A Simple Guide For Understanding Various Home-based Business Models Before You Invest In Them!
Earning extra income through a home-based business has always been an attractive option for many.
In fact, there are some who are better suited working in a relaxed environment from home rather than an office.
The choices have always been diverse … and invariably people pursue activities within areas of interest or attuned to their skill sets (e.g. investing, dressmaking, etc).
A large number of people seeking to work from home also pursue Network Marketing (MLM) opportunities and now, many have established Online businesses and take advantage of the booming Affiliate marketing sector.
Both of these channels offer wonderful opportunities to earn extra income, and for those who master what is involved, potentially a full-time income.
However, both also have advantages and limitations which need to be understood.
Network Marketing Is Alive …
Some Internet “Gurus” will tell you that Network Marketing is dying. Yes, it is diminishing in popularity because of the availability of online business opportunities … but it is far from dead as a business channel … and it certainly will not disappear in our lifetime.
ADVANTAGES:-
- Successful MLM businesses have a foundation of quality products, wonderful “distributor” support (including education), strong brand recognition and “distributor” bases (e.g. Avon, Herbalife), and very loyal user bases because the products are good. Very few online businesses enjoy the same advantages!
- Fundamentally, “people buy from people they know, like and trust”, even in todays wired world. Nothing beats personal contact and relationships. Network Marketing with its emphasis on personal contact tends to generate this!
- Distributors get to enjoy a proper Lifetime Value on those they introduce as subsequent sales generally come back through them. This is important because the distributor may only earn $10 on a particular sale, but if the person makes that same purchase every month, that grows to $120 in the first 12 months alone.
- Distributors often participate in matrix-based models which reward you for TEAM effort and in the process provide a bonus “passive” income for achievers!
- There is a mindset amongst diehard MLM’ers that this is the business channel to pursue and so new Network Marketing channels are continuously emerging providing those with an interest in this area with new options to pursue.
LIMITATIONS:-
- Commission structures on personal sales are lower than they could be because of the need to spread them through multiple levels, sometimes as many as 10 levels.
- Many systems involve auto-shipping – i.e. the distributor must each month buy (and pay) for a minimum amount of product. As a result, many distributors end up with cupboards full of product and, when unable to move stock, need to personally consume it.In effect, this becomes a “personal use” item rather than a “true business”.
- Remuneration structures can be unfair – in some cases only a few people really benefit (i.e those at the top). This particlarly applies to many forced matrix models.
- Creation of a Get Rich Quick mindset – encouraged by some promoters. Many distributors fall for this by thinking that once they’ve built their downline, they are on a gravy train and don’t need to continue working “their business”.
- As many former Amway Diamonds have found, unless you continue to perform, the rewards can dry up. {Network Marketing is no different to any other business – take your eye off the ball and you can go down!}
- Failure by the company and the distributor to embrace the Internet properly – many promoters establish replicated sites for their distributors and as a result, many distribtors think this is the only online presence you need.
Savvy MLMer’s have recognized that there is a golden opportunity to grow their business using the Internet and have established “authority” websites independent of the company website, are active on Facebook and other social media, and build their own lists. A link back to the parent site is all that is required in such instances.
Understand these limitations / failings and you will be better able to determine whether a Network Marketing opportunity is for you.
Affiliate Marketing is Booming …
Becoming active online is all the go nowadays – and for good reason! It’s inexpensive and you have a global audience at your doorstep no matter where you are based.
Whilst social media is all the buzz, Affiliate Marketing is where the money is over and above promoting your own products / services.
With the rapid growth of the Internet, Affiliate marketing is growing exponentially with millions now registered as affiliates via various services.
ADVANTAGES:-
- You don’t need to to have your own product, invest in or carry any stock, or deal with customer service issues.
- It’s a way to build content for your website … to convert it into a proper “authority” site so you can build a real business.
- You can select from thousands of offers on multiple Affiliate services to boost your activity and opportunities.
- No more having to hold meetings or take people out for a coffee and “hard-sell” them as with many MLM opportnities … and you’re on the same track (online) as where the vast majority of people are going.
- You can get the whole family involved in what you are doing, including your children, as people love to go “online”.
LIMITATIONS:-
- You generally don’t enjoy the “Lifetime Value” benefit which quality Network Marketing programs provide as most affiliate offers reward you on the first sale only with subsequent sales generally handled directly by the company. However, you generally earn much higher commissions with Affiliate offers and so that partially offsets this limitation.
- Many promoters have name capture links on their sales pages, links which help them build THEIR lists at your expense. {People invariably don’t purchase on a first view and therefore, if they come back at a later date through a company promotion, your referral can be lost.}
- Depending on which Affiliate service you use, you may need to carry multiple links on your site as most services track by a specific offer. Alternatively, you may need to use multiple Affiliate services to get all the offers you want. The process in both cases can be time consuming and unweildly, particularly if you have to use multiple services and hence get to know different systems. It is far from an ideal situation.
- Some of the best offers are time-limited (special one-off promotions) often using a “scarcity” selling pitch, or get farmed out very quickly as everyone jumps on the bandwagon. Therefore, it is imperitive that you stay on top of what is happening within your niche in order to determine that any specific offer is suitable for you.
- Affiliate Cheats – people who strip your ID and replace it with their own – profilerate, especially on big open Affiliate Networks which accept anyone as an Affiliate. You lose the benefit of your referral when this happens!
As with any business / channel, if you stay on top of things, then you can certainly prosper!
Please understand that the limitations outlined above should not hold you back from evaluating and moving on any Network Marketing or Affiliate Marketing program.
There is no reason why anyone cannot succeed with either business model IF it’s in an area they feel comfortable with and are willing to “work their business”! There are success stories everywhere of people who have done enormously well with both business models!
By understanding the above, you will be better able to assess each individual opportunity on its merits.
