There are many advantages of network marketing over other business models. Here are just a few...
Of all the advantages of network marketing, leverage is probably the single most important. To understand why, consider this...
There are only so many hours in any single day. And in those limited hours you must work to generate some income, sleep, be with your family or loved ones, and do a host of other tasks that require your attention.
Let's focus on your work hours.
Most people work eight hours a day in a job -- a job they don't even like. In exchange for their time, employers pay a set fee per time spent at work. Some employers pay employees for units of a product produced.
Either way, if you are the employee, your income is severely limited...
First: by the number of hours you can spent on your work, and
Second: by the number of units you can personally produce in the given time.
Now consider network marketing.
Network marketing companies pay their distributors for work done by other distributors. So by systematically increasing the number of active distributors in your downline, you can simultaneously increase your income. And...
You can do this without increasing the number of hours you spent at work. You can actually reduce your working hours and still see your income going up.
And that's what puts leverage top on the list of advantages of network marketing.
Click here to learn more about leverage.
- Passive Residual Income
Network marketing affords participants the opportunity to build an ever increasing passive residual income.
Building a passive residual income is the most obvious of the advantages of network marketing. Almost everyone joining has 'building a passive residual income' as one of their main objectives.
Note that the passive residual income is made possible by the leverage factor. By leveraging on other people's effort and time, a large residual income is possible.
- Low Start Up Costs
You can start a network marketing business with little or no money.
Regardless of how much you are required to pay in as start-up capital, your earning potential is still high compared to other types of businesses.
Although I list 'low start up costs' as one of the advantages of network marketing, be aware that even if the company you join does not require you to pay anything to start, you still need money for your overheads.
You need money for things like stock purchases, advertising, telecommunication, etc. Without these you are not in business. In fact, you will spend a big chunk of your money on marketing.
- International Business
A network marketing business can be operated globally. This is made possible by the internet.
Many network marketing companies allow their distributors to sponsor people in other countries around the world.
The only limitation in many companies is that you should not sell your products in those countries. You are allowed to only recruit other network marketers in those countries.
Some countries have strict work permit regulations. Since selling is 'work', you would need to have a work permit before selling anything in a country that has strict work permit regulations. So read through your company's policies before going international.
But if your company has no restrictions, through network marketing you can build a huge global business from the comfort of your home.
One of the not-so-obvious advantages of network marketing is tax efficiency.
When you join a network marketing company you start a business - your own business. Businesses have various tax advantages over ordinary employees.
Possibly the greatest advantage of all is that as a business you are allowed to deduct your expenses from your income before calculating how much tax you should pay.
To paraphrase Robert Kiyosaki...
Businesses earn, spend and pay taxes.
Employees earn, pay taxes and spend.
Mark the difference. Businesses spend what they earned before paying taxes while employees pay taxes before spending what they earn.
Just in case you don't understand how this puts you at an advantage, as a business person your tax liability is not calculated on how much income you have earned. No. It's calculated on how much of what you have earned remains after dedcuting some of your expenses from that income.
Note that tax laws differ from country to country, from state to state. So consult your local tax consultant to find out what you can deduct from your income before paying tax.
In South Africa for example, the general rule is that as a business you can deduct all expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature.
This is a huge tax advantage of having your own business, and in our case, your own network marketing business. Employees don't have this benefit. In fact South African tax laws expressly prohibits the deduction of certain expenses where the person is an employee.
It's sad to note that among all the advantages of network marketing, tax comes only as an after-thought to many distributors.
A major disadvantage of traditional business and the traditional 9 to 5 job is that of lack of freedom -- time freedom.
In a 9 to 5 job you sell your time for a given income. You are not free to come as and when you want. Your employer determines when you shall work. Aside from the occasional one month time off that you can get, you have to be at work as and when your employer wants.
The traditional business model is no different. While you may enjoy the benefits of being your own boss, you are likely to end up working much longer than you would had you been an employee. You become a slave to your customers.
Network marketing on the other hand removes these barriers.
I like John Kalench's way of putting it. In his book, Being The Best You Can Be In MLM, he says...
"No other support system of which I am aware...so completely honors the freedom and responsibility of the individual.
From your very first day in Network Marketing you are free.
You choose with whom you want to work...
You choose when you want to work...
You choose where you work...
You choose your style of working: person-to-person, through the mail, over the phone, in small groups or huge gatherings of people. Every single aspect of your business is up to you. It's your choice because it's your business."
Yes, with network marketing you have this freedom.
There is a saying in network marketing circles which says "you are in business for yourself, but not by yourself."
As soon as join you become part of a team - your upline. Serious upline members become committed to your success because without it they will not succeed.
As you start building your own business, you start a team of your own - your downline. This team will benefit from your personal support and those of your upline.
The network marketing company you have partnered with will also be committed to helping you because you are their number one source of business. Every customer you bring in is worth a lot to the company.
Although I list support as one of the advantages of network marketing, in practice, many distributors never give any form of support to their new recruits. This is sad. It is sad because if only they knew that by actively supporting new members their businesses will grow faster.
- Personal development
Perhaps also at the top of the list of advantages of network marketing is personal development. Network marketers are prolific readers of personal development material.
In network marketing you can learn such skills as public speaking, mentoring, coaching, how to relate with others etc.
I've noticed that serious network marketers also grow spiritually regardless of their religion.
In network marketing you don't need prior selling experience. You don't need any form of business background.
While selling experience and business background may come in handy if you have them, everyone who joins is entitled to some form of training. The training may come from the mlm company or from your upline.
A word of caution with training...
Some network marketing companies allow their top distributors to develop and promote motivational courses and literature and sell these to those in their organisations, especially new recruits. These materials are sometimes referred to as Business Support Material.
Business Support Material comes in various forms. It may come in the form of books, tapes, CD's, DVD's, etc.
Most of what I have seen as Business Support Material is essentially motivational talk. It has nothing or very little to do with training in the true sense of the word. It focuses more on the 'Why' part of your business, ignoring the 'How'.
The thing is...
Many distributors already know their 'Why'
They need to learn the 'How'
How do I recruit?
How do I generate qualified leads for my business?
How do I train my new recruits?
and many more are the concerns of many distributors.
Despite this ignorance of the ‘How”, training is still one of the major advantages of network marketing. Other business models rarely provide any form of training. You have to actively look out for training opportunities, which may come at a huge cost to you.