Random musings: Is it one of those pyramid things?

How many times have you been asked that? I know that I have been asked a few times. But before you get all huffy, try to find out what they mean. Sometimes they have no idea what they're even asking about.

Suppose they tell you what they mean, so how do you respond? I'll try to cover a few responses that you can use depending on what they say to you.

1. Only the people at the top of the pyramid make any money. That's true, but everybody is at the top of their own pyramid. Or more seriously, everybody can make it to the top in a network marketing business. How many other businesses can say that?

2. The only people who make money are the ones who got in at the beginning. The only advantage that the people who started early is more practice. Anybody who puts in the work can make money.

3. You only make money if you recruit someone else. Yes and no. Usually there is some kind of bonus if you sign up another distributor (or whatever the particular company calls their representatives), but only after the new distributor signs up some customers. Customers are the lifeblood of legitimate businesses. If there are no products or services being sold, then the business is not legitimate. But the beauty of network marketing is the leveraged residual income. So, what the heck does that mean? It means that you make a little money from the customers that you sign up directly, plus a little bit from the customers that your distributors sign up, plus a little bit from the customers of the distributors that your distributors sign up, etc.

I can't tell you what other companies pay out, but SendOutCards will pay you from 2 - 27% for the efforts of others…not a bad deal! And 5% for your own purchases and 20% on your customers' purchases.

4. You have to get in on the ground floor. It's often better to get in early, see #2 above, but it's bad to get in too early. Usually it takes about 1 1/2 years or so for a company to become established. If you join a company before this time, there's about a 90% chance that they may go out of business, according to Harvard Business School. And yes, HBS teaches network marketing.

Network marketing is not only a legitimate business model, but you may see more established businesses taking on the model. Why? Because it's a much more effective way of selling a product or service. How so? In the standard marketing model, a company pays an advertising firm money up front to come up with an advertising campaign, which may or may not produce results. Then a sales force is hired to sell the product. A lot of salespeople are on a commission basis, but they may have a base salary whether they sell anything or not. The company may be out thousands or even millions of dollars before an item or service is even sold. But with network marketing, there is no money paid until an item or service is sold. There is no advertising campaign. The products are sold by word of mouth by independent contractors; whether they're called distributors, representatives, consultants, or ambassadors. Money is only paid out when goods or services are sold to a customer, which makes it very inexpensive and efficient for the companies selling the product or service, which is why they usually offer a decent commission. And usually the only limit to how much you can earn is how much you and your team can sell. Many of the top distributors are making 6 or 7 figures a month. And many more are making a few hundred to a few thousand dollars a month.

Years ago I was in a network marketing company, but I did absolutely nothing with it until I read "Why We Want You to be Rich" by Donald Trump and Robert Kiyosaki where they talked about how network marketing could be an ideal way to get rich. So, I got more active in network marketing. I'm not where I want to be yet, but I'm making progress.