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The Three Primary Home Business Models

The Three Primary Home Business Models

For guys like me who love movies, walking into a video store “unprepared” to rent a DVD can be a daunting experience. In most video rental establishments you stroll in and are immediately assaulted by all the “new releases”, many of which you wanted to see in the film’s theatrical release but never got around to for one reason or another. Shortly after absorbing this and trying to decide if you want to rent one of these, you’re distracted by the TV playing a family film your kids have been clamoring for. But you really wanted to see a “grown-up movie” (and we’re not talking about that “Adult” section in the corner behind those curtains) just something that’s doesn’t have talking (or singing) animals. But then there’s that action movie you’ve wanted to see for years, but if you bring that one home, you darn well better bring home a “chick flick” for the wife. But then there’s no time for a double-feature… You stand there shaking your head suffering from complete “analysis paralysis”. Sound familiar? For me, the solution to all this video angst was Netflix. Now what does Netflix and all this movie stuff have to do with the three primary home-business models? Allow me to explain…

Out of curiosity, or maybe even due to serious financial motivations, perhaps you’ve explored at one time what I call “The Home-Based Business Arena”. To do so, you probably visited your favorite search engine, entered the search term “home-business” and voila … the search engine proudly told you that in 0.16 seconds they found over 262,000,000 websites that have something to do with “home business”. After picking yourself up off the floor due to the shock of finding so many websites, you click on a few links but, like me in the preceding paragraph at the video store, because you really don’t know what you’re looking for, these websites begin to intimidate more than inform. Thus suffering from a similar case of “analysis paralysis” you click away from them and ask yourself: “What was I thinking?”

I can tell you what you were thinking: You want your piece of “The American Dream” and you want to make it from home! You want to have that money continue to flow for years and years from the work you do today. And you want this path towards financial freedom to be an easy journey, not as complex as the last two Pirates of the Caribbean movies. Of course you also want your bank account balance to GROW, not shrink. And finally, you want to be excited and have fun with what you do! Am I right? Wasn’t that what you were thinking?

As I mentioned previously, I was able to solve my video renting dilemma by subscribing to a service called Netflix. This Internet-based service allows me to visit their website and organize what I want to see courtesy of their 21 different genres, and then have them send them to me via the US Mail in my order of preference.

Luckily for you, “The Home-Based Business Arena” has only three major categories. So let me do for your entrepreneurial interests what Netflix did for my cinema interests and help you discover what industry best suits what you are really looking for out there so that you can prioritize them accordingly:

  • Affiliate Marketing– This is one of the simplest ways to make money because there are thousands and thousands of affiliate programs that you can sign-up with and begin making money immediately. Best of all, most of them are FREE! As an affiliate marketer, you promote a particular company’s product or service, and after you’ve generated a customer (made a sale), you’re paid a commission. Here’s a quick example: Ever notice how many websites promote the many products from Amazon.com? That’s because most of these websites are actually Amazon affiliates. That means when someone clicks on one of Amazon.com’s links on a website and buys a product from Amazon; the website owner automatically receives a commission directly from Amazon.com. As I’ve already stated, there are thousands of great affiliate programs you can join and earn a resale commission when one of your customers buys their product. And because most affiliate programs are FREE to join, it’s a great way to add additional income streams to any business. In most cases commissions can range from 25% – 50% or more, especially when selling Internet products like e-books or other “information products” like CDs and DVDs. A lot of Internet marketers have become millionaires without ever having a product of their own. They did it simply by promoting affiliate programs!
  • Traditional MLM & Network Marketing– Traditional MLM & Network Marketing is a business model that started over 60 years ago and is very much alive today. Many of today’s top nutritional and service-oriented products are sold by independent distributors that earn a commission every time they sell a product. The fundamental difference between Network Marketing and Affiliate Marketing is that you can recruit other independent distributors (also known as a downline or team) and make money courtesy of their sales — and their recruit’s sales. This model is very similar to the real estate industry where brokers can earn override commissions on their agents. Another advantage with Network Marketing compared to Affiliate Marketing is that you can be paid on multiple levels instead of just one. Many Network Marketing companies use a monthly auto-ship system, thus generating automatic sales each month, which in turn produces residual income that continues to come in for months or years, for the work you only do once.
  • Home-Based Direct Sales– In network marketing, the main focus is on building an organization of distributors buying a little bit of product (or subscribing to a service) each month.The logic behind this is simple; the majority of people can afford to buy $50 – $150 per month of products so as to generate a potentially large volume. But there are other options that exist in the home business industry that tend to focus on a big, one-time, up-front commission… Welcome to the World of Home-Based Direct Sales! There are many products and services within the Home-Based Direct Sales industry, however the three most popular by far includes various travel programs, wealth education and marketing products/seminars. But since large commissions can’t be generated out of a vacuum you should be aware that many of them have a hefty price ranging from $1,000 – $15,000! However, on the flip side, the commissions vary from 25% – 75% thus allowing someone to generate cash-flow quickly to help recoup ones advertising and sundry other operating costs. But be careful… A large majority of Direct Sales compensation plans use a “1-Up” or “2-Up” system whereby you “pass up” the commission on your first one or two training sales to your sponsor. Luckily though, the only “7-Up” I know of is a soft drink.

Now that I’ve provided you a way to categorize the large majority of home-based businesses out there, don’t think for a minute that your work is done. In fact, to steal from an old Carpenter’s song “…We’ve only just begun…” Your next all-important step is to do your research into whatever opportunity has caught your fancy. It’s imperative that you gather as much information as you can so that you can honestly evaluate the long term profitability of ANY legitimate home business opportunity. Skipping this could be a HUGE financial misstep because there’s no escaping this sobering fact: Over 97% of the people who join any home-based business fail. During this frustrating journey, the overwhelming majority of them spend much more than they ever make, so be sure to do everything you can to prevent becoming yet another statistic.

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