Homebased business success tip #3

Homebased business success tip #3, be sure to find a business with the right compensation plan. Now you may ask what does that mean? Well different pay plans are right for different people. I will explain the basics and then I will give you my recommendation on what pay plan I prefer and why. There are two types of pay plans, there are one time payments often termed as bonus, signing bonus, customer acquisition bonuses, straight commission, ect. These are normally a percent of a sale or sign up fee. The next type of pay plan are known as residual income plans; usually you will earn a continued commission from a customers spending. These plans can also be broken down into MLM or multi tiered pay plans or non tired pay plans. MLM pay plan just means that as you bring people into your business you will earn a % or flat fee depending on the work they do. Non-tiered pay plans or non MLM pay plans just mean that you only get paid from your own efforts and not the efforts of others that you bring into the business.

When working what is known as a flat fee pay plan or a customer acquisition bonus plan, you basically need to ask yourself. Can I make enough sales that the amount I am paid will cover all of my expenses including all business expenses with enough left over that I will be able to afford the life that I want. I make this statement because I have often seen people who are promoting business opportunities or services where they only earn a $20 or $30 per sale or less! Unless you are a super sales star or you some how have the market cornered that is not a feasible compensation plan for someone looking to earn a full time income. These are only feasible if you are paid enough that you don't have to make a tremendous volume of sales to earn of living. For example, in my current home business, I have clients who earn up to $9,705 per sale. Needless, to say the average person would not have to make many sales to get by on that kind of income. The compensation does not have to be that high to earn a living, you just have to know that with your current resources can you move enough product or service to earn enough money to achieve your goals.

The next compensation plan to consider would be one that offers a residual income. The best residual incomes are ones that pay you a percentage over and over for a customer's subscription payment. In other words you can get paid annually or monthly for as long as a customer remains a customer. This is great as long as customers have some degree of loyalty to the product/service. It's worthless if the customer only remains a customer for a couple of months; that would completely defeat the idea of a residual income. Some companies offer a residual income on a consumable basis. In other words for example with Mary Kay, if you develop a loyal customer they will come to you each time they need new make up. This type of residual income is fine as long as you can develop some customer loyalty; however, it's not as consistent as a residual from a subscription based product. By the way Mary Kay, has not trouble with customer loyalty.

One thing you need to watch for when choosing a company with a residual compensation plan, the smaller your payments are on a per product basis the more customers you will need, to create a full time income. Also, the smaller the payments the more loyal the customers should be to the company or product. You need to be sure you are able to bring more customers in quicker than you lose them; otherwise your income will eventually plateau or worse decrease!

When choosing between a MLM or network marketing compensation plan versus a more tradition direct sales compensation plan it really comes down to ones personal opinion. Many people hate network marketing and MLM, however, it is a legal and ethical business model. I for one have not succeeded with that type of business model yet. But it does not mean that you can't. The only thing I would caution you against, be sure when choosing a MLM or network marketing compensation plan, that you could earn a living by your sole efforts and not the efforts of your "team". I say this because many network marketing companies like to explain their compensation plan with a theory similier to this "If you bring in two people and those two people duplicate your efforts, then those four people duplicate their efforts.. and so on" These companies try to show a compound effect. This can look very enticing on paper. However, it has been my experience that I am usually one the handful of people working hard on my team; at least that was the case with my MLM efforts. It is unrealistic to assume others are as serious as I am about my business. However, if you work with a MLM company be sure that your personal efforts can sustain you, as time goes by you will begin to develop a team of hard working individuals, but don't depend on that early in your business.

My personal recommendation would be any compensation plan that you are comfortable with. Companies always scream,"We have the best compensation plan, better than anyone else's". That's ignorance because it's always a matter of personal opinion. As long as you work with a compensation plan that you feel is fair, and that you are confident in, then you can succeed with it. My personal preferences are compensation plans on high ticket items that offer at least a 50% commission or better. If it is a flat fee product or service than I expect to it to be a higher ticket item. On a flat fee product such as with my current compensation plan I don't expect to earn no less than $1,000 on each sale. Although, I love residual income earning that kind of flat rate payment, I can use that money to create my own residual income through real estate and other investments. I do not have to depend on a company to pay me each month. I hope you find this information useful when looking for a homebased business that is right for you.

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