Network Marketing Versus Service Home Businesses

There are several types of home based businesses you can build. Sometimes "Home Based Business" and "Network Marketing" are considered one in the same, but there are many other variations of a home business that do not involve network marketing, recruiting, or even products. One such business is a Service Business. Let's compare that type of business to a Network Marketing business.

Now in many ways Network Marketing has certain aspects of a service business. However, by service business, I am referring to someone who performs some sort of service usually for billable time or perhaps for a flat fee. An example of this would be someone who does book-keeping services from home as her home based business. We'll call her 'Jane'.

The biggest drawback to a service based business like this is billable hours. Our Jane must spend a certain number of billable hours on each client usually every month. Let's say Jane spends on the average of 5 hours per month per client. She has about 30 clients and bills them on an hourly basis at rates that vary according to the work she is asked to perform. Now let's do the math on Jane's clients. If she spends about 5 hours per client and she has 30 clients, that means she's spending 150 hours per month on direct client work. Now say she's bills on the average of $75 per hour. More math: She's taking in about $11,250 per month.

You might say our hypothetical Jane is doing pretty well, but what's wrong with this picture? While Jane is a making a decent living from her book-keeping service, she has some limitations. Jane's 150 hours per week pretty much belong to her clients. She doesn't have much time to do other things like market her business, network with other business people, and do business planning.

But that hardly matters when you think of it. There's not much room for taking on more clients at 150 hours per month anyway. And even if there is, at some point she would reach her limit; a point where she can't take on any more clients. Of course she could grow by moving out of her house, into office space and starting a book-keeping service where she takes on help.

In a Network Marketing business, neither of these limitations exist. Network marketing businesses are generally structured to let you do work (e.g. sponsor and train a new rep) and get paid for that work well out into the future (residual income). Residual income is the best kind of income because you're getting paid for work already done!

Oh and let's not forget about vacations. How is poor Jane going to ever take a vacation? If she skips a month, she'll have 300 hours of work waiting for her the following month to do! So if you are planning a service based home business, it may provide a living, but at the same time it may create limiting circumstances. While there are limits in Network Marketing businesses, you'll be a long time reaching them.