How does network marketing differ from a franchise opportunity? Usually individuals will associate with a parent company on the basis of being an independent contractor or franchisee – the remuneration comes as not just by the products they sell but by the sales efforts of those recruited into the business.
One can liken this in certain aspects to some franchise opportunities whereby royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or regional manager.
With a franchise business, you usually acquire the rights to an exclusive territory and you then have to market the branded product in the territory. In return you have to pay an initial franchise fee and some royalties to the franchisor.
Network marketing unlike a franchise opportunity is based upon not only selling the products that the organisation produces but also from building an organisation around you that would follow your steps and duplicate your efforts. You make a percentage from the chain you created.
This is one of the most powerful concepts of network marketing – making it possible to earn from the efforts of others but carries with it a burden of responsibility – one needs to teach the people in their organisation and also help them to increase their sales volume whilst building their own organisations.
Companies that have decided to embark on the MLM route organise seminars and events with the purpose of teaching their representatives the most efficient way of doing those two things.
How does one choose the exact company / business to become involved with?
The essential ingredients of the choice are the qualities of the person that is introducing you and the company itself – is the company well funded? Are the resources there to see through a bleak period? Are the products conducive to residual income or is it a purchase made once every 4 or 5 years?
The best business opportunities come from companies that distribute products that people will actually use both from a usability point of view and the price structure.
In my own experience of network marketing, it is crucial to have a product that people can relate to, and, following the old sales strategy, that they can see the benefits of – it also has to be something that is affordable and useable.
Again, in my experience, there are many companies offering their products for sale using one of the most ,if not the most affective marketing systems in the world – by definition the system is so effective in part due to the number of people it involves.
A great misconception held is that it is the same as pyramid-selling – this is not the case and the whole system is designed so that everyone can make money rather than the profits being distributed in an unfair way.
Most of all, though I personally think that one should examine the products carefully as they will ultimately lead to sales – and the bottom line is that if products do not sell well, irrespective of what it is, then the company will ultimately falter. It is also important to find products that have repeat sales so that you can generate a residual income stream from all your efforts.
The choice of what company to be involved with or what industry one’s particular interest is held for is, of course up to the individual but I think that it is important to keep one’s business head on whilst evaluating the concept – what one enjoys may not necessarily be the money-spinner.