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I attended a webinar last night that was hosted by Daegan Smith, on building a network marketing business. He discussed his thoughts on this topic and they really resonated with me. The points he made about choosing the right business model  for you were dead-on with the way I feel so I thought I’d share this with all of you.

Which home based business model is for you? This is a question that most current or prospective network marketers do not think enough about before they get involved with a home based business opportunity.

A Traditional MLM Compensation Plan is based on recruiting a “downline”, building a large team, and earning residual commissions (you earn each month your downline team member renews their monthly auto-ship). The cost of entry is typically somewhere between $50 – $300 and has a recurring monthly “auto-ship” payment of $50 – $100. The predominant products in this type of business are health and wellness and nutrition.

Pro’s

  1. Low Start-Up Cost.
  2. Can Build Passive, Residual income.
  3. Dream of having a massive team and huge residual check can make it easier for recruiting.

Con’s

  1. Low Cost can attract hobbiest, non-serious marketers.
  2. It takes a long time to build a team to earn decent money (generally about 500 paying members to earn $3000). Potentially 3-5 years, depending on your experience level and current following.
  3. The company could go out of business by the time you’ve built a decent sized organization.
  4. High attrition rate. The industry  has an average annual attrition rate of 85%. People stop paying for their monthly auto-ship when they aren’t making any money.

A Top-Tier Direct Sales business compensation plan is a higher-ticket “one time purchase” product that can cost anywhere from $1000 – $10, 000 or more. In this business model, you get paid a large commission upfront and sometimes additional income based on team members production but do not receive on-going residual commissions. You can take a look at my recommended Top Tier Direct Sales business RIGHT HERE

Pro’s

  1. Get Paid a substantial commission immediately when you make a sale.
  2. Can Earn a “Job Replacing” Income Quickly.
  3. Higher cost attracts more professional, serious marketers.
  4. Higher, one-time start up costs provides a feeling of business ownership and lower attrition rate.

Con’s

  1. Higher entry cost can create a longer sales cycle (people need to think longer before joining).
  2. You are not building a residual income. You will need to keep selling to earn commissions.
  3. Higher cost eliminates many marketers who cannot afford to join your business, even if they want to.

You should also consider the product. Does it excite you? Can you market it enthusiastically? Would you rather make sales yourself or help your team members with their marketing?

Next time you join a network marketing business opportunity, give some thought to what type of business you would like to build. Neither is better. Just  which business  model suits your personality and expertise. Then…go for it!

Ready to take action and get your network marketing business turning massive profits? Visit my popular Home Business Site at www.7FigureMLMSuccess.com so I can show you how to generate leads online and put money in your pocket quickly using the same system that’s worked for me!