Intro on a successful network marketing business

Introduction on:

ways to build a successful network marketing business

In simple terms, network marketing is a network of people who have access to a range of products and services that are distributed through that network. Rather than operating via a shopfront, people can buy these products and services for personal use or to sell to others. Further to this, people can assist in expanding the network by inviting others to join the network, thus extending the concept to their sphere. Over time, and with more people introduced, the volume of products and services being distributed increases. Along the way, a portion of the profits on those products and services are paid to you and people in your ‘down-line’ (we’ll explain some of this terminology later). In time, the opportunity to create a regular income from a team of people using and selling products becomes a reality. Over the years, network marketing has attracted some less than favourable perceptions. The industry’s image was tarnished in its early days of development, when there were no systems in place to educate those involved to go about their business in an ethical and professional manner.

Additionally, there were many disreputable companies around who took the attitude of selling products at any cost, to anyone, with no long-term strategy; there were also some illegal pyramid schemes that entered the market disguised as network marketing companies.

Today there are well over 20 million people around the globe involved in network marketing, also known as multi-level marketing (MLM) or direct selling, and this figure is growing. Manufacturers, many of them Fortune 500 companies, now see it as a viable and credible alternative for distributing their products and services. Reaching consumers directly through traditional retailing methods and/or outlets is not only difficult, it is extremely costly. Today, almost everything— including health supplements, cosmetics, cleaning products, training materials, clothes, cars and travel—can be and is being sold through network marketing. Some of the most famous names in the network marketing industry include Avon, Usana, Melaleuca, Mary Kay, Quixtar, Herbalife, Amway, Tupperware, Juice Plus, Nu Skin and AIM. Technology, especially the Internet, has had a dramatic impact on the industry, and more and more it is seen to be moving into the marketing mainstream. The industry is rapidly maturing and those becoming involved in network marketing are now more often than not coming from professional backgrounds. Network marketing has certainly come of age. It is an excellent way to get into business, it has a lot of appealing aspects that cannot be found in mainstream businesses (we discuss this throughout the book), and many of the 20 million people involved are making a lot of money, for not a lot of work. They did the hard yards when they started but now they enjoy the fruits of their labour with a solid passive income stream and residual income. Previously, many people saw network marketing as something you did on the side to make a little extra cash. This option is still available today, but for most people now involved in it, network marketing is an opportunity to establish a business that is, and will continue to be, their main source of income. One of the biggest mistakes made by people becoming involved with network marketing is failing to treat it as a real business right from the start. Because there is normally a relatively low start-up cost, and a high degree of flexibility, some people treat it more as a hobby. That said, this concept does work for some people. They manage to set up a great little business which supplements their income and helps them to acquire the things they want out of life. But for many others, their lack of conviction ultimately results in the business slowly fading into the background—materials, books and products are left to gather dust on a shelf and the words ‘network marketing simply isn’t for me’ are uttered whenever the concept is raised. The main purpose of this book is to make you, the reader, aware of the similarities between building a network marketing business and building a traditional business. Even though the way each one works, and the end results, are different, many of the principles, fundamentals and attitudes behind making each business a success remain the same. If you can see your network marketing business as just that, a business, right from the start and give it the respect and focus required, and at the same time recognise that many of the principles and challenges are no different to starting up a pet shop, for example, then you are a long way towards achieving success. Numerous network marketing companies are now established around the world. The way they do business, their structure and the terminology used varies from company to company. While our discussion has been kept as generic as possible, to encompass the industry overall, most observations are based on experiences with a particular network marketing company. If the references and examples we use don’t always seem relevant to the particular network marketing company you are involved in, you can bet that the principle of treating it like a real business still applies.

 Why network marketing?

 It is important to remember that you are going into business first and foremost; in this instance, the type of business you are considering is a network marketing business.

Network marketing businesses each have their own idiosyncrasies and opportunities. They can be incredibly rewarding on many levels and as challenging as any mainstream business.

