What is MLM? What is Network Marketing?

Its a qreat question, but one that is often not explained correctly.

What is Network Marketing?

Did you know that it is possible start an MLM business and create a major second income that continues to increase over time while working at home? How about doing this with a small initial investment and even doing it while only working part time?

I can tell you honestly that it is possible.  In fact, with persistence and commitment, this income could soon replace your current full time income. It could even create a lifestyle of the rich and famous.

What if it worked for you like it has worked for so many others?

When was the last time you recommended a good book, restaurant or movie to a friend? How often do you do that? Probably pretty often, right?

But, when was the last time the publisher, restaurant or movie producer sent you a "royalty" check for the referral?

Probably, never.

Well, despite the way things usually are, the idea behind what is now the fastest growing home based business trend in America and around the world, Network Marketing, is that if you get paid for recommending things you like, use and believe in, you'll do this more and more! And, you'll probably find some others that want to do the same thing.

That's it in a nutshell.

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, and you're also 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 a MLM business opportunity consists of three major components.

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.  

Repeat this process every week and 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.

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. 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

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 -

  • Day 1 - 1 cent
  • Day 2 - 2 cents
  • Day 3 - 4 cents
  • Day 7 - 64 cents  (hmmmm)
  • Day 14 - $81.92 (getting a little more interesting)
  • Day 21 - $10,485.76 (getting A LOT more interesting!)
  • Day 30 - $5,368,708 (I'm definitely interested!)
  • and you can do the math on Day 31!!

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!

Think back to time leverage and see how duplication multiplied the time that was being invested into your company.  Now not only can you multiply time but also earnings.  This is how network marketing truly pays off.  By yourself you can only do so much, earn so much.  But as a team working towards the same common goal you can go as far as you want. Take a look at the penny story one more time to see how fast things can add up.

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