Why Network Marketing

In Secrets of the Millionaire Mind, T. Harv Eker says:

“Network marketing, for example, is an amazing concept. First, it doesn’t usually require you to put up a lot of up-front capital. Second, once you’ve done the initial work, it allows you to enjoy ongoing residual income (another form of income without working), year after year after year. Try creating that from a regular nine-to-five job! I can’t overemphasize the importance of creating passive income structures. It’s simple. Without passive income you can never be free.”
(Wealth File #15, Page 151)

Network marketing combines aspects of two types of income (discussed earlier). It gives you the ability to build a business income. The difference is that instead of hiring employees, you get other entrepreneurs to join in your distribution network. Not having to hire employees is a crucial aspect of network marketing. Your business growth is based on recruiting other business people. As your business grows your income should increase.

Network marketing also provides passive residual income. Once your distribution network is set-up, it is possible to enjoy a continual stream of checks that come to you even after you stop working in the business. The big difference between network marketing and standard residual income—it is possible for your residual income to grow month after month. Why is this? Because this is also a business and the entrepreneurs who have joined you in your distribution network will still build their businesses. You get the benefits of both business growth and residual income!

There are some problems with network marketing as a business vehicle. The first is that most people do not treat it like a business. The average franchise will cost someone hundreds of thousands of dollars to start and run for the first year. For most of the truly successful franchises you have to commit yourself both financially and physically.

A good friend of mine purchased a franchise from one of the famous national sandwich shops. His complaint was that for the first several years of running his business, he gave up his high-paying, prestigious corporate job to work in a minimum wage position making lunches for other people. It took several years of hard work before he was able to buy another location and then another. Finally he was able to have others run his business for him. At that point he was able to go start another business.

In network marketing, most companies only require a minimal fee to sign-up as a distributor. For most people, there is no commitment to this business. It only cost $25 to $50. They try the business for a few days, or maybe only a few hours. After realizing that this is not a guaranteed lottery ticket—they give up. There was no commitment mentally to this business. If they had to invest their life savings, put up their house and risked everything they had on the success of this operation, very few would quit so easily.

The greatest factor to success in network marketing is to treat it like a business and to work it accordingly. Of course, one of the advantages of this industry is that you do not have to work your business full-time to earn a great income. Many of the most successful distributors enjoy this business because they only have to commit a few hours a day or even a week and to enjoy the equivalent of a full time income.

For someone who is committed to running their network marketing opportunity like a business, the industry provides great advantages. One key advantage is that you can learn all you need to know. Robert Kiyosaki says “At least in the network marketing world they'll train you. It's a whole different way of being taught. In the network marketing world if you're not making it, someone will be there to encourage you. It's a lot more humane way of being taught a vital, vital, vital life skill.”

Why do we provide training to people who need it? Think about the difference between network marketing and the corporate world. In the corporate world you are normally hired to do a job you pretty much know how to do. If not, the company has to spend considerable money training you in a skill that you may take to a competitor after you acquire competency in it. Remember that the business world never pays you what you are worth; they have to pay less to make a profit.

In network marketing you are paid exactly what you are worth. But the difference is that your worth is not based on how well you can sell a product, or how skilled you are as an accountant or lawyer. It is based on your ability to train and motivate others! In network marketing, your residual income is based on the success of the distributors you recruit. The success of the person who recruited you is based on your success. If you do not know how to do something, your sponsor probably does. If they don’t—keep going up the line until you find an answer. Everyone in your distribution chain is dependent in each other to acquire wealth. Network marketing is not an industry for the Lone Ranger type.