An MLM home business is a great way for a company to get product out into the marketplace with little overhead. It is also a great business model for the independent contractor or representative for creating wealth via a leveraged asset and a residual income stream. The model is successful because it revolves around the company’s end products being sold prior to any commissions being paid out (or advertising, for that matter). But which marketing approach or philosophy will make the most profit?
An MLM home business company only pays out once what they’re marketing has been sold. And, regardless of what a company is selling, no one gets paid unless something does get sold. Something – a product, service, membership, etc – must be purchased before anyone in an MLM home business organization is paid. That transaction determines who and how much is paid out.
3 main approaches or philosophies to to consider when it comes to creating income with the MLM home business model:
1. The first MLM home business approach is the retail sales model.
This is the lowest income approach of the three and essentially involves buying “product” (which could be a product, service or membership) at a discounted or wholesale price and then turning around and marking up the price to allow you to make a profit when you sell it. This is a direct sales approach. The more “product” sold, the more money made. The amount of income is directly related to the amount of “product” sold and the amount of profit added in to the price of each sale. When no sales are made, no income is received. Pretty straight forward and self-explanatory.
Many people new to the MLM home business industry or not familiar with the industry mistakenly believe that this approach is the main marketing approach one needs to follow in order to see success with an MLM home business. This is where the sales-type objections usually come from, where a potential prospect learned about the MLM home business model as someone was trying to sell them on an MLM home business “product.”
2. The second MLM home business approach is the whole-sale model, focusing on organizational sales.
Rather than relying on just the one business owner to sell “product,” with this approach the focus is widened some by bringing on a few other people to help increase overall sales volume, taking in a little less per sale because of having to pay the team part of the commission of each sale. So now there are say ten people allowing for ten times as much product which perhaps may allow one to multiply profit by 5 (to account for profit margin being cut in half, say).
This is a better model in that it allows one to leverage oneself somewhat, allowing one to increase one’s revenue and profit by being able to move more “product.” However, the focus here is still on the “product” itself. If a person limit’s his or her operations to just 10 people and themself, they are limiting their income as the 11 of them are only able to move a certain amount of product. Also, they are dependent on all 11 people to continue their production level to maintain the revenue and profit level. So it is a better model than the first model as far as revenue and profit are concerned, but it’s still a “sales job” and limits one’s income potential.
3. The third MLM home business approach is similar to the second approach but the focus and philosophy is entirely opposite.
The focus is on building a team where many people are able to move just a little product each rather than the other way around. The team creates the leverage to allow you to earn a little from a whole lot of people, able to earn a few percentage from hundreds rather than a larger percentage from just a few.