get you thinking about the power of this geometric growth.

Let's say you start on the 1st day of the month with 1 penny in your bank account. Now, you are going to double it every day for the rest of the month.

Any guess about how much you will have in your account on day 30, or, day 31?

Well, here you go -

See the power of geometric growth and duplication?

Duplicating yourself means teaching someone else to do what you do. When the two of you each teach another person, you duplicate it again, only twice. And so on, and so on, and so on!

Now, I am not trying to say your business will grow like that daily. But, what if it followed this pattern over a 5 year time span?

Network Marketing success (I mean six figure incomes) typically take two to five years to grow. Plan on that!

(Remember that shampoo commercial about telling two friends, who tell two friends? I know, I am dating myself, but that truly is what we do!)

That's Network Marketing!

On to How to Choose an MLM Company>>>
 

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