What is Network Marketing also known as MLM
and how does it work?

Network Marketing also referred to as MLM is a form of marketing in which sales associates receive compensation, not only for personal sales but also for the sales of team members whom they have recruited. This can sometimes create a downline of distributors and a hierarchy with multiple levels of compensation. Typically, salespeople create relationship referrals and word-of-mouth marketing to conduct and expand businesses.

The idea is simple, instead of spending money on professional marketing and ad agencies, to promote a product or service, why not pay the people who love them the most have them promote it by sharing it with others?  This is exactly what a network marketing company does, they pay a portion of each sales dollar received back out to their independent distributors that share and promote their product or service.  These independent distributors are usually the products most committed and enthusiastic consumers.

MLM was introduced in 1945 by the California Vitamin Company, later known as Nutrilite. The Direct Selling Association, of which about 200 companies are members, defines direct selling as “the sale of a consumer product or service, person-to-person, away from a fixed retail location, marketed through independent sales representatives.”

According to the DSA, an enormous variety of products and services are available for purchase through this business model, although direct selling is frequently associated with items such as greeting cards, cosmetics and wellness products.

The power of network marketing is that the independent distributor is not paid a commission only on the products or services of the people they refer it to, but by team members (other independent distributors) that also refer the product or service, thus creating the power of residual income.  Network Marketing does well over $110 billion in annual sales globally.

One of the reasons that the total sales keeps growing is that it is a true win-win.  The company is able to get an amazing level of a market and customer awareness through their distributors that would be difficult and extremely expensive to market in any other way.  Much of the money saved on this type of marketing is given back to the independent distributor in the form of commissions and residual income, allowing them the opportunity  to create significant cash flow.

You don’t hire employees in network marketing, you sponsor individuals who are all independent distributors.  As your network of independent distributors grows, 100, 300, 500, or 6,000+ you have the start of a serious organizations that delivers significant residual income.

Gone are the days of negative stigma of network marketing.  It is recognized by many experts and accomplished businesspeople as one of the fastest-growing business models in the world.  15 years ago, you couldn’t have gotten a major business journal to write about it.  Today you will find it in such journals as Forbes, Fortune, Newsweek , TIME, U.S. News & World Report, USA Today, The New York Times, and the Wall Street Journal.

In an issue of Fortune, they said this about network marketing, ” An investor’s dream…the best-kept secret of the business world…an industry with steady annual growth, healthy cash flow, high return on invested capital, and long-term prospects for global expansions.”

Donald Trump, Warren Buffet, and Richard Branson, three of the richest and most influential people, have all owned network marketing companies.

Watch This Video Below And Get The Facts About Network Marketing

Tom Peters, the legendary management expert and author of the best seller, In Search of Excellence, describes network marketing as “the first truly revolutionary shift in marketing since the advent of ‘modern’ marketing at Procter and Gamble and Harvard Business School over fifty years ago.”

David Bach – Start Late, Finish Rich. “When I read in Fortune magazine that Warren Buffett, the billionaire investor and one of the world’s richest men, was investing in a direct sales [network marketing] company, I decided I was missing something.”

T. Harv Eker – Secrets of the Millionaire Mind. “Network marketing, for example, is an amazing concept. First, it it does not usually require you to put up a lot of up-front capital. Second, once you have done the initial work, it allows you to enjoy ongoing residual income, year after year after year. Without passive income you can never be free.” “Just signing up and becoming a part-time distributor will give you some excellent tax advantages.”

Sandy Botkin – Tax Expert. “A network marketing business can result in tax savings of $3,000 to $9,000 per year.”

Robert Kiyosaki – New York Times Best Selling Author Rich Dad Poor Dad. “If I had to do it all over again, I would have started building a network marketing business. The network marketing industry continues to grow faster than franchises or traditional big businesses.”

Robert Kiyosaki Explains In This Video Below Why Network Marketing is The Perfect Home Business.

Support for MLM

While the basics of MLM are fairly straightforward,  Kiyosaki is supports the business model, because he believes MLM directly generates wealth.

“Even more important than the quantity of money you make is the quality of money you make,” Kiyosaki wrote.

This is explained by examining a cashflow quadrant chart below, which is comprised of four distinct sources of income.

The “E quadrant,” which represents the employed, is one in which most people reside. This is often considered to be the most accepted way of earning income.

However, according to Kiyosaki, job security is a thing of the past. Therefore, those in the “employed” mindset will never achieve true financial freedom, because they will always work for someone else. In other words, workers only get paid if and when they go to work.

The “S quadrant” represents those who are self-employed and small-business owners. This includes a range of occupations, from freelancers to doctors, real estate agents, insurance agents, and attorneys. Kiyosaki references a poll conducted by the Fresno research firm Decipher that found, “Seventy-two percent of all adult Americans would rather work for themselves than for a job, and 67 percent think about quitting their jobs regularly.”

According to Kiyosaki, while this quadrant can be financially rewarding, it frequently binds business owners with extreme time commitments.

The “I quadrant” includes a very small percentage of the population; those who make the majority of their income through investments.

According to Kiyosaki, the “B quadrant”, which represents big-business owners, is the only way to create genuine wealth.

“Wealth is not the same thing as money,” he wrote. “Wealth is not measured by the size of income. Wealth is measured in time.”

By creating a team of workers, a business owner can create assets. Assets generate passive income, the type of income truly wealthy people typically have. Whether or not a big-business owner works on any given day, the owner still generates income, because of team efforts.

According to Kiyosaki, one of the greatest benefits of the MLM business model is the ability it provides for individuals to move into the B quadrant. All associates in legitimate MLM companies, regardless of level or position, are able to hire a team of workers, which provides the potential for enormous financial growth. The passive-income potential of MLM constitutes an immense portion of its popularity.

Some MLM companies offer other incentives as well, including all-expense paid vacations and residual income.

According to Kiyosaki, aside from the financial benefits and time freedom associated with MLM, other proficiencies include personal development, real-world business education, a circle of friends with the same dreams and values, leadership skills, a duplicable business and the power of creating personal networks.

“Today, network marketing is recognized by many experts and accomplished business people as one of the fastest-growing business models in the world,” Kiyosaki wrote.

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Chuck & Nicki Pousson
Skype: chuckpousson
E-mail: chuck.pousson@gmail.com

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