Introduction To IP Addressing And Networking

NETWORKING BASICS

A network can be defined as the interconnection of autonomous computers linked together to facilitate communication while networking is the simple concept of connected computers.

Networks and networking have grown exponentially over the last 15years; they have evolved at light speed just to keep up with huge increases in basic critical user needs such as sharing data and printers, as well as more advanced demands such as video conferencing.

TYPES OF NETWORKS

LOCAL AREA NETWORK (LAN)

A LAN (Local Area Network) is a group of computers and network devices connected together, usually within the same building. A Local Area Network (LAN) is a high-speed communication system designed to link computers and other data processing devices together within a small geographical area, such as a workgroup, department, or building. Local Area Networks implement shared access technology. This means that all the devices attached to the LAN share a single communications medium, usually a coaxial, twisted pair or fibre optic cable.

METROPOLITAN AREA NETWORK (MAN)

Metropolitan area networks or MANs are large computer networks usually spanning a city or a town. They typically use wireless infrastructure or optical fibre connections to link their sites.

The IEEE 802-2001 standard describes a MAN as being: “A MAN is optimized for a larger geographical area than is a LAN, ranging from several blocks of buildings to entire cities. MANs can also depend on communications channels of moderate to high data rates. A MAN might be owned and operated by a single organization, but it usually will be used by many individuals and organizations. MANs might also be owned and operated as public utilities. They will often provide means for internetworking of local networks. Metropolitan area networks can span up to 50km.”

WIDE AREA NETWORK (WAN)

Wide Area Network (WAN) is a computer network that covers a broad area. A WAN in compares to a MAN, is not restricted to a geographical location, although it might be restricted to a geographical locations, it might also be confined within the bounds of a state or country. A WAN connects several LANs, and may be limited to an enterprise (a corporation or organization) or accessible to the public.

The technology is high speed and relatively expensive. The INTERNET is an example of a worldwide public WAN.

NETWORKING DEVICES

ROUTERS

Routers are used to connect networks together and route packets of data from one network to another. Routers, by default break up a broadcast domain, which is the set of all devices on a network segment that hear all broadcasts sent on that segment.

Routers also break up collision domains. This is an Ethernet term used to describe a network scenario where one particular device sends a packet on a network segment, forcing every other device on that segment to pay attention to it. At the same time, a different device tries to transmit, leading to a collision, after which both devices must retransmit one at a time.

Routers run on the layer 3 of the OSI (Open System Interconnection) reference model.

SWITCHES

Switches are used for network segmentation based on the MAC addresses. Switches look at the incoming frame’s hardware addresses before deciding to either forward the frame or drop it.

Switches break up collision domains but the hosts on the switch are still members of one big broadcast domain.

HUB

A hub is really a multiple port repeater. A repeater receives a digital signal and re-amplifies or regenerates that signal, and then forwards the digital signal out all active ports without looking at any data. An active hub does the same thing. This means all devices plugged into a hub are in the same collision domain as well as in the same broadcast domain, which means that devices share the same bandwidth. Hubs operate at the physical layer of the OSI model.

IP ADDRESSING

An IP address is a numeric identifier assigned to each machine on an IP network. It designates the specific location of a device on the network. An IP address is a software address and designed to allow host on one network to communicate with a host on a different network regardless of the type of LANs the hosts are participating in.

IP TERMINOLOGIES

Bit: A bit is one digit, either a 1 or a 0.

Byte: A byte is 7 or 8 bits, depending on whether parity is used.

Octet: An octet, made up of 8 bits is just an ordinary 8 bit binary number. In most cases byte and octet are completely interchangeable.

Network address: This is the designation used in routing to send packets to a remote network. For example 10.0.0.0, 172.16.0.0, and 192.168.10.0 are network addresses.

Broadcast address: The address used by applications and hosts to send information to all nodes on a network is called the broadcast address. Examples include 255.255.255.255 which is all networks, all nodes; 172.16.255.255, which is all subnets and hosts on network 172.16.0.0.

HEIRARCHICAL IP ADDRESSING SCHEME

An IP address consists of 32 bits of information (IPV4). IPV6, a new version of IP consists of 128 bits of information. The 32 bits IP is divided into four sections referred to as octet or bytes each containing 1 byte (8bits).

An IP address is depicted using any of these 3 methods.

Dotted decimal, as in 172.16.30.56

Binary, as in 10101100.00010000.00011110.00111000

Hexadecimal, as in AC.10.1E.38

All this examples represent the same IP address. But the most commonly used is the dotted decimal. The Windows Registry stores a machine’s IP address in hex.

The 32 bit IP address is a structured or hierarchical address, as opposed to a flat non hierarchical address. Although either type of addressing scheme could have been used, hierarchical addressing was chosen for a good reason. The advantage of this scheme is that it can handle a large number of addresses, namely 4.3 billion (a 32 bit address space with two possible values for each position that is either 1 or 0 gives 237, or 4,294,967,296).

The disadvantage of the flat addressing scheme relates to routing. If every address were unique, all routers on the internet would need to store the address of each and every machine on the internet. This would make efficient routing impossible.

