How To Generate Immediate Cash Flow For Your Network Marketing Business
Posted by Reyn | February 27, 2009
While many people suggest you to always focus on long term goals, I say you need to focus on the short term goals first - getting positive cash flow right from the beginning.
Why you ask? To survive in this business, that’s why.
Let’s be brutally honest with ourselves, you’ll quit if you keep on getting negative cash flow right? It’s okay, no one would call a money pit a business after all.
But the problem is, you can’t avoid having negative cash flow in the beginning because of your monthly auto-ship cost. And I haven’t even mention about the additional marketing costs.
Considering that much costs involve, many people took around 3 months to break even…and maybe more.
Let’s face it. On a monthly basis, if you get 100 leads, how many people can you recruit? Probably 2 or 3. Yup, if you’re brand new, 2%-3% conversion rate is quite good already.
Assuming that your direct downline also active, after 3 months, you probably get a total of 12 downline. Now, let’s estimate that on average, each downline earn you $5 per month = $60/month. This barely covers for your monthly auto-ship. Don’t forget that you also have advertising budget to cover.
Now this is where many upline suggest you to look at the other end of the rainbow by saying that after 6 months, you’ll be making profits. Yes you might…and if you’re cool with it, it’s okay.
But are you really okay with the idea of keep losing money for 6 months straight?
I don’t know about you, but many people sure aren’t. 97% failing rate is not a joke. Most people quit after losing money for 2 months…not to mention 6 months.
That’s why I said that if you just starting out, you need to focus on the short term goal first: getting positive cash flow. If you at least break even from the beginning, I’m sure you’re smart enough to decide to continue. Am I right?
This where the concept called “Funded Proposal” comes into play. The goal of this concept is to make money upfront to cover for your auto-ship and advertising expenses while still building the residual income at the back end.
So here’s how it work…
- Promote Generic Information Product about MLM at the Front End
The truth is, people are more comfortable paying for information that teach them how to make money rather than joining an opportunity which they have to put the money where their mouth is. It’s just the way people are.
So the smarter approach is to first promote a generic info product that teach them how to succeed with MLM. Now this will surely convert better and you make affiliate commission for each sale. This upfront commission will then cover for your expenses, resulting in positive cash flow right from the beginning.
- Pitch About Your Opportunity at the Back End
Generating upfront commission is not the only advantage of Funded Proposal. After they have purchased your affiliate product, they are surely more eager to join a MLM business right away. This is where you come in. By this time, your prospects are also already familiar with you and a substantial relationship has been built. If they like the product you’re recommending, trust has been established and they will likely to listen to what you have to offer.
Can you see how smart this strategy is? It’s not just about making money fast, but it also converts better.
Go back to the first case, assuming that out of 100 leads only 3 people joining, it surely ineffective to let the other 97 just go like that. After all, you’ve spent money to gather them.
While only promoting your main opportunity works as well, it surely slower and more ‘expensive’. If you can generate positive cash flow right now and also later on, why don’t you?
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Posted in How Network Marketing Works |
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One Response to “How To Generate Immediate Cash Flow For Your Network Marketing Business”
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That’s true - breaking even should be people’s first goal. If you’re constantly losing money it’s easy to get discouraged, and that means wasted investment (time and money lost).
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