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The Importance of Leverage in Network Marketing.

A Little Thing Called Leverage.

From the desk of Michael A Fowler, M.B.A.

Leverage Ė What is it and Where do you get it from?

Youíve probably heard this term before.  In fact, leverage is what makes the network marketing system work. All businesses have this model, or try and obtain it by employing others to multiply and duplicate their efforts 

Imagine this:

You work 40 hours a week for a set wage.  Thatís what is called exchanging time for money.  You earn $5 an hour for 40 hours, you get paid $200.  Now, to make more money, you work more hours.  Good plan?  Not really... Why?  Because you can only physically work for so many hours a day which means that you are limited to how much you can earn.  Not only that but your standard of living and your health start to suffer if you work longer hours. 

What you really need is leverage.

"Network Marketing uses the implementation of the leverage model to help you make money by getting others to work with you and give you a share of what they earn, otherwise known as a Ďresidual income.í  Some people refer to this as a pyramid structure but all businesses are pyramids.  They all have a top figure, the Chairman or CEO.  Then thereís the Vice-Chairman, Senior Directors, Directors, Managers, Assistant Managers, Supervisors and finally the workforce.  Each of these categories has a place within the leverage structure.  The CEO leverages off the entire efforts of everyone below him.  The same applies to each category in turn, except for the common workforce because they are at the bottom of the pyramid structure."

You, as a network marketer, must introduce leverage into your business.  Itís your business, so you are the CEO, the Vice-Chairman and so on... But you are also the workforce.  By persuading others to join you because your business has what others want, you start to leverage upon the work of others and create a residual income.  Now you are still on $5 an hour but you have several people in your organisation, all of whom are working 40 hours also.  Letís say that those under you are earning $4 an hour because the other $1 is spread amongst the hierarchy in the organisation.  You now have a situation where 7 people are working 40 hours and contributing $40 each into the residual income pool.  Therefore there is an amount of $280 available for sharing.  As you are the CEO, it would be reasonable for you to get 50% of that pool of residual income.  The rest would be distributed amongst the seniority of the downline structure.  So now you have your $200 plus another $140 by way of leverage, giving you $340.  Did you work more than your normal 40 hours?  No, you did not.  You leveraged your hours worked by getting others involved in the network marketing process.

As time progresses and building a business becomes easier, your residual income increases.  The more people you have in your organisation, the more leverage you have and the more residual income you earn.  Thatís why choosing a business that suits the needs of many is so important.  To make money from a home-based business takes time and dedication.  Building a business that lasts, is also very important.  The Better Business Bureau maintains a register of good businesses.  Check out my network marketing articles for more information about choosing a business and why my personal choice was Automatic Builder and Nutronix.

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