What is a MLM business?

Hey as you know I am testing out these options to give you guys and myself an idea of what works and what doesn’t. With this in mind until I started to research I didn’t really know what a MLM business was.

I found out and I tried to learn a little about them, if I am going to try to build one it makes sense right?

I also have been carrying out some personal development for myself. Reading some books listening to inspirational stories etc one of which has been “the seven habits of highly effective people” by Stephen R Covey. This is a great book to read for those new to this style of training he breaks it down into sections that lets you work on each individual habit, but this is not why I brought it up.

One of the things Covey stats in his book is that he suggests to really learn something you should learn as though you are going to teach it to someone else. This is how I approach my reconnaissance into, What is a MLM business?

MLM or Network Marketing

Effectively the same thing, MLM stands for multi-level marketing and works in ultimately the same way as network marketing. The basic idea behind the process is that the company produces one or more products they then charge the marketing of this product not to large marketing budgets but to individual customers who actually use the product.

The belief behind this is that someone using the product and getting results from its use is going to sell the product much more effectively than an advert. In essence the company wants all of its customers to recommend their product to friends and people they know, to encourage this they pay a commission.

These two methods have received some very bad press over the last thirty years, being described as pyramid schemes and scams. The difference from what I have deduced is that to be a MLM business there must be a strong emphasis on a product that provides value to its customer base without the commission. This basically means that if the company was not paying commission customers would still buy and use the product. This comes into play when evaluating a company that you choose to partner with.

How does it work

It is actually a very simple process despite many people trying to make it very complicated for years. If the company employed one sales man and told him they wanted £1000 in sales a week that might be achievable but if they wanted £10000 in sales in a week it would not be. He would need to push his team hard to all achieve lets say £1000 a week if he had a team of ten.

Now if you take the MLM route rather than pushing you ten strong sales force to achieve £1000 a week you would aim to have 100 representatives all doing at least £100 a week, much more achievable.

They then as discussed incentive the representatives to get other representatives and if in one month those 100 reps all get one more rep and every one of them is still getting £100 in sales then the sales would be £1000000. You can see the beefits of this method right.

The_Power_of_four

This is however one of the distinguishing differences between MLM and a Pyramid scheme, If the sole purpose of the representatives is to bring in new representatives and not to promote the products then this is not an MLM business.

What’s in it for us

So far we have seen that it could benefit the company to take this approach, but why would that suit us?

Well many of us have been brought up and educated in a working environment. We can go to work and get paid for our time doing so. Even in this environment some people do very well but even those that do very well will reach a limit of how much time they can put in for their wages.

In a MLM opportunity if we are recommending £100 of the products a week and lets say we get !0%(just for ease of maths) commission on that then we will get £10 a week (not much right). But if we then get lets say four reps that would fall below us to join the business and each do £100 in sales a week then we are now getting £50 a week and we are still only selling £100 of product a week.

If we can then help those four each get their own four representatives to work under them then our first line is earning us £10 in commission (that is our personal sales), our second line is earning us £40 in commission our third line which now has 16 reps in it will be earning us £160 in commission.

With duplication and each rep doing the same thing line 4 will have 64 reps and earn £640 and our 5th line will have 256 reps and be earning us £2560. Now once you have all five line that is then a weekly income of £3410. Can you see where this business template could lead you to?

Incentives

Having looked through the example above I am sure you can agree that it is a powerful structure for earn a large income and it is also in certain circumstances unending. You will possibly not know all the people that are out there earning you money because as long as you continue to work with the four that you recruited and teach them to do the same with their four it will continue to duplicate.

In most MLM companies though this is not the only good aspect. They generally other incentives to improve sales, to bring in more representatives to climb the ladder and have more lines beneath you. These incentives can (not in all cases) included holidays, cars and such gift that you couldn’t even imagine getting from the company that asks you to turn up for work every day.

Car_incentives

What is a MLM business?

On the face of it, it looks like a no brainer. This is one of the reasons that I choose to pursue this venture to try to achieve my ultimate goals. Do I think it will be easy? No.

MLM I believe is not for everyone, I would suggest that you need to have a bit of a business brain. You probably need to have a thick skin, but for those that can see the potential and are willing to push their own limits I feel that the sky may well be the limit to our earning potential.

I do also however believe that it will not happen overnight or fall into my lap. For this reason I have aligned it with my long term goal to retire early and build a property portfolio. I do not need the result tomorrow, I need the result in a few years and if I can make enough money in even five years to retire happy and early that surely id better than the normal working life!