Economic Value and Metcalfe's Law of Networking!

Economic value is an important term with regards to your business and building wealth. But understanding this value will ultimately show you why you should establish a strong network of customers and potential customers for your business.

Here's how a standard business model works with no networking involved: As with any business, for each customer you serve, you receive so much in return. Your economic ratio is 1 : 1. If you serve two people, your economic power or value is 1 : 2. The first number in the ratio is you (your business) and the second number is your customers. If you have 100 customers, your ratio is 1 : 100.

Ultimately, there is a limit to how many customers you can find and serve. You are only one person and you can only serve so many people in a given day.

Now with networking or network marketing business models, Metcalfe's Law of Networking says that your economic power or value is the square of the number of entities (people, customers, or businesses) in your network. So, when you start your networking business, your economic power is 1 : 1 squared or 1. That's why in the beginning, you appear to not make a lot of money or have a lot of economic pull.

As your network grows, so does your economic value. Economic power is the potential amount of money you will receive from your network. If you have 2 people in your network, your economic power is 4 (1 : 2 squared equals 4). That means, instead of having just 2 potential customers in your network, you have 2 more because of the network each of your two has.

As your network grows some more, say you have 10 people in your personal network, your economic value now turns to 100 (1 : 10 squared equals 100.) So, instead of just having 10 people paying you money, you potentially have 100 people paying you from the people within your 10 personal referrals within your network because each of those 10 have the same 10 referral potential you have.

Metcalfe's Law of Networking is why network marketing is so popular in the world of business. People you refer know people and their people know people. This referral based marketing concept is used for the sales and distribution of products and services around the globe and if you are patient and consistent with your efforts, your network will grow and grow and grow until you have more people than you know what to do with. This is the power of economic value in business.

Economic value teaches you why you should start networking right away. Now, begin building your network by establishing a Keep In Touch Program.

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