NETWORK ADDRESS RANGE

The network address uniquely identifies each network. Every machine on the same network shares that network address as part of its IP address. In the IP address of 172.16.30.56, 172.16 is the network address.

The node address is assigned to and uniquely identifies each machine on a network. This number can also be referred to as host address. In 172.16.30.56, 30.56 is the node address. Class A network is used when a small number of networks possessing a very large number of nodes are needed. Class C network is used when numerous networks with a small number of node is needed.

CLASS A ADDRESSES

The first bit of the first byte in a class A network address must always be off or 0. This means a class A address must be between 0 and 127, inclusive.

0xxxxxxx.hhhhhhhh.hhhhhhhh.hhhhhhhh

If we turn the other 7 bits all off and then turn them all on, we’ll find the class A range of network addresses.

00000000 = 0

01111111 = 127

Class A format is network.node.node.node, so for example in the IP address 49.22.102.70, the 49 is the network address and 22.102.70 is the node address. Every machine on this particular network would have the distinctive network address of 49.

CLASS B ADDRESSES

The first bit of the first byte must always be turned on, but the second bit must always be turned off.

01xxxxxx.xxxxxxxx.hhhhhhhh.hhhhhhhh

If we can turn the first bit on and the second bit off and if the other 6 bits all off and then all on, we’ll find the class B range of network addresses.

10000000 = 128

10111111 = 191

Class B format is network.network.node.node, so far in the IP address 132.163.40.57, the 132.163 is the network address and 40.57 is the node address.

CLASS C ADDRESSES

The first and second bit of the first byte must always be turned on, but the third bit can never be on.

110xxxxx.xxxxxxxx.xxxxxxxx.hhhhhhhh

If we turn the first and second bit on and the third bit off and then all other 5 bits all off and all on, we’ll find the class C range of network address.

11000000 = 192

11011111 = 223

Class C format is network.network.network.node, for example in the IP address 195.166.231.75, the 195.166.231 is the network address and 75 is the node address.

CLASS D AND CLASS E ADDRESSES

The address between 224 and 255 are reserved for class D and E networks. Class D (224-239) is used for multicast addresses and class E (240-255) for scientific purposes.

PRIVATE IP ADDRESSES

Private IP addresses are those that can be used on a private network, but they’re not routable through the internet. This is designed for the purpose of creating a measure of well-needed security, but it also conveniently saves valuable IP address space. If every host on every network had to have real routable IP addresses, we would have run out of IP addresses to hand out years ago.

Class A 10.0.0.0 through 10.255.255.255

Class B 172.16.0.0 through 172.31.255.255

Class C 192.168.0.0 through 192.168.255.255

TROUBLESHOOTING IP ADDRESSING

Here are the troubleshooting steps in resolving a problem on an IP network.

1. Open a DOS window and ping 127.0.0.1. This is the diagnostic or loopback address, and if you get a successful ping, your IP stack is considered to be initialized. If it fails, then you have an IP stack failure and need to reinstall TCP/IP on the host.

2. From the DOS window, ping the IP addresses of the local host. If that’s successful, then your Network Interface Card (NIC) card is functioning. If it fails, then there is a problem with the NIC card. This doesn’t mean that a cable is plugged into the NIC, only that the IP protocol stack on the host can communicate to the NIC.

3. From the DOS window, ping the default gateway. If the ping works, it means that the NIC is plugged into the network and can communicate on the local network. If it fails, then you have a local physical network problem that could be happening anywhere from the NIC to the gateway.

4. If steps 1 through 3 were successful, try to ping the remote server. If that works then you have IP communication between then local host and the remote server, you also know that the remote physical network is working.

5. If the user still can’t communicate with the server after steps 1 through 4 were successful, then there’s probably a resolution problem and there is need to check the Domain Name Server (DNS) settings.

NETWORK ADDRESS TRANSLATION

Network Address Translation (NAT) is used mainly to translate private inside addresses on a network to a global outside address. The main idea is to conserve internet global address space, but it also increases network security by hiding internal IP addresses from external networks.

TABLE 3: NAT ADVANTAGES AND DISADVANTAGES

ADVANTAGES

Conserves legally registered addresses.

Reduces address overlap occurrence.

Increases flexibility when connecting to internet.

Eliminates address renumbering as network changes.

Translation introduces switching path delays

DISADVANTAGES

Loss of end-to-end traceability

Certain applications will not function with NAT enabled.

TYPES OF NAT

Static NAT: This type of NAT is designed to allow one-to-one mapping between local and global addresses. Static NAT requires that there is one real internet IP address for every host on your network.

Dynamic NAT: This version gives one the ability to map an unregistered IP address to a registered IP address from out of a pool of registered IP addresses.

Overloading: This is also known as Port Address Translation (PAT). It is the most popular type of NAT configuration. Overloading is a form of dynamic NAT that maps multiple unregistered IP address to a single registered IP address by using different ports. With overloading thousands of users can connect to the internet using only one real global IP address.

