Tuesday, November 12, 2013

Why Network Marketing?

The latest book I am reading now is entitled "How to Become Filthy, Stinking Rich Through Network Marketing (without Alienating Friends and Family)" by Yarnell, Bates and Hall. It is written by authors with over thirty years of experience in network marketing. It is a great primer on network marketing, or direct sales industries.

I find it extremely informative for anyone who is considering network marketing as a supplemental or primary income stream. And for those who are interested in creating multiple streams of income, this may be just the ticket.

Why network marketing?

According to the authors, "network marketing is the only game in town for the next four decades, because it's the fastest way to accumulate risk-free wealth in large enough increments to enable boomers to retire comfortably."

The authors appreciate that the boomer audience may be most readily drawn to network marketing. Network marketing provides an intellectual challenge beyond the boredom that may accompany retirement; and most retirees have the wisdom and capacity to be remarkably productive by working smarter rather than harder.

Economic uncertainty around pensions and retirement accounts may drive many boomers to consider new sources of supplemental income. And network marketing provides a highly personal social network within which to enjoy social interaction with colleagues of all ages. Network marketing allows boomers to give back in ways that may make a significant difference in the lives of others with whom they interact. So it provides fulfillment, in addition to financial incentives.

And typically, network marketing does not take a huge infusion of cash to get started.

Selecting the right company comes down to getting answers to some basic company information regarding the products that one might consider for marketing. The authors propose these for a privately-held company:
  1. How is the company capitalized-by the owners or by outside investors?
  2. How much of the company is owned by the founders/owners?
  3. What's the plan to fund future growth?
  4. Does the company have access to additional capital to fund rapid growth?
  5. Does the company have an adequate line of credit to support erratic growth?
  6. Does the company have debt; if so, what is the ratio of that debt to assets?
  7. Does the company have any outstanding legal concerns, such as unresolved lawsuits or product liability issues?
  8. What is the previous experience of the chief financial officer and/or the chief executive officer?
  9. Has the company ever filed for bankruptcy protection?
  10. Is the company willing to let you review a copy of its most recent year-end financial report? Is the annual statement audited by a reputable accounting firm?
  11. What is the company's long-term business plan?
  12. What are the company's current annual net sales; and more important, at what rate are they increasing?
  13. In what area of business is the company currently investing its capital?
  14. Is the company profitable now? Does the company have a positive cash flow?
I have included the travel industry as an area for my network marketing activities, but anyone considering network marketing should be knowledgeable and excited about the products they are marketing. This means using the products, and focusing on the results of using these products in people's lives.

A future blog will explore how this book shows that network marketing is able to deliver superior products at less cost than the traditional retail business model. Until then,

Happy investing!

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