What is MLM?

The Most MisUnderstood Business Plan

Just what is MLM?

Also known as Network Marketing and Multi Level
Marketing, MLM is a business plan that allows anyone to start their own
legitimate home business without breaking the bank.

It is a business plan that is often misunderstood and misused.
However, it is not the plan that has failed so many, it is the poor
training that has been associated with MLM networks.

So many promises and so little support.

So what is MLM? MLM is not a free gold mine, it is just a better way
of doing business. It is not perfect, but no business plan is. However,
it does provide a way for you to earn and be rewarded for your effort.
You can be the CEO of your own business and help others do the same.

Learning, educating and working to achieve success. How can that be a bad plan?

Many people just don’t understand the concept of Network Marketing.
The purpose of this page is to explain the benefits of MLM. It is here
to give you something to think about as you evaluate your options
within the Network Marketing industry, or, as you explain the concept
to others. It will give you the answer to the question of “What is MLM?”

The concept of a MLM business opportunity consists of three major components.

  1. Time Leverage
  2. Residual Income
  3. A System of Duplication

Time Leverage

Time Leverage is the ability to get paid month after month on work you do one time.

A good analogy that you are already familiar with is the franchising
industry. In franchising, the franchisee, or one who purchases the
rights to do business using a well-known business name such as
McDonald’s, pays a royalty fee every month to the franchiser, or parent
company. It’s always a percentage of the profits earned.

The parent company, or McDonald’s, has incredible time leverage. The
more McDonald’s stores they have around the world, the more money they
make. But, the parent company certainly doesn’t do all of the work. If
they have 5,000 stores, each open 18 hours a day, 90,000 hours are
worked daily on their behalf.

The concept works the same way with an MLM business system, except you don’t have to pay a royalty fee each month!

For instance, let’s say you start your own Network Marketing
business and begin by investing five hours per week into your business.
You introduce your business system to Mike and begin working with him.
He also puts five hours a week into his business. You now have 10 hours
per week working on your behalf, although you are only putting in five
hours yourself.

If you and Mike each bring in a new partner, who each commit to five
hours, you will soon be benefiting from 20 hours per week. Remember,
your actual time involvement is only five hours each week.

Repeat this process every week and by the end of the first month,
you have forty hours each week working on your behalf. At the end of
the second month, over 640 hours will be invested into your business
each week, but not all by you. You are only putting in five.

Do you see the beauty of time leverage?

In network marketing, we are paid for opening “outlets” and teaching
those “outlets” to be successful. And, remember, franchising was
thought to be a scam in the ’70s, when it first began.

Residual Income

Residual Income is the ability to get paid over and over for the work you do one time. It’s also called “royalty pay.”

There are very few businesses or industries today that pay residual
income. Musicians, authors and insurance sales people are a few
professions that do earn a residual income. If you were to write or
record a popular song, each time that song played on the radio, or a CD
was sold, you would receive a commission, or royalty payment.

Residual income in Network Marketing is income you continue to earn
based on efforts you put forth initially. This income is based on the
sale of products and services.

These products must continue to generate repeat sales. This is one
reason why “consumable” products are the most effective in Network
Marketing.

Consumable products are those items that are bought, used up and
then replaced, over and over again. If you are marketing a product that
is a one time purchase product, you will have a harder time generating
residual income.

Residual income is desirable in MLM, because this is what allows you
to put forth a lot of effort in the beginning, and reap the rewards of
that for months and years to come!

Building an organization of people working toward a common goal, you can ensure a strong residual income that lasts for years.

It is important that you understand this pay advantage, and invest your effort, energy and time in other people.

Earning residual income requires a few things -

  1. First – take action to get momentum going in your organization.
  2. Second, continue building on that momentum, and teach others to do the same.
  3. Finally,
    learn and develop leadership skills that provide the foundation to
    support your entire organization. People follow people, and leadership
    skills are developed. Leaders are created, not necessarily born.

In the beginning, you have the “privilege” of working lots of hours
for a little pay. In the end, you have the “joy” of working little
hours for lots of pay. Get started and then build on your efforts each
and every month. Be a leader of others and watch the residual income
roll in.

Duplication and Geometric Growth

Duplication is quite possibly the most exciting concept!

Have you heard the “Penny a Day” story? This is a good illustration
to get you thinking about the power of this geometric growth.

