Network Marketing--The New School

You've heard the hype! Sign up tonight! Work your warm market to corral customers. Talk with everyone within three feet of you about joining your business. Develop an ever expanding contact list and work it by telephone. Remember, some get it. Some don't. Some who get it will. Others won't. Who's next? You go get three distributors (aka representatives, consultants, etc.) who get three, who get three and so forth down to seven levels, and soon you will be cavorting on the beach whenever you want, driving a luxury car and living in your dream home."

You've heard the hype! Maybe it worked for you! Most often, the hype you heard at numerous "opportunity meetings" did not position you or most network marketing participants to generate wealth.

Quickly, though, please understand that this article does not provide a diatribe against network or multi-level marketing. I am a network marketer and have worked for more than 30 years in this distribution system, a segment of the direct selling industry, in partnership with numerous companies. I love network marketing and in my early ventures, I bought the hype hook, line and sinker.

Like many of you, I sunk! Unlike many of you, I resurfaced because I practiced two of the seven laws of guaranteed success: I got started! I refused to quit! So despite much of the hype being just that--hype, I still believe that this distribution system provides an amazing opportunity for anyone--despite circumstances--to achieve and maintain multi-generational wealth.

I believe this for many reasons, not the least of which is the fact that the numbers reveal an encouraging picture. In 2007, network marketing generated more than $30 billion in sales in the United States with about 15 million individuals working part-time and full-time in this dynamic industry. That's good! However, when I divide $30.8 billion (gross sales revenue) by 15 million professionals, I come up with about $2,000 in retail sales per professional. Now, that's retail sales--what customers paid. Even with a commission rate of 30 percent, which one of my manufacturing partners pays, the annual business revenue per professional averages about $600 annually, or about $50 per month.

Obviously, some--actually about 20 percent--professional networker marketers made much, much more than $50 per month. Without question network marketing looms large as an absolutely great industry. Consider several observations:

In a recent article, Fortune Magazine editors referred to network marketing as " . . . the best kept secret of the business world." "An industry with steady annual growth, healthy cash flows, high return on invested capital and long-term prospects for global expansion."

Robert Kiyosaki says this: "When I first heard about network marketing, I was against it. But after opening my mind, I began to see advantages that few other business opportunities offer. Long -term success in life is a reflection of your education, life experience and personal character. Many network marketing companies provide personal development training in those key areas . . . A true network marketing business is the exact opposite of a traditional business model. A network marketing business is designed to bring you up to the top, not keep you down at the bottom. A true network marketing business does not succeed unless it brings you up to the top." (Why We Want You to Be Rich, by Donald Trump and Robert Kiyosaki, chapter 27, pp. 307-308).

In their book--The New Professionals--The Rise of Network Marketing as the Next Major Profession, Charles W. King, Ph.D, and James W. Robinson wrote: "Network marketing is the low-cost, and now high-tech industry that invites you to build your own business and earn a potentially high income while working from home on your own schedule. You earn immediate income and serious long-term residual income by selling products and services directly to consumers and convincing others to do the same . . .Today's it's a high-touch, high-tech field, international in scope, that is growing in sophistication, complexity and diversity; an industry where knowledge workers are welcome, professionalism is prized, and search engines and stock options are replacing pep rallies and prayer circles."

Referring to network marketing, mixed with the rapid growth of the wellness industry, Paul Zane Pilzer referred to the combination as the "perfect storm of opportunity." Pilzer continued: "Direct selling impresses me because it allows people to begin to captain their own ship, choose the hours they work, and through their activity levels choose how and when to increase their incomes . . . This business offers low startup costs, has no employees or insurance expenses, and the overhead is practically non-existent. The direct selling business model also utilizes new technologies, such as the internet, which help make it easier than ever to own a business."