Working smarter, not harder

There was a time when simply working hard meant that you had the opportunity to get ahead of the average person who perhaps had a more relaxed approach to work. Today that is simply not the case. Although a strong work ethic will always be important, it is no longer the only ingredient. Success is about being smarter and often doing things differently to the way we would have done them in the past. Network marketing allows you to do just that, while at the same time giving you the opportunity to associate with very successful people who understand this principle and who have made it work for them.

Leverage and duplication

Leverage and duplication are simply the ability to leverage your time and to duplicate your efforts. If you are working in a traditional business, your income is largely governed by the number of hours you can physically work in a week. In network marketing, as your network grows, the time collectively invested within the network is dramatically increased, and your efforts are greatly duplicated and multiplied. Simply put, you yourself, one person, can continue to work 40 or 60 hours per week, or you can build a network where collectively, for example, 1000 people are working only10 hours each per week, meaning your earning hours now total 10000. You need to understand that this concept is not unique to network marketing, but is a key ingredient in most successful entrepreneurial enterprises. Most successful entrepreneurs use it to build their wealth. For example, those who have

established large franchising businesses base their success on duplication and leverage of one successful store, repeating it nationally and, ideally, globally.

Passive income versus active income

Active income is best described as having to continually work, trading hours for dollars, in order to maintain that income. Passive income means that, in time, you don’t have to physically do the work but you can still maintain the income. Given the choice, most people would prefer passive income over active income. The majority of people think of passive income in terms of the royalties paid to recording artists and authors, or the returns on investment of property owners and shareholders. Further to these are the entrepreneurial business owners who derive large passive incomes from their businesses. In some cases passive income can be established without much effort; in other cases a certain amount of work may be required to maintain the flow of passive income. There are different models, but the concept is the same—do the work now to build a long-term income stream. Passive income gives the recipients choice; they are not tied down to working hours for dollars but are in the unique position of having control over what it is they want to do with their time. Passive income provides the opportunity to have greater control of what you want to do in your day—if you want to play golf, you can play golf; if you want to do some work, do some work; if you want to go off on a holiday on a whim, then go. Passive income represents control, freedom and lifestyle. Network marketing is a great opportunity to establish passive income. Many people who built successful network marketing businesses now enjoy the passive income they bring. To get to that point required effort and commitment, but the end result is worth it.

Low capital investment

For many of those who dream of owning their own business, a major hurdle to be overcome is the costs and risks associated with buying an existing business or setting one up in the first place, often representing hundreds of thousands of dollars and a lot of risk. One of the attractive features of building a network marketing business is the low capital, or low entry cost, required to get started. The majority of network marketing companies require very little upfront money to join; what moneys are required cover start-up costs and some initial product purchase. If a person goes on to successfully develop their network marketing business, the return on such a low initial capital investment can be significant.

Low operating cost

The ongoing operating costs required in the majority of network marketing businesses are generally very low when compared with a traditional business producing similar turnover. Costs often revolve around accessing educational and motivational material, acquiring business-building tools and attending seminars provided and organised as part of the support system. Further to this are incidental costs such as phone, fuel and other small home office operating costs. As the volume produced throughout the network is built on the principle of leverage and duplication of a number of independent business owners collectively establishing their own businesses and subsequent volume, the costs in achieving that volume are greatly reduced by spreading them across each independent business owner. Therefore each business has low operating costs, minimising the need for staff, infrastructure and other normally high overheads.

Part-time commitment still works

One of the major advantages of being involved in network marketing is the opportunity to establish it part-time alongside your current occupation or business. For those whose dream has been to own a business but who have feared taking the plunge due to the risk involved in giving up a secure job and income to delve into the unknown, this part-time aspect reduces that risk. For those already running a traditional business who feel trapped and can’t risk simply walking away from it, the opportunity to develop something on the side with a view that some day it will replace their current income stream is also very attractive. After building the network marketing business part-time to a point that the income derived from it can safely replace that from the job or traditional business, one can then comfortably move into working the network marketing business full-time.