Start on the 1st day of the month with 1 penny in your bank account.
Now, you are going to double it every day for the rest of the month.
Any guess about how much you will have in your account on day 30, or,
day 31?

Take a look -

  • Day 1 – 1 cent
  • Day 2 – 2 cents
  • Day 3 – 4 cents
  • Day 7 – 64 cents (hmmmm)
  • Day 14 – $81.92 (getting a little more interesting)
  • Day 21 – $10,485.76 (getting A LOT more interesting!)
  • Day 30 – $5,368,708 (I’m definitely interested!) and you can do the math on Day 31!!

See the power of geometric growth and duplication?

Duplicating yourself means teaching someone else to do what you do.
When the two of you each teach another person, you duplicate it again,
only twice. And so on, and so on, and so on!

Think back to time leverage and see how duplication multiplied the
time that was being invested into your company. Now not only can you
multiply time but also earnings.

This is how network marketing truly pays off.

On your own, you can only do so much, earn so much. But as a team
working towards the same common goal you can go as far as you want.
Take a look at the penny story one more time to see how fast things can
add up.

So What is MLM?

MLM is the power for anyone to achieve their financial success no matter their position in life or on the company ladder.

It lets you get paid on YOUR EFFORTS and get earning leverage by helping and training others.

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Comments

  1. sosheruthinsker says:

    You make a good case, but if this is such a fantastic system than why do so many people fail?

  2. Don’t have that much budget, but I really want a homebased business. Hope this will work fine for me.

    • That’s one of the best things about an MLM business is that it doesn’t take much of a budget to get started. The company I am with only needs $19.95 to get started and that is a one time fee, not a yearly one. Then of course you have to purchase some product but you get to chose what you want. They don’t send you the special of the month whether you want it or not…

  3. Thank you for breaking down the principle of time leverage. It sounds like this uses one of the natural laws of the universe – the power of momentum. I can appreciate the analogy about how franchising was at one time not accepted. Any time you revolutionize some aspect of any market, or even try to improve it, you will most certainly experience buyer resistance first hand. It is unfortunate that it takes so much time for enough intrepid buyers to influence the masses before change for the better can be enacted. Unfortunately, significant change often comes long after the pioneers run out of capital. It’s been aptly said, the pioneers struggle and the settlers prosper.

  4. I have to admit I am pretty ignorant when it comes to business opportunities such as multi level marketing. So I am glad I came across this page that gave me a crash course education about the basics of MLM.

    It looks like working as a team instead of all alone in isolation really could be a great way to earn an income stream that is long lasting and help people to ride out the financial bumps in the road.

    Great article and thanks for opening my eyes to this wonderful opportunity!

  5. One of the things I would like to have clarified is what the differences are between Multi level marketing and affiliate programs. What are the advantages and disadvantages and which one has more potential growth. The two similarities I notice that exist between the two are that there are many programs and lots of competition. Maybe this is answered in the training program, but I thought this forum might be a good place to touch on it with at least an overview to help those that are wondering. I would like to hear it from the expert(s).

  6. If I understand the concept of multi level marketing correctly, it enables sales persons to recruit other sales people to work independently, but under their recruiter only in the sense that the recruiter earns a percentage of the revenue generated by his subordinates. And the chain of multi levels is limitless as subordinates recruit other sales pros to work under their umbrella. My summary may be a simplistic description, but it would seem to me that this would be an ideal business model for any industry involving sales. Even real estate could use such a model. Or maybe the already do this when a real estate company recruits agents who work independently but under the company brand. I’m just not sure if the company gets a portion of the sale of each home.

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  8. This article is aptly titled, the most misunderstood business plan and I would also call multi level marketing the most vilified business because it is perceived by just about anyone who has never done their due diligence as being misleading and they assume every program is a scam to prey upon those who are in dire need of an income or mislead nave persons into paying up front registration fees or product costs or any other extras when you first sign up for the program.

  9. Nice Article. You do a good job. Thanks again.

  10. Heya are using WordPress for your blog platform? I’m new to the blog world but I’m trying to get started and set up my own. Do you need any html coding expertise to make your own blog? Any help would be really appreciated!

    • Yes, this is a wordpress blog. It is pretty easy. I suggest you do the wordpress that you host yourself instead of the free version because you have more control, but NO you do not need to have any coding experience.

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