NAT TERMINOLOGIES
Local addresses: Name of local hosts before translation.

Global addresses: Name of addresses after translation.

Inside local: Name of inside source address before translation.

Outside local: Name of destination host before translation.

Inside global: Name of inside hosts after translation

Outside global: Name of outside destination host after translation.

LAYER2 SWITCHING

Layer2 switching is the process of using the hardware address of devices on a LAN to segment a network. The term layer2 switching is used because switches operate on the data-link layer which is the second layer of the OSI reference model.

Layer2 switching is considered hardware-based bridging because it uses specialized hardware called an application-specific integrated circuit (ASIC). ASICs can run up to gigabit speeds with very low latency rates.

Switches read each frame as it passes through the network, the layer2 device then puts the source hardware address in a filter table and keeps track of which port the frame was received on. The information (logged in the switch’s filter table) is what helps the machine determine the location of a specific sending device. After a filter table is built on the layer2 device, it will only forward frames to the segment where the destination hardware is located. If the destination device is on the same segment as the frame, the layer2 device will block the frame from going to any other segments. If the destination is on a different segment, the frame can only be transmitted to that segment. This is called TRANSPARENT BRIDGING.

When a switch interface receives a frame with a destination hardware address that isn’t found in the device filter table, it will forward the frame to all connected segments. If the unknown device that was sent the frame replies to this forwarding action, the switch updates its filter table regarding that device’s location.

ADVANTAGES OF LAYER2 SWITCHING

The biggest benefit of LAN switching over hub-centred implementations is that each device on every segment plugged into a switch can transmit silmatenously whereas hubs only allow one device per network segment to communicate at a time.

Switches are faster than routers because they don’t take time looking at the Network layer header information. Instead, they look at the frame’s hardware address before deciding to either forward the frame or drop it.

Switches create private dedicated collision domains and provide independent bandwidth on each port unlike hubs. The figure below shows five hosts connected to a switch, all running 10Mbps half-duplex to the server. Unlike the hub, each host has 10Mbps dedicated communication to the server.

LIMITATIONS OF LAYER2 SWITCHING

Switched networks break up collision domains but the network is still one large broadcast domain. This does not only limits your network’s size and growth potential, but can also reduce its overall performance.

FUNCTIONS OF LAYER2 SWITCHING

There are three distinct functions of layer2 switching, these are

Address learning.

Forward/filter decision

Loop avoidance.

ADDRESS LEARNING

When a switch is first powered on, the MAC forward/filter table is empty. When a device transmits and an interface receives the frame, the switch places the frame source address in the MAC forward/filter table, allowing it to remember which interface the sending device is located on. The switch then has no choice but to flood the network with this frame out of every port except the source port because it has no idea where the destination device is actually located.

If a device answers the flooded frame and sends a frame back, then the switch will take source address from that frame and place that MAC address in its database as well, associating this address with the interface that received the frame. Since the switch now has both of the relevant MAC addresses in its filtering table, the two devices can now make a point to point connection. The switch doesn’t need to flood the frame as it did the first time.

If there is no communication to a particular address within a certain amount of time, the switch will flush the entry from the database to keep it as current as possible.

FORWARD/FILTER DECISIONS

When a frame arrives at a switch interface, the destination hardware address is compared to the forward/filter MAC database. If the destination hardware address is known and listed in the database, the frame is sent out only the correct exit interface.

The switch doesn’t transmit the frame out any interface except for the destination interface. This preserves bandwidth on the other network segments and is called FRAME FILTERING.

LOOP AVOIDANCE

When two switches are connected together, redundant links between the switches are a good idea because they help prevent complete network failures in the event one link stops working.

Redundant links are extremely helpful but they often cause more problems than they solve, this is because frames can be flooded down all redundant links silmatenously creating network loops.

Switches use a protocol called STP (Spanning Tree Protocol) created by Digital Equipment Corporation (DEC) now Compaq to avoid network loops by shutting down redundant links. With STP running, frames will be forwarded only on the premium STP-picked link.

CONFIGURING THE CISCO 2950 CATALYST SWITCH FAMILY.

The 2950 switch is one of the Cisco Catalyst switch family’s high-end model. The 2950 comes in many flavours and run 10Mbps all the way up to 1Gbps switched ports with either twisted-pair or fibre. They can provide basic data, video and voice services.

2950 SWITCH STARTUP

When the 2950 switch is first powered on, it runs through a Power-on-Self-test (POST). At first all port LEDs are green, and if upon completion the post determines that all ports are in good shape, all the LEDs blink and then turn off. But if the POST finds a port that has failed both the system’s LED and the port’s LEDs turn amber.

However, unlike a router, the switch is actually usable in Fresh-out-of-the-box condition. You can just plug the switch into your network and connect network segment together without any configuration.

To connect to the Cisco switch, use a rolled Ethernet cable to connect a host to a switch console serial communication port. Once you have the correct cable connected from your PC to the Cisco switch, you can start HyperTerminal to create a console connection and configure the device as follows:

1. Open HyperTerminal by clicking on start button and then All programs, then Accessories, then Communication, then click on HyperTerminal. Enter a name for the connection. It is irrelevant what you name it. Then click OK.