Interestingly, this industry's power triggers the "failure timebomb" that decrees that most network marketing efforts fail.Chances are, many of you reading this article have tried several so-called opportunities, and they simply did not live up to the hype you heard at that first meeting. Consider this metaphor: if you have an outstanding dream home plan, the best materials and even plans to furnish your new home with spectacular furniture, your house will fail unless you build a solid foundation. Similarly, most professional network marketers who fail to create wealth using the network marketing distribution system miss the the mark because they do not build a solid foundation under their business. Easy access to residual capital provides an important segment of the business foundation you must build to create a successful home based business, in partnership with manufacturers who use the network marketing compensation plan.

You need the following to achieve the residual capital you need to finance building a solid and enduring home based business foundation:

A fulltime or a parttime job. Sometimes, the hype you hear at so-called "opportunity meetings," seems to infer that a job is a bad thing and that you should be ashamed of living from "paycheck-to-paycheck." Some truth lingers in that inference, but much of it simply is not true. In reality, if you try to launch a home-based business without a job, you are probably more likely to fail because, except in rare instances, your home-based business will not initially earn enough money to support you, your family--if you have one--and the business. Additionally, being unemployed denies you access to your initial stream of business investment capital that will usually fund about 25 percent of your Business Operating Budget (BOB). This does not mean, however, that not having a job eliminates your chances of home business success. My team and I--KOG-WOW, LLC--can show you how to design, develop and deploy a successful home business even when you're unemployed, and also if you draw social security or disability checks from the government.

A business entity--limited partnership, limited liability company or a corporation--fully registered with the proper local, state and federal offices. Local registration involves complying with zoning, business alias and city/county tax ordinances. A business alias is simply a name that differentiates you--the individual--from the business entity. For example, one of the business entities that I operate is KOG-WOW, LLC. This entity--a Limited Liability Company--also serves as the principal member of six other LLCs. Federal registration means simply to receive an Employer Identification Number (EIN), which could be called the "social security number" for your business. This number also differentiates you--the individual taxpayer--from the business that also has specific tax paying responsibilities. State registration requires you to file proper papers with the Secretary of State or another designated office in your particular state goverment. If you launch a corporation, you must file Articles of Incorporation. Launch a Limited Liability Company and you file Articles of Organization.

A strategy to develop a Business Operating Budget (BOB), including direct and indirect costs, as well as business assets. This means, among other things, that you must apply for and receive your Business Investment Grant from the federal goverment. I know you've never heard that term. Let me explain. According to Ron Mueller, in his book Home Business Tax Savings Made Easy: "Congress did not create laws that ended up 'unintentionally' decreasing federal tax revenues because some clever lawyers found a loophole. No, they passed these laws for two specific and important reasons. The first objective was to stimulate the strongest segment of the American economy--small business. But the biggest objective was to encourage every taxpayer to have a home-based business and to continue to run it actively, because it provides the ideal 'safety net' in times of economic downturns and layoffs . . .That being Congress' objective, the question they wrestled with was, 'How do we motivate busy people to do something else?' Answer? What's the greatest motivator of all time? Right--money . . .So they (Congress) decided they'd pay taxpayers to start and run a home-based business. The method of payment--huge tax refunds" Then the challenge for Congress became how to get a chunk of that money to new home based business owners quickly--sooner than the end of the tax year--efficiently--without a lot of hassle--and effectively--so new home-based business owners can use this money immediately. Thus, Congress created the strategy that I refer to as the Business Investment Grant. You do not have to write a grant proposal to receive this tax benefit that could range from an additional $200 to $800 per month, month-after-month. You do not have to deal with governmental red tape. In other words, you could have the additional money coming into your business--to use as start-up operating capital--within the next two weeks. I do not have the time or the space to explain the full strategy here. Take advantage of the link in the resource box to learn more.

A strategy to generate another stream of continuous capital by helping others launch home-based businesses built on a solid foundation similar to yours.

In part two of this three part series, I will provide some additional details of what we refer to as the unique Action-Based Capital Development System (ABCDS).