The purpose of starting a network marketing business is to make profit. If a business spends more money than it makes it will go belly up. So why should network marketing be any different?
We know that network marketing gives exponential passive income with time. If you have a group of 100 to 1,000 people in your network buying the product and recruiting more, then you will be getting richer and richer! We all know that.
Its SURVIVING the first 3 to 6 months in the network marketing business that is crucial. There is a learning curve involved .typically a new distributor will go through a 3 months of trial and error period. After which it takes 3 to 6 months to build a network that starts paying you money. If you can learn to manage your cash flow wisely and also teach the people you sponsor to do the same then you will succeed in this business.
The key to survival is CASH FLOW. People in network marketing business usually run out of cash flow normally after 3 months and they quit because they have not planned properly. If you teach and help the new members in your team to reach breakeven as fast as possible ..will give them confidence to continue in the business.
TYPICAL EXPENSES OF A NETWORK MARKETING BUSINESS
A typical network marketing business will have the following expenses:
Joining Fee Auto-ship Petrol Training MaterialPromotion materials Meetings and Rallies Phone Bill Leads AdvertisingMiscellaneous
People when joining the network marketing business opportunity only look at the initial cost of joining and auto-ship. They fail to take into account other expenses that are vital to succeed in the business. This results in cash crunch and dropping out of business.
# BUDGETING AND REDUCING COSTS
To succeed you have to budget your expenses and find ways and means to reduce costs. There are unscrupulous people in this business who make new members to spend on advertising and promotional materials from which they generate revenues to run their own business. Advertising and promotion is essential to success of any business but has to be done sensibly. Every dollar spent must show some positive result for the business or it is a waste.
Spending money on your education first is the best investment you will ever do. If you are educated then you will save thousands of dollars in the course of your business. There is simply no substitute for education. Find a mentor with a servants heart who will coach you for free. Even if you have to pay a little money do not hesitate. You will get exponential results from this investment. You have to investment in your education first because as we discussed earlier in this book that network marketing is a mentoring business and not a sales business. You have to learn before you can teach.
Some other suggestions to reduce your costs are given below:
Keep minimum stock necessary to run your network marketing business. Some stock is necessary to share the experience with other people but keep it to the minimum. You can always order more when you need. If you have too much stock in your garage then sell it to generate cash flow. It will give a new lease of life to your business. Have a Buddy in your area. This will save costs when traveling to meetings but will also create synergy. Do some research and switch to low cost phone plans. There are many free systems like SKYPE available on the internet. To save petrol costs try and qualify your leads before you decide to drive down to meet them. If you are prospecting someone who is indecisive, lazy and complains constantly, it is better to keep him or her in the back burner and focus on people who are excited about the business. You dont want to find yourself driving miles just to talk to someone and after two hours find out that they are not interested. A very good way to qualify what type of prospect you are dealing with is to ask a few questions about their dreams and self-development. If you find that they have no energy in their words, or are not doing anything to improve themselves then you can very well save lots of time and petrol. As your network grows you will have to find leaders in your team who are highly motivated and work with them for the betterment of the team. The most important cost in your business is the leads and how you generate them. The cost of generating the leads and converting them into your business can make or break your network marketing business. You have to learn how to minimize these costs and be effective. This is something you have to understand and perfect if you have to succeed in this business. Hold local training sessions besides the companys training sessions with all your team members. This may save cost to your team members. Educate all the team members about proper cash flow management when build ing the business. Everyone must focus on following the same network marketing system in your team! It is crucial for duplication. Can you imagine 100 people all going in their own direction? This is recipe for disaster. A simple system of duplication saves cost, time and effort of the team.
TAX DOLLARS CAN FUND YOUR BUSINESS
Tax incentives provide a huge source of cash flow to run your network marketing business and achieve break even within weeks. When you engage in network marketing business opportunity you can claim cost of travel, communications, entertainment, office stationary, advertising and even products that you buy through auto-ship (for promotion) as legitimate business expense. You can also claim part of your rent/mortgage, electricity and water bills as legitimate expenses as you are using your home as office. You can also claim depreciation on office furniture, car, computer, fax machine and other accessories that you need for your home business. Please speak with your local tax consultant before you embark on this course because tax laws are different in each country.
In most cases the tax incentives are so generous that they can fund your business in the initial stages. What most people do not realize is that when you take tax incentives into account the break even point of your business is much closer than you think.
Make sure your team members understand cash flow and break even analysis. When you help them make money, they will help YOU make money! This is the secret to network marketing success
But before any thing else you must learn how to build your Virtual Real Estate
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