Support systems

One of the reasons franchising has become so popular today is that people buying into a franchise do so with a sense of confidence from knowing there is a system in place and that they are not on their own. Network marketing also provides this sense of confidence—although you are in business for yourself, you’re not in business by yourself. Many network marketing companies, particularly the larger ones, have a substantial support system in place to assist the business owners. In some cases these support systems are run by some of the more successful business owners and leaders from within the network, people who understand the value of sharing their experience and knowledge in order to assist their own organisation grow quicker

Another major benefit of having a support system in place is the opportunity it gives you to again further leverage your time—by directing people within your organisation to the support system and letting it do most of the work for you, rather than you being solely responsible for the training and support of those in your team.

Creating positive cashflow

In their internationally bestselling book Cashflow Quadrant, Robert Kiyosaki and Sharon Lechter, strong advocates of network marketing (Kiyosaki is the author of a number of books on the subject), highlight the importance of creating positive cashflow if you want to achieve wealth. Most people operate in a negative cashflow—just look at the accumulated credit card debt. The majority of people run out of money before the end of each month, and ‘when it’s drastic, put it on plastic’. Most of them will spend their entire lives living from month to month, heavily in debt, and as a result will never go on to achieve their goals or dreams. For the average person, once they find themselves in this position it is very difficult to turn it around, because the negative cash position makes it almost impossible to get ahead—unless, of course, they win the lottery that they are all waiting to win. Positive income is basically the reverse, where your income exceeds living expenses. Network marketing gives a person the opportunity to establish a positive income by offering them a business that requires very little in the way of start-up and ongoing costs, something they can develop part-time with no threat to their current income and, in the big scheme of things, allows for very little or no risk. More importantly, a network marketing business offers the potential of providing a passive and exponentially growing income that in time becomes a positive cashflow because the income outweighs the expenditure. Once you have a positive cashflow, that cash can be used to invest in other positive cashflow opportunities, and so on and so on.

Creating wealth

Many people who have built a successful network marketing business have done so by recognising the possibilities in using it as a vehicle to create a large passive income and positive cashflow, and in using that cashflow to build their wealth. For many, not only is it an opportunity to create a positive cashflow but it also gives them the ability to associate with people who themselves have created wealth and therefore to learn from their experience. Most successful network marketing business owners have found financial independence through their network marketing business, and many have used the positive cashflow to further build wealth through investments, property or the purchase of other business ventures.

Reality versus fiction

Network marketing has become the victim of many misconceptions and some ill repute in years past. Sadly, in some cases a bad reputation was well deserved. Today, however, most network marketing organisations have to adhere to strict codes of conduct, their products have to be of the highest standards, and the high-pressure sales techniques employed in the past no longer work. Some of the misconceptions still commonly heard are covered in the following pages.

‘It’s a pyramid’

This is one of the most common misconceptions. Often when reference is made to network marketing the response will be: ‘Oh, that’s one of those pyramid things, isn’t it?’ Interestingly, when they are challenged, most people making the comment have no understanding of what constitutes a pyramid scheme, or even of how one works, and certainly have no understanding of network marketing. Putting aside structural differences, the most important point of difference is that pyramid schemes are illegal and reputable network marketing companies are not. Many network marketing companies are now established in countries around the world where they have had to undergo strict government regulatory scrutiny before being allowed to open. Further to this, many network marketing businesses now deal with Fortune 500 companies, distributing these products or services through their networks, something the solicitors of those Fortune 500 companies would not allow if they were dealing with an illegal pyramid.

‘You make money out of other people’

People often remark that being in a network marketing business is just making money out of friends or other people. But that’s just what any business does—it makes money from providing a product or service to other people. If you were a tradesperson, for example, and your friends wanted to engage your services to have renovations done to their home, would you decline the offer because you didn’t want to make money from them? Network marketing is no different from traditional business in that it has a particular product or service available for purchase by those who choose it.

‘You will lose all your friends’

People involved in network marketing will often make many more friends as a result of their involvement. Because you meet so many new people while developing your network, and then work with many more as business associates over the life of your business, your circle of friends grows considerably, many of them remaining lifelong friends. This is not to say that there are not people who have lost friends. There have been, and probably always will be, a minority involved in network marketing whose nature it is to be pushy, to not take no for an answer, to be very demanding, sometimes downright rude, even obnoxious. Usually these people are the ones that wanted to do it their way, and wouldn’t listen to advice or plug into the training and support system. Needless to say, their involvement in network marketing is often short. If you were running a traditional business and were constantly pressuring your friends to buy from you, it wouldn’t take long to lose them—but as we know, most people owning a traditional business have many friends. Why? Because they go about their business in a professional manner. Your network marketing business is just that, a business. Go about your business in a professional manner and you will not lose friends, you will go on to make many more than you would have otherwise.