2. Choose the communication port either COM1 or COM2, whichever is open on your PC.

3. Now at the port settings. The default values (2400bps and no flow control hardware) will not work, you must set the port settings as shown in the figure below.

Notice that the bit rate is set to 9600 and the flow control is set to none. At this point click OK and press the Enter key, and you should be connected to your Cisco switch console port.

Here’s the 2950 switch’s initial output:

— System Configuration Dialog —

Would you like to enter the initial configuration dialog? [Yes/no]: no

Press RETURN to get started!

00:04:53: %LINK-5-CHANGED: Interface Vlan1, changed state to administratively down

00:04:54: %LINEPROTO-5-UPDOWN: Line protocol on Interface Vlan1, changed state to down
Switch>

THE CONFIGURATION

The switch> prompt is called the user exec mode and it’s mostly used to view statistics. You can only view and change configuration of a Cisco switch in privileged exec mode which you get into with the enable command.

Switch>

Switch> enable

Switch#

Switch# disable

Switch>

The global configuration mode can be entered from the privileged mode by using the configure terminal command or config t for short.
Switch# config t
Enter the configuration commands, one per line, End with CNTL/Z.
Switch(config)# hostname zenith
Zenith(config)#

The hostname command is used in naming the switch. The hostname of a switch is only locally significant but it’s still helpful to set a hostname on a switch so that you can identify the switch when connecting to it.

SETTING THE ENABLE MODE PASSWORDS AND LINE PASSWORD.

Zenith> enable

Zenith# config t

Enter the configuration commands, one per line, End with CNTL/Z.

Zenith(config)# enable password bank

Zenith(config)# enable secret middle

The enable password bank command sets the enable password as bank and the enable secret middle command sets the enable secret password as middle. The enable secret password is more secure and it supersedes the enable password if it is set. The enable secret password and the enable password cannot be the same on the 2950 switch.

Zenith(config)# line ?

First line number

console Primary terminal line

vty Virtual terminal

Zenith(config)# line vty ?

First line number

Zenith(config)# line vty 0 15

Zenith(config-line)# login

Zenith(config-line)# password alex

Zenith(config-line)# line con 0

Zenith(config-line)# login

Zenith(config-line)# password malouda

Zenith(config-line)# exit

Zenith(config)# exit

Zenith#

The line vty 0 15, login and password alex commands set the telnet password to alex and the line con 0, login, and password malouda commands sets the console password to malouda.

SETTING IP INFORMATION

You don’t have to set any IP configuration on the switch to make it work. You can just plug it in. But there are two reasons we set IP address information on the switch.

To manage the switch via Telnet or other management software.

To configure the switch with different VLANs and other network functions.

Zenith(config)# int vlan 1

Zenith(config-if)# ip address 172.16.10.17 255.255.255.0

Zenith(config-if)# no shutdown

Zenith(config-if)# exit

Zenith(config)# ip default-gateway 172.16.10.1

Zenith(config)#

The IP address is set to 172.16.10.17 and the no shutdown command must be applied to enable the interface.

CONFIGURING INTERFACE DESCRIPTIONS

You can administratively set a name for each interface on the switches with the description command.

Zenith(config)# int fastethernet 0/ ?

FastEthernet Interface number.

Zenith(config)# int fastethernet 0/1

Zenith(config-if)# description Sales LAN

Zenith(config-if)# int f0/12

Zenith(config-if)# description Connection to Mail server

Zenith(config-if)# CNTL/Z
Zenith#

You can look at the descriptions at any time with either the show interface command or the show running-config command from the global configuration mode.

ERASING AND SAVING THE SWITCH CONFIGURATION
Zenith# copy running-config startup-config
Zenith# erase startup-config

The first command copies the configuration into the NVRAM (Non-volatile RAM) while the erase startup-config command erases the switch configuration.

Zenith# erase startup-config

Erasing the nvram filesystem will remove all files! Continue? [confirm] [Enter]

[OK]

Erase of nvram: complete

Zenith#

VIRTUAL LAN (VLAN)

A Virtual LAN (VLAN) is a logical grouping of network users and resources connected to administratively defined ports on a switch. When one create VLANs, one creates smaller broadcast domains within a switched internetwork by assigning different ports on the switch to different subnetworks. A VLAN is treated like its own subnet or broadcast domain, which means that frames broadcast onto the network are only switched between ports logically grouped within the same VLAN.
By default, no hosts in a specific VLAN can communicate with any other hosts that are members of another VLAN.
5.1 ADVANTAGES OF VLAN

A group of users needing security can be put into a VLAN so that no user outside the VLAN can communicate with them.

As a logical grouping of users by function, VLANs can be considered independent from their physical or geographical locations.

VLANs can enhance network security.

It can block broadcast storms caused by a faulty NIC (Network Interface Card) card.

VLANs increase the number of broadcast domains while decreasing their sizes.

