Network marketing (also networking/multi-level marketing) is an industry made up of a chain of independent distributors, whose tasks are to sell the company's products or services and at the same time recruit more distributors who would likewise sell the company's products or services. It is often called ?people's franchise,? because the seemingly endless recruitment eventually results to a hierarchical organization, which is also referred to as a distributor's ?downline?.

In networking, each distributor earns: (1) commissions through direct product sales, and (2) residual income from the sales of the distributors in their downline. Bonuses may also be given upon attaining specified sales levels.

Perhaps what makes network marketing appealing is that it is generally conducted at home, and this greatly reduces the operating costs that are incurred in the traditional business, such as employee wages or office rent.

Although others have made fortunes in network marketing, a lot of people find themselves unable to achieve any kind of success. This is because while there are legitimate network marketing plans, there also exists a great deal of illegal pyramid schemes.

So what does it take to be successful in networking? First, we must learn how to get started in a network marketing business:

Know the basics: evaluating a plan.

The reason why many people end up as failures and drop out of a particular business enterprise is that they readily join a program without having any idea what to do or, worse, what the program really is all about.

Proper education about a particular business is necessary before paying or signing a contract. Take the time to learn about the network marketing opportunity, and take the time to think it over. You may want to consult your family, friends, or lawyer before making your decision.

In evaluating a particular business opportunity, consider the following:

The Company

There are numerous network-marketing companies that flood the market today, with more emerging at a faster rate. There is always the risk of these companies? going out of business, either through collapsing like a house of cards, or being forced to shut down by law enforcement. This is why careful consideration should be made in choosing a company.

Know the company's track record. Check with the local government where the company is based (or the agency where the company is registered) for lawsuits or any other records.

Also, choose a network marketing company that is known for its integrity. Above all, the company should adhere to high moral principles or professional standards, and should stand behind their products or services. Talk to people who have had dealings with the company. Beware, though, of shills ? they are ?decoy? references that make outrageous claims or exaggerations that are in favor of the company.

The product

Know the products or services that the company sells. Ideal products and/or services are those that are unique, are used by the average person everyday, and are competitively priced. Be cautious of ?miracle products? ? there should be substantial evidence/s that would back up their claims.

The key to an effective and successful networking is for distributors to love their products. It is very easy to promote products or services that you like and you personally use.

Capital

Remember that Network Marketing, like any other legitimate business, is a real business. There will always be a ?cost of doing business?; be it in the form of training materials or advertising.

Know how much investment is required to join the plan. Watch out for the ?something-for-nothing? promises, and beware of companies that require you to purchase a ?start-up-kit? of expensive products and marketing materials ? these may be ?pyramids in disguise.?

Compensation plan

The compensation plan, or payment system varies from one networking company to another. It generally depends on the distributor's volume of sales and his or her level in the hierarchy structure. In other words, a distributor usually earns commissions not only on their own sales but on the sales made by people ?below them.?

Find out if there is a minimum monthly sales commitment that one needs to reach in order to earn a commission. Watch out for companies that offer more than 60% (of the list price) in commissions ? it will most likely be that the products are overpriced, or that a distributor must keep up a specific quota or sales volume.

The Sponsor

Another key to an effective networking is finding the right sponsor who can provide you with the necessary support to help you grow your business. A good sponsor should be able to know what you need. He or she may not have all the answers but can get the answers for you, or even work with you to solve a problem and make the right decisions.

Training

Probably the most important attribute to be successful in network marketing is proper training. The problem with most companies that offer some form of training is that they urge people to only follow their training program and not deviate from the scripts found in the company brochures and flyers. A good training should make it possible for you to have complete control of your network marketing business.

Recruitment

Once you have joined a network marketing plan, the basic (and crucial) task will be to gather customers for your products or services. There should be more than enough ?new members? that would contribute to your downline.

Bear in mind the importance of the people within your organization. As their sponsor, it is important to build a trusting relationship with them, training them, and provide them with the information that they need.

Advertise

Network marketing would not thrive if not for advertising, the most effective form of which is based on word of mouth.

There are various methods of ?reaching? people and advertising your products. Be it with a single phone call, fax, flyers, posters, traditional newspaper ad, e-mail, thru the Internet, or even a conversation with a friend, what is important is choosing the form that works for you and that you are comfortable with.

Patience

The network marketing business has always been mistaken for a ?get-rich-quick? scheme. People do not seem to understand that it takes time for a ?Geometric Progression? of their income to take place. It is unfortunate that most network marketers quit within their first year, when the ?return on investment? for a business model of this type usually takes 3-5 years!

Conclusion.

Networking is truly a genuine and feasible business. It is just a matter of having an open mind and the necessary education to minimize, if not prevent, losses for many participants.

It takes passion, commitment, and determination for a business to flourish. But what it really takes for people to be highly effective in networking is for them to have fun while doing it.