‘It’s a cult’

Quite often a lot of excitement, enthusiasm, motivation and commitment is displayed by those involved in network marketing. For people outside the industry this can be a little difficult to understand, and some of them can see the degree of enthusiasm as akin to a cult following—only because they don’t relate to this level of motivation and commitment when compared to their own situation. It is very common for people to slip into the drudgery of living a day-to-day existence, like being on a treadmill, experiencing very little excitement, enthusiasm, motivation or commitment. It is easy to understand why seeing people in network marketing displaying the opposite, being so passionate and committed, can be difficult to accept. More people are driven by an external influence, like satisfying their boss, paying off a bank overdraft or having a mortgage hanging over their head, than are driven by a personal dream or goal. People who are attracted to network marketing see the business as an opportunity to get off the treadmill. As they begin to see results their attitude becomes even more positive, their excitement and commitment towards the business grows, and they are driven internally. People who can’t grasp the concept of someone doing something without being forced to do so by an outside influence often come to the conclusion that someone must be convincing them to do it. The whole environment of excitement, enthusiasm, motivation and commitment that surrounds the network marketing industry is often misunderstood. Probably the key here is perspective. When sporting fans go to a stadium with their hair dyed and faces painted in their favourite team’s colours, wave flags, yell and scream alongside thousands of other people showing the same excitement, enthusiasm, motivation and commitment, we think that’s normal. Yet when those in network marketing show enthusiasm and motivation towards their own business opportunity and their business team, for some reason it is seen as strange.

‘Nobody ever makes money’

This is quite a common remark, and is usually the result of having come across people who’ve been involved in network marketing and, indeed, haven’t made any money. If you haven’t come across one of them yet, you will. There are, it is true, a large number of people who have not made any money from their network marketing business, and usually the first thing they blame is the business, not themselves. Most of them did not plug into the support system, were not teachable, did not listen, were not active enough in their business, did not give it long enough to work and, most importantly, did not treat it as a real business. If they had started a traditional business with the same lack of focus and respect, they would have failed there also. Because in most cases the start-up costs of a network marketing business are very low, this can be reflected in the commitment given to the business. The important thing you need to know is that many thousands of people have made money from network marketing, much of it significant, and so can you if you decide to work at it. Being in network marketing is no different to being in traditional business—if you don’t work the business, the business won’t work for you. The other thing that is important here is, once again, perspective. For example, how many people start a university degree and don’t graduate? Good thing universities don’t have a failure ceremony at the end of the year—if they did, no one would think that university works. How many people do you know who’ve started out on a fitness program, or joined a gym, and simply quit? What failed here: the fitness program, the gym or the individual? In business, more importantly, consider how many people start a traditional business and fail. The figures are truly alarming (in some areas, nine out of ten businesses fail within the first two years), and in most cases people lose everything as a result. If we focused on this fact, no one would want to start a business and the economy would probably collapse.

The most important message

Being successful in any business is more about attitude than anything else. Sure, if your business concept is to sell ice to Eskimos, the best attitude in the world will probably not help you a great deal and in all likelihood the business will bomb. But the wonderful thing about most network marketing models and companies is that they have been proven to work in the past—which means, at least theoretically, that you can make it work as well. In other words, they are based on a tried, tested and proven model, not some pie-in-the-sky concept that could prove to be fundamentally flawed. Throughout this book there is a lot of discussion about setting goals, having dreams, keeping motivated and having a positive attitude. We know that some people tend to close off a little when topics like this are raised, but we believe, absolutely and totally, that if you take the right mental approach to running any business your chances of success will be dramatically increased. So if you take only one key message from this book it is this: approach your network marketing business with the right attitude, stay positive, have goals and dreams and you will make it work for you. We suggest that you mark this page and read it whenever you have those moments of doubt or uncertainty (which you most certainly will have).