Network-based business refers to the method in which the products and services of the organisation move from one individual to another. The size of the distributor’s business network is very critical to success in this business. Whereas in some of the affiliate programs discussed above there will be a tier or two where the seller gets paid for referring another seller, success in those hardly ever spins on the network size.
Network-based businesses have deeper payment levels ranging from seven tiers-deep or more. In network based business, the reward is almost always in direct proportion to the size of the distributor network and not as much on the sales or movement of products and services.
Network building is a trade where the distributor is in the business of finding other distributors to work with so that the overall work required for success is distributed amongst a team rather than being concentrated on an individual.
In instances where the payment does relate to the sales of products or services, the percentage pay is defined by the size of the distributor network and increases as the distributor network increases. This characteristic also makes it the most attractive type of business for extra money in Kenya.
Although network building requires commitment at the beginning, once the network reaches a level about mid-way on the compensation plan, the network becomes self-sustaining. It is this characteristic that causes it to be an example of business where you can make money while you sleep.
How it Works
Few network-based companies will have a strictly online platform to run the business. Most of them depend heavily on the ability of the distributor to connect with others on a one on one, thus giving the trade the moniker of “direct sales.” To move this business online often depends on the creativity of the distributor. There are also strict rules to adhere to do network-based business online.All network based companies have an initial capital investment and require a new distributor to get a direct referral from a distributor who is already in the business. Each company will have their specific way of identifying how the new distributor came to hear of the business and accord the reward of the new referral to the referrer accordingly.
In companies that sell products such as health, beauty, furniture and other products, the new distributor will be required to make a purchase of a certain amount to qualify as a first level distributor. In many instances, although such purchase is designated as retail, the distributor is not always the obvious consumer.
Companies in the network based business undertake training of all new distributors as part of their business cost. They therefore will have detailed training outlets, materials, and business mentors attached to the business offer. The high quality training forums make it ideal as a low capital business for youth with little background skill.
How You Make Money
Network-based companies have an all-important document called the Compensation Plan also called the Marketing Plan in some quarters. The compensation plan is a document that defines how much one is paid when their network get to a definite size. It also details the requirements to qualify for specific levels of pay.Of all the businesses discussed here, the network-based business has the highest potential of turning a small investment capital to millions. You can start the business with capital of less than 10k and grow it to a multi-million empire. This is because the payment percentage to the individual distributor grows as their network grows. It is a simple mathematical progression.
Network based companies also have details of financial awards reaching up to their millions, whereas the other types of business assume the reseller income rests at the product commission. It is rare that affiliate and dropshipping businesses offer targets or payment levels that improve on reaching attaining those targets. For this reason, network based companies are often seen as promoting get-rich-quick schemes as opposed to being business opportunities.
However, by the sheer requirement of building a sizeable network to earn hefty pay, network-based business are not anywhere close to being an offer for overnight riches. To think that is to push a piece of misinformation and to promote them as such is to be deliberately deceptive. For most programs, the distributor will invest anywhere from two years to ten to attain the multi-millionaire mark in their company.
How You Will Spend the KES 10,000 in a Network Based Business
Like the others, a network based business will attract running costs which extend to telephone costs to speak with customers. If your company of choice has offline meetings in a specific location, there will be the requirement that you avail yourself at such meetings.It is also worth your while as an entrepreneur in the digital age to run your business with the support of your own website. The highest capital requirement in network based business is the initial capital asked for by all companies as a starting fee. This fee is given many different names, but it is a capital investment nevertheless.
If the fee is tagged as a product purchase, the distributor has permission to consume, sell, or give away such products. Of specific importance to note is that in companies, especially those that sell products, the product purchase requirement does not end at start-up. Most companies will require the distributor to make a mandatory monthly purchase to qualify for their payment check.
In service-based network companies, the fee will often be a plain capital investment or will sometimes be tagged as a purchase of a starter kit or that sort of thing. It is this latter category that makes it difficult sometimes to differentiate between a pyramid scheme – which worldwide is an illegal business – and a legitimate network-based organisation.
The difference is simple: a pyramid scheme does not deliver any product or service into the market place at any point in the compensation structure. A legitimate company will always have a product or service that is available to consumers as part of their business dealings in the marketplace.
The two companies recommended on this page that have a less than Kshs 10,000 start-up requirement are:
1. BF Suma (health products)
Learn more through BF Suma PDF2. Helping Hands International (education and community development)
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