VLAN MEMBERSHIP

VLANs are usually created by the administrator, who then assigns switch ports to each VLAN. Such a VLAN is called a static VLAN. If the administrator wants to do a little more work up front and assign all the host devices hardware addresses into a database, then the switch can be configured to assign VLANs dynamically whenever a host is plugged into a switch. This is called dynamic VLAN.

STATIC VLANs

Static VLANs are the usual way of creating VLANs, and they’re also the most secure. The switch port that you assign a VLAN association to always maintain that association until an administrator manually changes that port assignment.

DYNAMIC VLANs

A dynamic VLAN determines a node’s VLAN assignment automatically. Using intelligent management software, you can base assignment on hardware addresses, protocols, or even applications to create dynamic VLANs.

An example is the VLAN Management Policy Server (VMPS) service used to set up a database of MAC addresses that can be used for dynamic addressing of VLANs. A VMPS database maps MAC addresses to VLANs.

FRAME TAGGING

As frames are switched through the network, switches must be able to keep track of all the frames. Frames are handled differently according to the type of link they are traversing. The frame identification method uniquely assigns user defined ID to each frame. This is sometimes referred to as the “VLAN ID”.

Each switch that the frame reaches must first identify the VLAN ID from the frame tag, and then it finds out what to do with the frame by looking at the information in the filter table. If the frame reaches a switch that has another trunked link, the frame will be forwarded out the trunk-link port.

Once the frame reaches an exit to an access link matching the frame’s VLAN ID, the switch removes the VLAN identifier. This is so the destination device can receive the frame without having to understand their VLAN identification.

There are two different types of links in a switched environment, they are:
Access links: This type of link is only part of one VLAN. Any device attached to an access link is unaware of a VLAN membership; the device just assumes its part of a broadcast domain. Access link devices cannot communicate with devices outside their VLAN unless the packet is routed.
Trunk links: Trunk links can carry multiple VLANs. A trunk link is a 100 or 1000Mbps point to point link between two switches, between a switch and server. These carry the traffic of multiple VLANs from 1 to 1005 at a time. Trunking allows you to make a single port part of multiple VLANS at the same time. It also allows VLANs to span across multiple switches.

VLAN IDENTIFICATION METHODS

There are basically two ways of frame tagging.

Inter-Switch Link (ISL)

IEEE 802.1Q

The main purpose of ISL and 802.1Q frame tagging methods is to provide interswitch VLAN communication.

Inter-switch Link (ISL) Protocol: This is proprietary to Cisco switches, and it is used for fast Ethernet and gigabit Ethernet links only. ISL routing can be used on a switch port, router interfaces and server interface cards to trunk a server.

IEEE 802.1Q: Created by the IEEE as a standard method of frame tagging, it isn’t Cisco proprietary so if you’re trunking between a Cisco switched link and a different brand of switch; you have to use 802.1Q for the trunk link to work.

VLAN TRUNKING PROTOCOL (VTP)

This protocol was created by Cisco but it is not proprietary. The basic goals of VLAN Trunking protocol (VTP) are to manage all configured VLANs across a switched internetwork and to maintain consistency through the network. VTP allows an administrator to add, delete and rename VLANs on a switch, information that is then propagated to all other switches in the VTP domain.

Before one can get VTP to manage VLANs across the network, one has to create a VTP server. All switches sharing the same VLAN information must be in the same VTP domain.

One can use a VTP domain if there is more than one switch connected in a network, but if all the switches are in only one VLAN, there is no need to use VTP. VTP information is set between switches via trunk port.

Does Network Marketing Offer People a Real Chance of Creating Financial Security and Independence

This unique business has millions of distributors doing billions of pounds in sales annually. It is conducted in nearly 100 countries around the world. It has been praised by leading business people and also by heads of state for boosting the economy. Yet most people in the UK are still totally confused by it.

Network marketing has created many millionaires and spread that excitement to millions more, but just what are the realities of this business?
So what is network marketing?

Network Marketing is based on the concept of ‘networking’. We all have a circle of people we know through the circumstances of our daily lives and each of these people will have their own circle of acquaintances, colleagues, family and friends. Network Marketing involves tapping into these networks not only to sell product but also to offer the business opportunity to potential new distributors who then start the process of developing their own networks for selling and recruiting.

In network marketing, services and products are distributed to the final consumers through a network of independently contracted distributors or agents (also known as consultants). These distributors are then financially rewarded in two ways: a) from commissions and overrides from sales generation and b) for their contribution to the building up of the network by getting new ‘recruits’ to be downline distributors. The network marketing business model works because of the price differential that is generated from the distributor to the consumer. If the recruits of the one you recruited generate sales, you get a percentage of the price differential for the sales, and so on.

