Studying The Plan
Planning to join a network marketing business opportunity?
Then you should look for a Compensation Plan which is reasonable and fair for distributors working either fulltime or part-time and with reserved leadership bonuses for people who have the talent, energy and time in building huge and prolific teams. Remember that a compensation which is one-sided would undoubtedly be not working for your own financial interest.
I always believe that for a company to be considered as successful, it must live everyday with a “distributor first” policy and mindset. And this philosophy should manifest itself more in the way the business plan is structured.
With all the confusing figures usually presented during business opportunity meetings, you must realize that it actually takes very simple mathematics to determine how many sales or downlines needed to be on profit. Sadly, most people are blinded by hyped excitement and they failed to give some consideration on this aspect. As a consequence, most are misled by the imaginary potential income charts that are published intentionally by the company with the aim of enticing people to shell out their hard-earned money.
My main point here is not that you should never join any MLM company but that you must read the obvious between the lines and the blueprint in order to be sure that you will be fairly paid for your effort. A lot of people have the tendency to just skip this important part all because it may look like a tax code and most hates going into their taxes.
To help you better understand the total picture, here are the four basic types of Network Marketing plans:
1. The Break Away Plan
This is considered to be the grandfather of all plans which drove the growth of Network Marketing during its earliest years. As the oldest and the most traditional business plan, it pays the distributors to build and be paid on a limitless number of frontline people. The break away term refers to the fact that by the time frontline downlines achieve a definite programmed volume they can already “break away” from their sponsoring upline and start managing their own sales organization. In this type of plan the company will pay its leaders based on the volume generated by the frontline as well as some levels with their break away groups. The thing is that in this business plan if you never work your way it would be virtually impossible to continue receiving good checks. That’s why a distributor has to continually recruit new people in order to receive attractive compensation.
2. The Unilevel Plan
In this plan, distributors are only paid on a certain number of levels as established by the company. What’s good here is the absence of break away groups. As the result, the bigger your frontline the larger is the total group size. Naturally, the lower levels would be larger compared to the upper ones. This is also true here: no recruit no check.
3. The Matrix Plan
Here you are basically limited to the number of recruits you are allowed to place on your frontline. For example, in a 3 by 5 matrix you are only allowed to have 3 on your front line then 9 on the next level, 27 on the third line and so on. If you have to compare this to the two other plans, matrix plan puts a limit of your success to a certain level. However, a lot of people find this plan appealing because recruits are enticed that they are only required to get 3 and are usually promised some spill-over from a heavy hitting upline. The bad side-effect is that everyone joins expecting for spillover and fails to exert more personal effort. You can expect that the result would be a big failure. Though limited in some aspects, a matrix plan could still work if distributors will depend on the spill-over and must instead depend on their personal efforts in getting people and sales volume.
4. The Binary Plan
This plan is the most popular nowadays. Binary can be considered as a exceptional case of the matrix where you are only to get two on your frontline – that’s why it is called binary. The only problem with this plan is that most require you to have a delicate balance on both sides of your downlines before the check can be signed in your name. In fact, some companies are banking on this trick so that they can keep what you earned for as long as possible and in many cases forever. Some fraudulent companies choose by initially opening only one side of the binary—termed a ‘powerleg’—as there is virtually no possibility of you getting the check until the other side is launched. Once the other side is finally opened, there is a strong possibility that numerous people have already said goodbye to the company leaving behind their money. You are ceaselessly left, not only with sponsoring new people, but doing the balancing act on both sides of your team. On its pure form, it would be better to beware of such plans! There are now some variations of these plans like the straight line plan where you are paid on all people coming after you regardless of who sponsor them. Unfortunately, based on figures most companies that use these plans never survive within two years of operation. It seems that most people are joining and just standing by wishing for the checks to rain on them. In other words, there is no strong incentive to promote and work the plan.
Important Warning: You must always be particularly wary whenever you are presented of a compensation plan which is so proud of telling the world that they intend to pay more than 60% of each sale they got. This generally means that the product marketed is priced beyond affordable, qualification quotas or volumes are set to be beyond the reach of ordinary distributors or the structure are in reality robbing you of your investment and effort. If the company utilizes the breakaway plan you may find out later that your downlines have already gone with the wind as you are about to achieve the big numbers. If you want to find out if a company intends to be misleading, you can easily sense it examining the compensation plan.
Study well before letting go of your money!