Every business depends on networking between employees and other stakeholders in the company to accomplish the goals of management. To be effective in a small business, you have to take a look at the way a corporation builds its network of clients and recruits their employees. Effective networking practices assure the highest profitability for a business.
This is why human resources is such a high priority in the corporate world. A corporation draws its strength from its client base and the reputation it builds by recruiting the best and brightest employees. If you are a small business owner, you have probably thought of expanding your business. The way to increase sales is done through either leveraging capital or human resources.
To leverage capital, you would borrow money and invest it in your means of production. This might be better equipment, more employees or anything that would increase your productivity. Most small businesses choose to leverage human resources. A good example of this is an affiliate program.
The idea behind running an affiliate program is to offer other companies or individuals a monetary incentive for acting as agents to sell your products to the public. Imagine having a small army of affiliates selling your products. The best part is that you only pay them a commission after they sell your product. You have no paid salespeople at all. Basically, you just receive the orders, process the payments and ship the goods to the customer. This is a good example of effective networking because you have a built-in loyal workforce once you have hired your affiliates.
The benefits to the merchant are increased sales, market share and product visibility. Another popular form of networking is direct sponsorship in a Multi-Level Marketing organization. In this type of marketing plan, an individual sponsors many other people into an organization. Then he trains this group of people on how to sponsor more people into the organization themselves. This method results in a very large base of marketers working to sell products for the company. The original sponsor gets paid for his efforts by the volume of sales his team produces.
The profit trickles down through the organization based on the number of people each group leader has sponsored and the sales volume achieved by each member of the group for the sales period. Affiliate programs and MLM are not for every company. There are costs of maintenance, and a payroll to meet every month. The biggest advantage of using these programs is that a non-employee of the company makes every sale.
This way the company does not have to pay the worker’s benefits and Social Security taxes. Each affiliate or network marketer is an independent taxable entity. They are not employees of the company from a legal standpoint. Business owners must decide for themselves the best way to expand their business when it comes time to do so. It all comes down to a cost per sale analysis. Finding the best way to capitalize your business always includes market research and weighing the benefits of your available options.
If you decide to use one of the methods outlined above, it is best to discuss this move with a qualified marketing specialist. Also hire a qualified accountant for taxes and payroll purposes. You may want to talk to other business people who have successfully made this change for more information.
About the Author
Kevin Sinclair is the publisher and editor of Be Successful News, a site that provides information and articles on how to succeed in your own home or small business.