Network Marketing Businesses
Understanding Time Compounding
Written by Chukwuma Asala for Gaebler Ventures
What is time compounding and how does it work in network marketing? Read on for how you can use this strategy to your advantage.
The network marketing industry is a multi-billion dollar industry.
This year the different companies that use a network marketing business strategy to advertise and sell their products accounted for up to $30 Billion of retail sales this past year in the United States. There is no question that the industry is growing and more and more people are becoming distributors in corporations like Amway Global, Avon, Mary Kay, etc.
But the fact that the industry as a whole is booming is not enough to warrant the steady influx of people into these businesses. What makes this strategy for making money so appealing to the average person with no sales or business background? The answer is in the business model.
Network marketing is incorporates a concept in business called time leverage or compounding. This gives the distributor or sales representative the ability to not just get paid on his or her own efforts but also on the efforts of the people they bring into their organization as well. The Amway Corporation uses a Time Compounding strategy referred to as Private Franchising. Each distributor has the ability to make money off of as many distributors as they are willing to help succeed in business. The McDonalds Corporation is one of the first companies to use this concept back in the 1960s. Ray Krock instituted a contract when he took over the franchising rights from the McDonalds brothers where the person who owned the franchise would get to keep 90% of his total profits but would have to give the remaining 10% back to the headquarters.
This system of distribution works so well because it encourages and facilitates unlimited competition and income potential. By giving up some of the money that the corporation could be making it inevitably get more of that time back to go help other people succeed in business as well. If we take a look at the McDonalds Corporation again there are close to 40,000 franchises today and the corporation gets back 40,000 different 10% checks from each franchise every month. Ray Krock by the way died over a decade ago and his company continues to still turn amazing profits. This is what time leverage gives you: the ability to create wealth without spending time. It is no wonder why network marketing is becoming one of the hottest trends on the internet right now in the world of e-commerce.
Chukwuma Asala is an international student from Nigeria who is studying to earn an MBA from the State University of New York in Albany. He has analyzed more than 20 industry case studies throughout his education thus far, and hopes to bring some of his business knowledge to Gaebler.com.
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