Before Starting a Network Marketing Business

Network marketing is the contemporary trend of the business world. But before you consider starting a network marketing business, consider these things first. It is best suited for people seeking flexible and part-time business options. For network marketing, a group of distributors works to promote a business. Many business tycoons as Mary Kay Cosmetics and Avon fall under the category of network marketing.

Start a Network Marketing Business on a Budget

You probably will not be required to come up with a heavy investment to start a business in network marketing. Most likely only a few hundred dollars, and off you go. Network marketing makes others part of their business community to make their product accessible to the consumers. A network marketer doesn’t have to start a business from scratch. Rather the company supports the marketers by providing their product and offers training to sell them. 

Network marketing businesses also go by different names such as cellular marketing, consumer-direct marketing, affiliate marketing, home-based business franchise, or referral marketing. You should look into each of these before starting a network marketing business.

How does Network Marketing Operate?

Network marketing operates by creating a system of tiers. Salespersons do not restrict themselves merely to the selling of the product or services. They have the authority to hire a group of marketers to work for them. Besides getting a commission on their sales (upline), they also enjoy a share of their marketers’ profit (downline).

It is just like a chain reaction; a new tier may create another new tier. The creation of the new tier benefits the marketers both in the top and middle tier. So the persons in the top tier earn the greatest benefit both from the direct sales as well as from the recruitments they make.

The Steps of Network Marketing

Network marketing typically involves three steps.

1. Lead generation:

Discover and locate potential customers.

2. Recruiting:

Make customers and convert them into your business partners.

3. Management:

Train, motivate and manage your business partners.

The Three Types of Network Marketing:

Before starting a network marketing business you should be aware of the type of business you are getting into. There are generally considered three types of network marketing businesses that exist.

1. Single-tier Network Marketing 

In this type, you sell a company’s product or services by becoming a part of their affiliate program. You do not recruit others and earn directly from sales. Single-tier marketing depends on how much traffic you can drive to the affiliate company’s website either through pay-per-lead or pay-per-click. Avon is a company that operates on single-tier network marketing.

2. Two-tier Network Marketing

This type of network marketing involves recruiting distributors. Besides, you can also earn by direct sales and driving traffic to the website either from you or your distributor. Ken Envoy’s site sale is an example of two-tier marketing.

3. Multi-Level Marketing

Multi-level network marketing (MLM) consists of two or more tiers. It employs two types of marketing strategies, name-driven network marketing, and marketing-driven networks. Businesses such as Amway and Magnetic Sponsoring are examples of multi-level marketing. You should have an efficient and enthusiastic marketing team.

Market research on relevant factors is a prerequisite for implementing any business idea. Be sure to take these facts into consideration before starting a network marketing business.

Things to Know Before Starting a Network Marketing Business

Below is the description of five significant things you need to know before diving into network marketing.

Is Your Marketing Team Enthusiastic Enough?

Network marketing demands industry-driven creative thinking. A strong marketing team is a key ingredient for long-term success in network marketing. Not every person intending to sell a product is necessarily good at it. Marketing demands enthusiasm and sincerity on the part of the marketers.

Hiring marketers, who are ambitious and excited about the business and product, transfer their spirits to others that in turn lead to greater sales and recruits into the marketing business. Lack of enthusiasm in marketers about the company or product leads them to adopt shortcuts and to mislead others in their attempt to make money. Such an attitude may sabotage the company’s trust in the long term or even may result in legal troubles.

Besides this, establishing useful contacts and connections provide a foundation for network marketing. Networking with the right people, who in the future may impact your business growth, is the key to successful network marketing. It enables you to establish a strong marketing team.

Pyramid Schemes

Sometimes it is hard to identify legitimate network marketing from a pyramid scheme (scam) as both can be very similar. Like any MLM, a pyramid scheme operates on recruitments and offers incentives for more recruitment from distributors.

