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. Thus began my quest to discover
what I could about MLM, since its proponents boast
that anyone could start a business for as little as a
few hundred dollars.
Finally, I 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, and
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 was
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.
Cora L. Foerstner teaches English and composition at
California State Polytechnic University, Pomona. She
is also a Master Practitioner of Neuo-Linguistic
Programing (NLP), Master Results Coach, and most
recently, a fledgling network marketer. You may
contact her at cora@usana.com or visit her web sites
at http://www.unitoday.net/cora and
www.whyresidualincome.com/cora
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