Since 1945, when Mytinger & Casselberry created the first documented MLM compensation plan for a company called Nutrilite, millions of people have joined a network marketing opportunity and many have gone on to form great fortunes.
But what is network marketing, exactly?
Even more crucial, is starting a network marketing business something that you should seriously consider as an option to help take back control of your financial future? Let us take a closer look to discover not only “what is network marketing” but also if it makes sense for you and your folks at that point in your life.
What is Network Marketing – Outlined
According to a Wikipedia entry, multilevel marketing ( MLM ) is a kind of marketing system that pays an independent contractor ( YOU ) a commission for product sales and also a commission for the sales of other independent contractors you induct to also promote a corporations goods and services.
The Small Enterprise Encyclopedia has a more challenging definition:
What is Network Marketing? It’s a proved business model which employs an independent distributor network to build the business by promoting services and products. Typically these businesses are also multilevel in nature meaning they pay out commissions earned on more than one level.
What? Are you confused yet?
Let’s break it down into language everybody can understand, shall we?
How Traditional Business Works
Every business offers a service or product for sale. The goal is to generate a lot of sales and earn a profit. To insure a profit, the cost of getting the product to all the way into the end users hands has to be less than the final selling price . If it cost $10 to supply and sell the product and folks buy it for $20, the company makes a decent profit. If cost-of-good-sold is $10 and the product sells for as little as $9.95, the company loses money and will soon find themselves into bankruptcy.
Traditionally a product is first manufactured or produced. It is then packed and distributed to a distributing warehouse. The distributor makes sales to a retail outlet and the retail outlet sells to the consumer. Everybody attempts to make a profit on the way.
A direct sales business frequently hires sales staff to actually market the product or service straight to the end user. For example, somebody knocks on your door and offers to offer you a free quote for landscaping. If you decide to hire this company, the direct sales person who came to your door makes a commission. So their livelihood depend wholly on how many sales they personally make.
What is Network Marketing Explained
Like every traditional business, a network marketing business also offers a spread of services and goods for sale. And the goal is also to earn a profit by making sales at a price higher than it costs to get the product into the hands of the people buying it. But that’s about the single thing a MLM company has in common with standard business because most multilevel marketing corporations are a variety of direct sales business with a twist.
The twist is they do not hire salespeople to bring their product to market. Instead they offer folks like me and you the opportunity to “sign up” as independent contractors to sell their services and goods and earn a commission if and when we makes sales. If you do not make sales, you are not making any money.
So far so good. Nonetheless it gets even better . Because you’re also permitted to refer people to the company to “sign up” to become independent entrepreneurs as well and, when you do, you may also earn some money on all the products their new business brings to market. And since you can refer a vast number of people to become entrepreneur, the earnings opportunity open to you is also unlimited.
What rather more information about “What is network marketing?” Click to see a network marketing compensatory plan explained and to discover exactly what you need to do to place yourself on the fast track to making wealth while enjoying your life.