The main objective of MLM is to promote a product or service, inviting distributors to magnify the promotion and sale. However, a pyramid scheme would focus more on getting money from you to recruit other distributors. Are you still confused? Ask yourself a couple of questions before you decide whether the company is a genuine one or a fraud.

  • Are they demanding a good amount of money to sign you up as a distributor? Legitimate companies don’t demand a high startup cost.
  • What is their policy about unsold inventory? In case you have to pay for the stuff, what about the unsold ones. Legitimate MLM has the policy to offer a good percentage of inventory buy-backs.
  • How much do they emphasize establishing a long-term market for the product? This aspect is crucial for legitimate MLM, while a pyramid scheme would not be at pains to increase the demand for their product.
  • What are they concerned about? Recruitments or sales. A pyramid scheme would focus more on making quick money from recruitments and not from the services or the products.

No Money, No Problem!

The perk of network marketing is that you can start up your company with minimum investment. A network marketer can easily make it from home, and the possibilities are endless. Some phone bills, internet, transportation, and some marketing policies for insurance. That’s why it provides the best earning opportunity to both men and women. Starting a network marketing business is the right option for those who have limited funding.

Choosing the Legal Entity for Starting a Network Marketing Business

It is good to have prior knowledge of the state laws related to network marketing. It saves your business from turning into a deceptive marketing scheme and makes your business compliant legally. Choosing the legal entity determines the potential growth of the business.

You can either opt for a limited liability company LLC or a general partnership. However, it is advisable to consider two things before making a choice, location and target audience. A general partnership is suitable for network marketing on a small scale. On the other hand, if you plan to expand your market, you should prefer LLC.

LLC offers more flexibility, protection from personal liability, and formalities such as having a board of directors and shareholders meeting.

Earning a Steady Income from Network Marketing

Earning money from network marketing is not a piece of cake, especially for the people to whom marketing is not their cup of tea. Maintaining a steady income could be a daunting task for marketers. The recruiters make your dream of highly attractive incentives as holiday trips, dinners, valuable gifts, cars.

However, transforming these dreams into reality requires a lot of consistency, persistence, and diligence on the part of marketers. Picking the product or services that you want to sell is crucial for determining the pace of your progress. You might earn a handsome amount of money from any product in the first instance. But if the product is not reusable or repeatable, you might lose your market for the next time.

Moreover, if the market is already saturated with the product you promote, there is a greater probability of losing your target market to other marketers. So the job of the marketers does not remain part-time rather becomes full-time if they want to avoid fluctuations in their earnings.

Network marketing is all about expanding your business and community. You need to be available to them to provide any assistance. Besides this, ordering, getting the stuff ready, deliveries demand a full-time commitment. One drawback of extending your partners is that you create your competitors dealing with the same product.

Tips to Save Yourself from Falling for Pyramid Schemes

Follow these tips and save yourself from those who intend to ruin your dream of running a successful business.

  • Investigate to gather the maximum information about the company’s products, their sales literature, business plans, and marketing strategies.
  • Find people having experience with the company, their feedback regarding the quality of the products.
  • Check the government’s official departments that deal with the business affairs of the companies to find any discrepancies.
  • While negotiating with the company, keep yourself calm, and don’t get carried away by the exaggerated claims they make.

Are You Ready for the Competition?

The level of competition is one of the most crucial things to consider for network marketing. Two things that determine the level of competition are; first, the services or products you offer secondly, the place of business—selling the services or products that are common in the market face a lot of competition.

However, a product or service that is unique and innovative would face lesser competition from well-established companies, retailers, and businesses. Network marketing is not restricted to the boundaries of a country. You are free to establish a stable marketing network in any country. Similarly, the launch of a new business in the market may also give you tough competition.

Sometimes, a sudden change in the government’s economic policies may adversely affect the business. The economic decline may impact the purchasing capacity of the customers. So always be prepared for the whims of the market. Choose a location and business with the least risk factor.