Network marketing is usually associated with pyramid or ponzi scams. This is because the main structure of the two models can be quite similar at first glance. However, if one takes a closer look at the models, there is one big and defining difference between them. The main difference between a legal network marketing firm and a pyramid scam is that the first one offers real products and services, the latter only promises opportunities and generates money from the cost of entry of the recruited members. A pyramid scam re-channels the incoming funds from the fees that newly recruited ‘members’ pays for entering the scheme and does not generate any kind of profits from other endeavors. The masterminds of the scam benefits while leaving most, if not all, of the downlines in financial burdens.

o As the networks widen, so the individual leader benefits not only from their own sales but also a percentage of the sales from their network. As more people join the network, so residual income increases.
o network marketing allows its distributors not only to network outwards in order to sell the product but also to benefit from their downline’s downline, either to a limited depth or ad infinitum. However, the two terms tend to be used fairly indiscriminately.
o As with any other home-based business, distributors need to work hard and have courage and determination. Finding a good sponsor is just as important as finding an interesting product and a good compensation plan which offers flexibility and just reward for effort. Contrary to expectation, the newcomer has the same potential for success as the long-term sponsor provided that the necessary research and skills training takes place. It is not necessary to be ‘in at the beginning’ and in some cases it may prove more difficult and risky to join at the beginning than to join a plan which has reached a more mature phase. Network Marketing is particularly suited to married women with family commitments as it offers them an opportunity to start a business on a part time basis with very little capital. The opportunity now exists for enterprising women to use their talents and the skills gained from motherhood to build businesses based both on selling and on finding and supporting the efforts of others.

There are 2 trends that are driving this industry forward:
a. General shift towards self-employment.
b. People’s quest for a better lifestyle – They no longer want to work 40 or 50 hours a week just to pay bills.

For many people Network Marketing is the only way to Create Financial Freedom in the UK today.

One business magazine wrote “Network marketing is so far ahead of the competition when it comes to money and lifestyle that is in a league of its own.”

With a traditional career you only get paid for the hours that you work. When you leave your employment your monthly salary stops and all you are left with is experience and perhaps a pension, which is rarely enough to live on. Network marketing is entirely different – Your efforts are multiplied by helping people succeed with their businesses, so that your investment comes back many times over, to create time and financial freedom. The longer you work at it, the easier it becomes. The more you help others become successful, the more successful you become.

“Network marketing offers people an opportunity to build a business of their own, with a small amount of capital, in their own time and with the help of a sponsor who is willing to help them every step of the way”. Prime Time Magazine

As you leverage your efforts you create a ‘residual income’ – by helping enough people become successful. Over time, you can build a truly passive income that keeps paying you long after you have done the work.

Network marketing offers people an opportunity to build a business of their own, with a small amount of capital, in their own time and with the help of a sponsor who is willing to help them every step of the way”. Prime Time Magazine

As you leverage your efforts you create a ‘residual income’ – by helping enough people become successful. Over time, you can build a truly passive income that keeps paying you long after you have done the work.

Consider this-
According to a study conducted in the USA in 1995, ‘Out of 100 people who are working at age 25, by the age of 65…

o 63% are dependent on Social Security, friends or relatives
o 29% are dead
o 3% are still working
o 4% have adequate capital for retirement
o 1% are wealthy

Questions normally asked about Network Marketing .

Q.Can Network Marketing be done successfully part-time?

A. Absolutely…it’s very common in fact. You can start your Network Marketing business on a part-time basis without giving up your current source of income until your Network Marketing business is generating the income you require. And the best part is that you can continue to operate indefinitely on a part-time basis. What would you do if you were financially independent and most of your time was free to do with as you pleased? This is why so many people are flocking to Network Marketing. And that’s why we say that Network Marketing puts the freedom back in free enterprise!

Q. Do I have to sell products door-to-door or hold parties or meetings?

A. No. One of the greatest features of Network Marketing is that success can be achieved using a wide variety of methods. You choose the methods that YOU are comfortable with. Within Tiscali we use amazing internet technologies . No delivering products, no collecting money, no party plan meetings!

Q. Isn’t Network Marketing one of those pyramid schemes?

A. Definitely not. Though Network Marketing and pyramid schemes do share some similarities, there’s a very important difference that makes the latter illegal.You see, in pyramid schemes, income is generated solely on the process of recruiting others into the pyramid. Sometimes a product or service of questionable value is involved(that is never retailed to the general public by the way), but generally what you’re buying is the right to recruit others into the scheme. This is illegal. Also, in pyramid schemes, those who get in first and who are at the top win, while everybody else loses. In a legitimate Network Marketing company, on the other hand, distributors are paid only on product movement; not on recruiting. Both at wholesale and retail. There’s also compensation based on the training and managing of your marketing team. And unlike illegal pyramids, in Network Marketing, no matter where you’re positioned or when you join, you can advance to the very highest income levels and even make more money than those above you in the network.

Q. I’m not a salesperson, so this probably isn’t for me.

A. Actually, studies have shown that people with no sales experience do great in Network Marketing. In fact, the studies show that they often do better than those with previous sales experience. This is because Network Marketing isn’t about selling; at least not in the way most people think of selling. There’s no place for arm-twisting or high-pressure techniques in Network Marketing. Rather, Network Marketing is simply about sharing the concepts and products of your Network Marketing company that you use and you’re excited about.

