David Wood, Numis Network’s newest Five Star, shared recently his perspective of what is needed to create wealth in mlm/network marketing. He explained that the nature of network marketing is exponential growth, although it doesn’t happen to everyone. It only happens to those who do the right things. He has passionate belief that the network marketing industry is the most awesome business model in existence. His belief is based on “fact” of the people he has personally known.

What things need to be in place in order to truly make it happen, e.g., earning in excess of $1 million annually.  Network marketing is currently a $114 billion industry.  There are basically four types of companies in existence today:

1. The first type is scams.  You don’t have to sell, or do anything.  Just send in $3,000 and it will take care of everything.
2. The second is party plans.  Examples are skin care, make-up, knives, cookware, and candles.  Where you invite everyone over for a party.  These will not produce leveraged, residual income, because professional business builders will not get involved with these companies.
3. The third type is the very large companies, such as Amway, Nuskin and others doing $100 millions in sales.  The difficulty with these companies is that they are beyond the rapid growth stage, e.g., Amway has been doing $9 billion in sales for over 10 years.
4. The fourth type of company is the “holy grail.”  This is a company in the right place at the right time, and provides the possibility of a life-changing breakthrough where time and money are no longer an issue.  An example is one of David’s friends who started in Amway in 1981, when they had reached $1 billion in sales.  At the time, no one thought that there was much growth left; however within 10 years Amway grew to $9 billion.

What are the options for finding the right company?

• Nutritional companies, although proven to create residual income, make up 4800 out of 5000 currently in network marketing, which makes this an extremely competitive field and difficult to create wealth.  Many leading nutritional companies have flat-lined in the last couple years due to the current recession.
• Technology companies are also proven to create great wealth, although pricing pressure has made it difficult to duplicate the success of such notables as Paul Orbison.  He was earning almost $2 million monthly in Excel in the 1990’s, until competitive factors forced Excel out of business.  Current technology companies face the same issue.

What are the key elements needed in a “holy grail” company?  The most important facet is rock-solid leadership.  Secondly, financial backing is crucial to new companies because of regulations and operating costs.  The third thing that is required is a product line without competition in it’s market niche.  Finally, a break-through company will have a compensation plan that innovates new ways of paying distributors.  For further information, check out David Wood’s blog.