Online versus Offline Network Marketing 

Online marketing is an umbrella term for a myriad of ways a marketer may employ online. These include online platforms, channels, emails, social media adverts, SEO, Google ads to access your target consumers. On the other hand, offline network marketing makes use of print media, TV, mail, billboards, and seminars to promote their brand. In the present-day digital world, there still exists scope for offline marketing.  Both the methods have their pros and cons.

Online Network Marketing:

Pros of Online Network MarketingCons of Online Network Marketing
Certain online tools like analytics help to track the impact of network marketing.Excessive dependence on technology
Cost-effective and even free to use            Sometimes demands investment for running certain programs or ad campaigns.
Online ad help  to target a huge audienceFaces tough competition from international markets.
Mobile friendly, helping to access a huge number of customers on the goA lot of people ignore the ads.
Building strong connections with the customersLacks human interaction 

Offline Network Marketing:

Pros of Offline Network MarketingCons of Offline Network Marketing
Provides customers with the tangible optionsThe direct impact of network marketing is not easy to measure, uses traditional methods of looking at the sales and profits.
Human interaction with customersCostly and is of short duration
It offers more flexibility and creativity in terms of winning the trust of the customers.Lacks quick accessibility to customers

Skills Required for Network Marketing

Here are four skills that help you to excel in your venture of network marketing.

1. Communication Skills

Communication is the foundation of the network marketing business. So developing communication skills is crucial for marketers. You can do so by strengthening the four pillars of communication that are pitch, convincing power, story-making, and closing.

2. Transferable Skills

Network marketing is all about teamwork. A leader must possess strong transferable skills to enhance the productivity of his team. It is not about merely transferring your knowledge or education but about sharing your struggle stories and experiences, both good and bad. It enables the team to learn from mistakes and avoid these in the future.

3. Problem-solving

Like any business, network marketing is replete with problems of all kinds. A professional marketer focuses on the solution rather than on the problem. A mental approach to looking at the solutions opens doors for possibilities and opportunities.

4. Leadership Skills

A leader must possess strong leadership in directing his team towards a shared goal. It includes knowing your team’s weaknesses and strengths while keeping them on the right track. Leadership skills are a complete package for many other skills as patience, creativity, positivity, risk-taking, and an ability to motivate and teach.

Before Starting a Network Business

Before you decide on a network marketing company simply because you like the products or you really connect with the person trying to sponsor you into the business, consider the idea that you can use the skills of an independent trainer or coach to fill in the inexperience or lack of industry know-how from a new up-line. Read this article on why all MLM’s are equal, you need something more.

Also, be sure to join my Facebook Page for weekly tips and techniques you won’t get anywhere else!


What is the fastest way to succeed in network marketing?

When you decide that you are starting a network marketing business, you should find a mentor who can help you succeed in reaching your goals.
Do not be afraid to use an independent MLM coach or trainer if you are not satisfied with your up-line.

How much can you make in network marketing?

Before starting a network marketing business it is important to be clear about how much money you can and/or will probably make. The two are completely different numbers, you can make millions of dollars with network marketing. However, chances are that you will end up not making much money in network marketing. Because 97% of people do not make much money in network marketing.
If you are one of the 3% though, who never give up, find a great mentor, and do the uncomfortable things the 97% do not want to do, you can make millions helping others succeed in network marketing.

How can I convince someone to join network marketing?

The best way to convince someone to join network marketing is to become successful and make it your life goal to help others find their own success. When you move your focus from getting them into your group, but rather your desire is to help them create and grow a large group for themselves, you become a outward helping person. People are drawn to others who are selfless. They are naturally weary and repulsed from those who are selfish.


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Aaron Jarrels

I am focused on helping anyone who wants to expand their reach. I help people overcome their limiting beliefs and show them how to gain the confidence to eliminate imposter syndrome that hinders success. I specialize in assisting people with shifting their mindsets and help them master the skills necessary to achieve professional and personal success.