Q. How much money can I make?

A. The bottom line is you’ll get out of it what you put into it. It works…if you do. But that’s the beauty of it, too; you are in control; it’s up to you how far you take it. And don’t forget, the income you create in Network Marketing is residual. This basically means that for the work you do just today, you have the potential to earn money not only for today but for years to come.

Q. What’s so important about sponsoring in this business anyway?

A. It’s like this… it doesn’t matter how intelligent, rich, energetic, or dynamic you are;we are all limited to the same 24 hours a day. By sponsoring, however, you can overcome this limitation. By sponsoring, you can virtually clone yourself and have dozens, hundreds, even thousands of people all working indirectly on your behalf on their time and receive a cut of everything they do. Sponsoring also builds your security in this business. Why? In most traditional businesses, what happens if you become ill or disabled and are unable to service your customers? Or perhaps you just want to take a nice long vacation? Whatever the case, you could lose most if not all of your income overnight because it relies on you being there. That’s not owning your own life and that’s certainly not financial freedom.Through the process of sponsoring and building a downline in Network Marketing, however, you can create total financial freedom for yourself. With a downline of independent business people working for you, you no longer have all your eggs in one basket. On the contrary, because each person in your downline has a vested interest in continuing and building their own businesses, you create an income that is non-dependent upon you – an income that can continue, even grow, indefinitely with or WITHOUT you.

Q. Do I have to stock and deliver products?

A. Most Network Marketing companies today allow its distributors (and often even retail customers) to order direct from the company. The company simultaneously tracks your commissions, credits your account, and automatically sends you a check for the total amount due.

Q. Isn’t Network Marketing just another “get-rich-quick” scheme?

A. No, “get-rich-quick” is a fairy tale. It just doesn’t happen in the real world. Sure, there are a few exceptions, but they’re extremely rare. In fact, if overnight riches is your dream, your odds are probably better playing your state lottery than doing it in business – any business.

Q. I couldn’t get involved in Network Marketing. It’s not a “real” business.

A. It’s very real. Network Marketing is now a multi-billion dollar industry involving millions of independent business people and major U.S. corporations like Colgate-Palmolive, Gillette, Sprint, and MCI, just to name a few. And it’s a rapidly-growing international force, too, with thousands of Network Marketing companies already in operation in Canada, Mexico, Europe, Japan, Australia, New Zealand, and the Pacific Basin.

Q. If Network Marketing is so great, why aren’t more people involved?

A. That can be summed up in one word: misconceptions. The general public just doesn’t understand what Network Marketing is or its potential. But that’s finally starting to change. Right now it’s estimated that only about 2% of the U.S. population is involved in Network Marketing. But industry experts predict that that number could climb to 10% by the end of this decade. You can position yourself to take advantage of this trend by getting started in Network Marketing now. The timing is great for getting involved!

Q. What are the costs involved in starting and operating this kind of business?

A. Virtually all Network Marketing companies require you to first purchase some kind of “Starter Kit.” This is a one-time cost, and is usually less than $100. In addition, of course, you’ll have monthly expenses for office supplies, postage, advertising, etc. A total of £50-£150 pounds per month is probably a realistic expenditure to expect. Anyone can afford this amount of money without jeopardising their current lifestyle while they’re trying to build a better one. And here’s some more good news – most, if not all of that, is tax deductible.

Q. What if I can’t afford to buy extra products.

A. You’re not supposed to. Network Marketing companies just want you to replace those products you now buy elsewhere with the equivalent-but-higher-quality products your Network Marketing company manufactures. By doing so, you’ll likely save money since you now get to buy at wholesale. Plus, it only makes sense to buy from yourself – to buy from “your own store.”

Q. I’ve tried Network Marketing before and it didn’t work for me.

A. Let’s say you’ve just moved into a new city and you decided to go out to eat that evening. Unfortunately, the food at the restaurant you picked turned out to be horrible. But just because of this one bad experience, you surely wouldn’t swear off eating at all the other restaurants in the city, would you? Of course not! Network Marketing is no different. There are fair Network Marketing companies, great Network Marketing companies, and, yes, even some bad Network Marketing companies. But Network Marketing works! You just need to link up with the right company and the right opportunity at the right time. See MLM RockStars.

Q. I don’t have the cash right now to get involved in Network Marketing.

A. Get it! If a brand new £60,000 Mercedes were offered to you for £1000, would you find the money somehow to buy it? Go and get the money because your own Network Marketing business could be worth a lot more than that Mercedes.

Q. I can see how others have become successful, but I don’t think I could do it.

A. People of every age, every background, from every walk of life are making it in Network Marketing today. If you have the desire, you can succeed in Network Marketing.

Q. If I would happen to be sponsored by someone half way across the country, how do I get questions answered? And what about training?

A. Free consultation and assistance from your sponsor, other upline associates(and often the corporate staff of your Network Marketing company) is a phone call away.Faxes, E-Mail, Voice Mail, and other new technologies also provide fast and efficient communications between upline and downline…no matter where they’re located. As for long-distance training, this is easily handled through video training CD’s, audio taped seminars, books, online computer and telephone conferences, etc.

