Back in 2006 I became involved in a home-based business 1300 Numbers Cost with a health and wellness company. Over the course of 6 months, I spent $4885 on samples, monthly purchase requirements, marketing materials and so forth. During the same time period, I earned exactly $807 for my efforts.
Clearly, something was wrong. It’s not as if I couldn’t find customers…I had generated thousands of dollars in sales! However, I clearly was not being properly compensated for my efforts.
Through further research I discovered I had made the wrong decision about what type of business was going to suit me. It wasn’t just about the products and whether or not I liked them personally. There’s a lot more to it than that, and I wasn’t aware of the common features of different kinds of home-based business models, and therefore was unable to make appropriate comparisons.
In fact, I didn’t even know there was anything other than network marketing (also referred to as multi-level marketing, MLM, consumer direct marketing and referral marketing). I wrongly assumed that network marketing was my only option when joining a home-based business.
So, I got excited about something and I jumped in. Sadly, that is exactly what most people do. I wasted precious time, and a lot of money.
My goal with this article is to educate you about your choices, specifically in regards to the differences between a Network Marketing business model and a Direct Sales business model. I sincerely hope that you can learn which business type will best suit you, and you can avoid the same mistakes I made years ago.
Entering into the home-based business arena is serious work, and requires more than just a wish and a prayer. I hope that you will find this article useful in your research and decision making process. If you do, please let me know!
Warm wishes for your success,
What’s The Difference?
The first thing I’d like to explain is that most home business companies are direct sales companies. In other words, an independent distributor sells products directly to the consumer.
However, some direct sales companies use a network marketing business model (referred to as MLM for the remainder of this article), while others use a direct sales business model.
Here’s the difference…
In any company, regardless of the product, there is a set amount of profit available for each sale that is created. The profit is what is left over after the company receives their wholesale payment for the product(s).
Some products can have a very high profit margin (up to 80% in some cases), while others have a much lower profit margin (5-20%). Regardless of the actual margin, each product has what I’ll call “available profit” to be earned.