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To understand the network marketing industry, you first have to understand the five different types of companies that are in the industry. These are not the type of products or opportunities; these are the "categories" of companies that are under the umbrella of network marketing.

When you understand the five different categories you will understand the type of company you should be searching for to create that extra income you need to make ends meet. It can also help you find the type of company that could make you substantially rich and retire early.

Category 1 - "Old Guys".

These are the companies that have been around for decades and decades and have proven the test of time. Through good management (and some trial and error), proper funding, proper product research, industry innovation, timing and a few other essential items that had to be in place and developed for a company to reach the top ranks.

These are the companies that hit momentum at the right time in the company's growth and stayed there for enough time. Because of this, they reached the billion-dollar mark and very few companies have hit the billion-dollar mark.

Although these are solid companies, the problem with getting involved with a company like that now is that the real chance of creating wealth are long gone. The reason for this is because the company has reached a level that will not allow it to reach exponential growth again. When a company reaches exponential growth, true wealth and legacy positions can be made. No network marketing company has ever reached exponential growth more than once.

Category 2 - "The Plans"

There are many companies which fall into this category; many party plans, phone and utility services, legal and insurance plans, discount cards and services, air and water purifiers, and other plans that are really for salespeople.

When you break down 'retailing products' you end up being a sales person. This is great for those who are the sales person types. This type of person does not have a fear of rejection and has, or can develop, selling skills. However, most of the population is not the sales-person type. They don't want to sell and do not like rejection.

As a result, many people do not do well with the "plan" companies. They may join the company after a positive product experience, but soon are dropping out because they end up doing with they don't like to do..and that is selling.

A large income can be achieved for the salesperson, but it is based on constantly replacing those who drop out because they are not salespeople. This does not create duplication, and therefore will not create a passive income.

Category 3 - "The Schemes"

This category is straight forward, but not so straight forward to those who are susceptible in thinking of making a quick dollar with promises which seem to good to be true.

These companies do sometimes hit exponential growth. However, almost in the same breath of growth do the hit the exceptional decline. This comes when the government shows up at their door and shuts them down. We are talking about the scams and schemes and these are illegal. Typically, there is no real product, only payment for recruiting others into the "idea" of making money.

People get hurt with these deals and most of the time, with just a little research (and common sense) people will see right through these scams. Most of the time, the owners are legally charged.

Category 4 - "Slow Growth"

These are the companies that have been around for an extended period of time, but never hit exponential growth. They grow slowly and only increase overall sales when they open a new country, market or product.

Companies that maintain slow growth do so for a number of reasons; products that do not have mass appeal, poor management or possibly a compensation plan that does not pay well or has "take-a-ways".

Typically, a company that has potential to hit exponential growth will do so in its early years. If a company has been around for a decade and has not reached exponential growth, it probably will not. Another sign is talk from the management team that exponential growth is just a short time away.

Again, you can create a good income in a slow growth company, however it will not be an amount that will create substantial wealth.

Category 5 - "The Holy Grail"

This is where true wealth is created in Network Marketing. This is a brand new company that has what it takes to hit that exponential growth curve and become the next billion-dollar success story. This is where legacy incomes are created.

So how does a category 5 company have a chance to become one of the "old guys". There are clues, we can look at the category 1 companies, the old guys, and compare what they had in place for them to reach the billion-dollar mark.

Here is what has to be in place to become the next billion-dollar company.

1. The right product.

Finding the right product at the right time for the population. An example of the right product is a product that can be consumed on a daily basis, has mass appeal and is easy for population to understand. Also, history has shown that one-product or one-purchase product companies don't last the long term.

2. Proper Funding

The reason many startup companies fail is due to the lack of money. All startup companies hit bumps in the road; in fact, established companies hit bumps in the road. You can have the best management team available, but without proper funding, the company can be easily lost.

3. Management

Using the same example as proper funding, you could have a huge capital budget, but without the management to spend it wisely, the company is surely lost. Management must understand the first phase of a company's grow, right through to managing the company in its 50th year. The management team must be diversified and experienced. This must not be their fist company, or the first time they try and open a new country or launch a new product.

4. Compensation Plan

The key part to a compensation plan is to promote the right behavior. If distributors are paid well for developing new distributors, then everyone succeeds! The compensation plan must be based on what is required for today's market, not the market 10 years ago.

5. Field Leadership

The most powerful automobile will not run without the gas to drive the engine. The gas in a company's growth is the field leadership. These are the people that become the reason for the growth of the company. These are the people that create legacy positions and the income that comes with it. These people do the recruiting and training and develop new leaders so new leaders can be developed. True field leadership develops leaders from new people, not raiding other top leaders in other companies.

So there we have it; the five categories of network marketing companies:

Category 1 - "The Old Guys"
Category 2 - "The Plans"
Category 3 - "The Schemes"
Category 4 - "Slow Growth
Category 5 - "The Holy Grail"

Review each one of these articles and determine which company meets the goals you are trying to achieve. Finding these articles can be done by searching for "The Five Categories of Network Marketing".

Do you find yourself in one of the first four companies wondering why you are not creating the commissions you are dreaming of? Maybe it's not your fault. Maybe it is about education and understanding about the industry.

Now that you find yourself educated, put that new education to work and find the company that is right for you!

Article by: Andy Geldhart