In 1992 I was introduced to the concept of Network Marketing. This is after I had graduated from college with a degree in Business Administration and Finance. I had been raised in the world of linear income. If you work you get paid. If you do not work, you do not.
Network Marketing was a foreign concept to me and as I studied the principles more it became clear that it was nothing more than a marketing and sales channel for companies to very efficiently bring their product and service to the end user.
In a normal company they advertise and market their product or service with advertisements which are an upfront cost with no idea whether it will bring sales and revenue. In the case of the business I am in, the wireless industry, Sprint or any of the big 3 companies will spend millions of dollars of their budget to produce Television, Print and Radio ads to bring customers in and generate revenue.
In a Network Marketing company the marketing costs are paid at the point of sale to the rep or distributor. All of the reps are 1099 employees with no benefits and are considered all small business owners. The company wins because they do not have to hire thousands of sales people with 401k's, health insurance and other benefits. The reps win because they can take advantage of having their own small business and will pay taxes after all expenses are taken out of their business income. Expenses like cell phones, meals, vacations while conducting business, computers, internet, cable, small office discounts, car expenses, etc.
This completely lines up with Robert Kyosaki's book, Rich Dad, Poor Dad. In his book he describes the four quadrants of earning money: Earned or Employee Income / Business Income / Passive Income / Portfolio Income.
Earned or Employee Income has a flaw. Taxes are taken off the top and the earnings are linear, you earn when you work. Earned income has no leakage.
Business Income is better because you pay your taxes AFTER you subtract out your expenses. Those expenses can be made up of many of your normal expenses you pay for anyway.
Passive Income is even better in that you are leveraging your Time and Effort. A good friend of mine just sold his chemical business for millions of dollars. He had a team of Salespeople who sold for his business and he paid them a 10% commission. They sold large amounts of chemicals to their customers in the oil business. He suggested to them that they individually hire people under them to sell chemicals and pay them 5% and keep the other 5% for themselves. This concept would leverage their efforts and still allow them to earn 10% for their own customers. His example is direct sales and has a few professional sales people selling large quantities of a product.
In Network Marketing you are recruiting a team of many people who are not professional sales people. They are people looking to make extra income and who understand the concept of Network or Referral marketing. In Networking you build a Team of many people who purchase the product or service and then refer others in the opportunity to do the same or they sell the product or service to customers. When the product or service is used every month and you develop a large Team you leverage your time and effort and build a stream of residual income.
In Direct Sales you have a Team of a few selling large amounts. In Networking you have a large number of people selling small amounts, according to their own drive and desire to succeed. In Direct Sales if you do not produce you get fired. In Networking you never get fired, can work as much or as little as you like and can work your business around your life and other activities.
There are many people who will scoff and tell you that it does not work and I would completely disagree. I have met many people who have made millions of dollars in the Network Marketing business. I have two people in my business who have made several million dollars in income and they started with a small investment (a few hundred dollars) and the desire to create a better life for themselves.
I myself started with no knowledge, not much money and no benefit of cell phones, internet or computers and built a Team of 1,000 people back in the early 90's. I was alerting $ 3,000 per month net which at the time was almost my salary as a Navy FA-18 fighter pilot.
If you are looking for a business that you can be proud of please take a look a serious look at a Network Marketing business to fuel your financial freedom and your life.