With the ever escalating cost of living expenses everyone is looking for a way to increase their income and cash flow. Usually they get a second job, but than they realize that government now wants more taxes, so they get a third job to pay the taxes on the second job. Ummm sounds familiar to any of you?

I realize this problem is very common in the Canadian society, however it is even more true of the younger generation.After doing couple months of thorough research and studies I have come to some conclusions. First of all I recommend everyone reading up on some personal finance books, Robert Kiyosaki would be a good place to start.

It was during my readings on Robert Kiyosaki that I came across one of his highly recommended businesses. Network Marketing, now before you pre-judge (like I used to do) take a few minutes and continue reading.

I understand the Network Marketing companies have a bad name (so do insurance agents and real estate agents oh and lawyers and the list goes on), however that is largely due to couple of things.

  1. Unrealistic goals 
    1. Mainly an unrealistic goal planted in the head of associates, they expect to become a millionaire and when they don’t they drop out and feel that they have failed.
  2. Made look way to simple
    1. The other reason is that they make it seem a little too simple, although network marketing is not complicated, some companies have made it look unrealistically simple. There is some work you need to do to be successful.
  3. Products/services
    1. Sometimes the products or services offered through network marketing companies is not always what is needed or wanted in the market. No matter how strong you market the product if it’s not needed or too much competition it will not be successful.

Those three reasons combined generally cause the failure of network marketing associates. However this doesn’t mean that network marketing doesn’t work. In fact it is one of the best marketing strategies out there and it has many benefits to the associates.

Benefits of Network Marketing

  1. Obvious potential increase in income (I will get into this more detail later on).
  2. Tax deductions! And this can be huge depending on the type of business and your income for a full analysis of how it works visit my previous post, Avoid taxes (save 20-40%).
  3. Free training, usually these companies provide great free training that you can use in other areas of your career as well.
  4. Power of leverage (I’ll get into that in more detail).
  5. Access to great services or products you can take advantage of.

Although there are several other great benefits these five are more than enough to consider a Network Marketing.

Problems with Network Marketing

  1. Company not always reliable
  2. Service don’t work
  3. Expensive

There are other problems that can potentially exist with Network Marketing, however they usually differ from company to company.

Let’s consider an example. Say there is company X that sales dry cleaning services for $50/month and to become an associate the fee is $500. At the time you decide to become an associate your tax deductions begin, so the $500 is tax deductible plus most of your regular expense (more info). You get paid $45 for ever plan you sale for the first 5 and than increases to $200 and you can build a team and leverage your time, everyone on your team (say 4 people) that sales the product you get $45 as well. If you and your team sale 5 products all year you make about $225 although that is not a lot of money remember it’s only your first year. When you add about $2000-$4000 in tax deductions it looks much better. The next year some of you have recruited more people and now you have about 15 people on your team and now you all make 2 sales each the whole year this adds up to $1350 (add the tax deductions and looks much better) not bad for about 5-10 hours per week and this can continue. Say each person on your team has recruited only 1 person that year now you have 30 members and everyone only makes 2 sales the whole year how much did we make? $2700 (again add the tax deductions)…. I think you get the point.

It’s like running any type of business you are not really in profit mode for the first year maybe not the second year either but eventually you will start seeing the income, the idea here is to stick and stay and you’ll get your pay.

Oh it’s a pyramid scheme

That’s how the general response is, but individuals say that due to lack of knowledge. What is a pyramid scheme? First of all Pyramid schemes are ILLEGAL and second of all if the company is a reputable company and has a long history you know it can not be a pyramid scheme because….THEY ARE ILLEGAL!

I took several months to research this concept and try to fully understand it, I further looked into Network Marketing companies to find out a potential company that would fit well. And I did find it, I will discuss the company in a another article.

However I strongly urge you to keep an open mind and understand network marketing concept. I also recommend viewing a video of Robert Kiyosaki on the concept of Network Marketing (Robert Kiyosaki On Network Marketing) (“The Business School” excerpt) and Donald Trumps recommendation on Network Marketing.

If you fully understand the concept of leverage it is one of the most amazing methods of creating wealth, look at McDonalds, Tim Hortons, Wal-Mart what do they all have in common? They all leverage through thousands of distributors.

Rockefeller said “I would rather earn 1% out of 100 people efforts than 100% of mine.”

I hope this post has encouraged you to keep an open mind and investigate the concept of Network Marketing and the tremendous impact it can have on you. In another post I will discuss my preferred network marketing company and the services it provides.

People don’t plan to fail…..they fail to plan!


Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.