Clueless About Network Marketing?

Clueless About Network Marketing?

By Cora L. Foerstner

A year ago, I began reading about real estate and residual income. My desire to become an entrepreneur was born. As I read, the term network marketing and its synonym multi-level marketing (MLM) kept popping up. The authors of these buzz words didn’t bother explaining or defining them. They assumed that I, their eager reader, knew their meaning.

I asked around, but no one had a clue as to what network marketing was. One of the down sides of academia is that the business world is a mystery to many of us. And so began my quest to discover what I could about MLM. Proponents of MLM boast that anyone could start a business for as little as a few hundred dollars.

After some fruitless research, I finally struck gold. I stared open mouthed at my computer screen. The name of the network marketing company jogged an old memory. In high school, I had known a young man who belonged to this company. A couple of times, he came to pick me up for a date, but before we left, he would clean my mother’s stove or refrigerator, showing her the miracles of his product. His goal, I assume, was to make money and dazzle me with his entrepreneur qualities. I felt humiliated because my mother was taking advantage of him to get her kitchen cleaned and because this boy was embarrassing me – I wanted to go to a movie or to a party, and he was cleaning my mother’s appliances.

I had the holy grail in my hand, but I felt apprehensive. I told my colleague what I’d discovered. He shrugged and said,"It’s a pyramid scam."

But I found that the lure of residual income far outweighed my apprehensions. Today, I’m a proud network marketer, ready to give anyone, who is as clueless as I was about network marketing, my fledgling expertise. Here’s the scoop.

DEFINITION: Network marketing is a business that markets a line of products or several lines of products through independent salespeople. An independent salesperson is recruited; she, in turn, recruits other people; these people recruit others, and so it goes. Each representative builds her own business with her recruits and their recruits under her, and she makes commission on the sales volume of her team. The people under the independent salesperson are called the downline. The potential for increasing the downline and earning money is exponential.

SCAM or LEGIT BUSINESS: When I was in high school and amorous young men were cleaning appliances, many fawned upon these companies. Let’s face it. There were lots of jokes. Most people didn’t make much money; they pestered their family and friends, and horror of horrors, they had garages filled with unused products that they had to buy to meet their quotas (a certain amount of the products a salesperson or team has to buy). Times have changed. Today, major corporations and Fortune 500 companies, like AT&T, MCI, Citigroup, and IBM, have multilevel sales forces.

The difference between network marketing and a pyramid scam is easy to explain. Network marketers sell products; they run businesses. A pyramid scam is a con. People give someone money in hopes that they can get other people to give them money. The claim is that anyone can get rich just by finding other people to do the same. There is no product, no business. The people at the top make lots of money. The scam falls apart. This is illegal. People get arrested.

THE GOOD, THE BAD, THE UGLY: Not all network marketing companies are created equal. There are some excellent ones, some okay ones, and some down right awful, ugly ones. If you are looking for a network marketing company, you have to do your due diligence and make sure that you find an excellent one. Remember that you are investing in your future.

RESIDUAL INCOME: What network marketing offers is a way to create residual income, while working part-time. Network marketing is not a "get rich quick" scheme. Those who succeed work hard, but they are creating something magical: residual income.

You go to work, and you get paid. If you don’t go to work, you don’t get paid. This is linear income. Residual income doesn’t depend on you working. Think of an author, who writes a book and gets a royalty check year after year. Residual income, like royalty checks, keeps coming and allows people to retire, have the freedom to travel, and do other wildly pleasant things.

MY 12 SUGGESTIONS FOR NEOPHYTES FROM ANOTHER NEOPHYTE:

1. Don’t rush into network marketing. Look around and find a good company that suits you and your needs. Don’t get pressured into anything. Ask lots of questions of the network marketer you are talking to. Avoid high pressure people.

2. As soon as you finish reading this, run out and buy Wave 4: Network Marketing in the 21st Century by Richard Poe. I don’t know Richard Poe, but I do know that this book explains everything.

3. Find a company and product that you are EXCITED about. It’s hard to sell something you don’t believe in. Ideally, you want a product that people buy over and over again, month after month, year after year, and a company with values that are congruent with your values.

4. Look for a company that has been around and proven itself. Someone who has been in network marketing and has experience might take a chance on a new company, but a novice should be more careful.

5. I’d suggested publicly traded companies. Their financial statements are public, and you can request their financial portfolio. Go to www.morningstar.com, or www.nasdaq.com, or www.valueline.com, or your favorite place and do some research. You just need the company’s ticket number, and you’re off and running. If you don’t feel confident doing this yourself, find a friend who knows something about stocks and financial statements, and ask her for help.

6. Check out the compensation plan. Is the commission fair? How often do it pay? Does excess sales money roll over? Does your team have to meet a quota? This could be a big drawback. If there are hefty quotas, you might find yourself buying products you don’t want. Poe’s book is priceless here; he explains the different commission plans.

7. Do you have to buy, store, deliver products? Most network marketing companies don’t do this any more. Most companies provide online or phone ordering, and the company distributes its products. You place an order, and they do the work.

8. Training is very important. What kind of training program do they have? In network marketing, team members help each other build their businesses. In network marketing, if the people on your team are successful, you are successful.

9. How do you work your business? Face to face with people you meet? On the internet? Or a little of both? This is important. Are there hidden costs in marketing? Ask for details.

10. See if you can find any dirt on the company. Check with the Better Business Bureau. Are there complaints against the company? What kind of complaints? You can do this online. Know what you are getting into.

11. IMPORTANT: Make sure that you are willing to commit time and energy to building your business, 10 to 20 hours per week. If you have a family, make sure they are cool with this.

12. Don’t quit your day job! At least not until you are making more money in network marketing than you are in your nine to five.