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When an individual first starts to think about jumping on
the home-based-business bandwagon, there are typically many
questions that need answering. Unfortunately, the source of
information that presents itself is usually someone that is
trying to recruit for his or her specific opportunity…not
a particularly objective point of view.
There are three main types of business models to consider.
First, the sale of products and the business opportunity to
friends, family, co-workers, acquaintances, and even strangers.
Second, there is the pure network marketing model that entails
selling mostly services (and again, the business opportunity)
to the same set of potential clients. Lastly, there is affiliate
marketing, which revolves around advertising others' products
and services and receiving commissions.
While all three models are valid, and can result in enough
income to substantially augment or even replace one's current
income, the activities involved in successfully implementing
any of these models vary to a great degree.
The sale of physical products via network marketing or MLM,
(multi-level marketing) has gained popularity over the last
few years, especially with the advent of the Internet making
the ordering of these products quick and easy. The problem
that most people face when trying to start this type of business
is that it relies heavily on traditional sales techniques
- real-time, personal contact with prospects for both the
product and the opportunity.
Most people are uncomfortable with trying to sell to people
they know, and even more uncomfortable pitching their wares
to strangers. Industry studies show that a little less than
3% of these businesses result in a viable income.
However, MLM has been around for a long time, and many large,
well-known corporations are starting to see the benefits of
using this model. What's the advantage for them? Even at the
low success rates, these companies realize large revenues
at high margins from the sale of their products to their distributors,
because most require a minimum order rate to be eligible for
the discounts that allow the business owner to make a profit.
Many of these companies even make a profit from the start-up
and annual distributor fees charged - especially when less
than 3% are actually using the services provided on a regular
basis. The other 97% end up with inventory that will never
be resold, which is either consumed by the business owner
or discarded.
The pure network marketing model is similar to the sale of
products in that it involves selling to the same set of prospects…friends,
family, etc. The difference is that there is no physical product
involved, usually a service that gives the consumer/client
access to information that they desire in order to achieve
certain goals. This business model is one that basically feeds
on itself, and is very popular with people that are interested
in self-help and motivational materials.
Affiliate marketing is simply signing up with companies (for
free) to direct internet traffic to a sales website. When
a sale occurs, the person responsible for pointing the purchaser
to the site receives a commission. Internet technology makes
it easy to track where the buyer came from and pay the originating
source the proper fee for the referral.
This business model is gaining ground in the home-based-business
arena, because it doesn't require the entrepreneur to embrace
and practice the traditional sales techniques that make most
people uncomfortable. It does, however, oblige the business
owner to know (or learn) effective internet advertising methods.
The big advantage in this business model for the entrepreneur
is that it requires very little capital expenditure to start
and maintain. The primary investment for this type of business
is time and effort.
When a potential home-based-business owner is evaluating
the various opportunities available, he or she should be realistic
about what they are willing to do in order to achieve success.
All three business models discussed here are legitimate ways
to make money, and all will require getting out of one's comfort
zone to some degree. The decision about which business model
is best depends entirely on the individual.
The key is to make sure that all of the questions are answered
by someone you trust before investing…and of course,
to have faith in your ability to succeed!
This article is free for republishing
Source: http://www.articlealley.com/article_172728_80.html
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