Q. I just don’t have the time to start a Network Marketing business. I’ve got too many irons in the fire already.

A. That’s precisely why you should consider Network Marketing. Besides creating financial freedom, Network Marketing is specifically designed to create personal freedom for you so that you can do all the things in life you really want to do that you don’t have the time for now.

Q. Don’t you have to get in at the beginning to make any real money? Doesn’t saturation eventually occur?

A. That’s another big misconception that’s been perpetuated by the media for years. The fact is, there has never been any evidence produced that “saturation” occurs in Network Marketing. This very topic was debated in U.S. courts at one time and that was the conclusion by the courts.Secondly, realise that because Network Marketing is still a very young industry, there are hundreds of millions of prospects worldwide who have never even heard of Network Marketing. It will take years to even make a dent in that.But here’s the main reason why “saturation” is a myth: Timing. In the U.S. alone, there are tens of thousands of brand new prospects “hatched” every year.Part of that figure is young adults who have only just reached the stage in their lives where they’d consider (and could afford) to start a business. Then there are the thousands who have just experienced a major shift in the direction of their lives because of changes at work, at home, etc. These same people, who just months before could in no way, shape, or form be considered prospects for Network Marketing, NOW are suddenly very open to the proposition. And this is happening constantly. Bottom line: The market is wide open and the potential is enormous.

Finally, Internationally acclaimed business people agree that Network Marketing represents one of the greatest opportunities in the world today.

What is Networking?

Quote: Power networking involves the development of a team of powerful, proactive referral partners capable of producing a steady flow of referrals for your business.

In this chapter:

o Examples of power networking

o Defining networking

o 7 Myths and truths about networking

Before we talk about networking, let’s take a look at some examples of the results that some have achieved by applying the principles of effective networking. The examples we cite are mostly from Local Business Network simply because these are the individuals with whom we have worked and whose stories we know. In most cases, you can replace LBN with the words “structured networking organization”.

We share these stories to help you understand how truly powerful networking can be for anyone who is willing to learn the principles of power networking and to apply them consistently. Many who do so achieve rewards totaling hundreds of thousands of dollars. For many, business from referral partners account for 25% to as much as 90% of their sales. We hope these examples will encourage you to read further and to consider seriously the principles we teach.

Website Design Firm Finds Structured Networking its Most Powerful Business Growth Tool

Steve Hyer started IGD Solutions, a website development firm, in 1999. In 2000, he joined Local Business Network, a structured business referral organization. Steve was not only new to business, but new to networking.

For the ensuing three years, LBN referrals accounted for an average of 38% of his business. In real dollars, that amounts to six figures each year. Forming strategic and referral partner relationships with members of his own chapter and with those in other chapters helped Steve create a continuous referral stream and thus a continuous stream of new leads and new clients. Steve found the regional mixers particularly helpful in finding and developing referral partner relationships with those in the technology field.

Steve writes that, “LBN is the single most effective method we have used to promote our business. The structure of meeting twice a month and really focusing on sharing referrals makes it extremely effective.”

From Corporate Cast Off To Successful Business Owner In 1 Year

Mark Raymond was laid off abruptly from his information technology job when his company was bought out. The IT market was slow and Mark knew he needed to find additional sources of income. He knew it takes time to grow any business.

Mark had an entrepreneurial background. He had owned a number of different businesses before, ranging from working as a disc jockey, to being a truck driver, to operating as a multi-media expert with auto shows. Fortunately, he had built a successful real estate rental business and owned more than ten properties. Still he needed to replace his IT income.

Mark joined Pre-Paid Legal Services as an Independent Associate. He focused on the sales aspect instead of building a team, but needed prospects and referral partners. His target markets were companies and small business owners, but he did not know where to start.

His wife, Tricia Raymond, a real estate agent, already belonged to a Local Business Network and she encouraged him to use the networking to promote his business. Mark only knows one way to go – full speed ahead. He became the President of his LBN chapter and aggressively built referral relationships.

Within one year of joining LBN, he sold over 400 Pre-Paid Legal memberships. Nearly half, 180 memberships, came directly or indirectly from LBN. Today he has a rapidly growing nationwide network of business associates helping to grow his business.

Sales Agent for a Title Insurance Company Receives over 60% of Her Business Through Networking Group Referrals

Sandra Maurer enjoyed networking, but didn’t realize how powerful it could be when she joined the Birmingham, MI chapter of Local Business Network. Her sales were strongly dependent on relationships with mortgage lenders, attorneys and real estate agents.

Sandra began visiting as many LBN chapters as she could to meet key referral partners and build relationships. She attended every regional mixer to meet other members and build more relationships. She became an extraordinary referral generator, giving as many as 50 or more referrals every month.

Within two years, the relationships she had built within LBN were generating over 60% of her income. When she changed jobs, she took those relationships with her and had an immediate sales base even though she was selling different products and services.

Accountant Gives and Receives Over $100,000 in Referrals Annually

Norm McKee is an accountant and business consultant. During his first year in LBN, referrals from LBN members accounted for about 25% of his business. The second year it grew to 40%. Partnering with other LBN professionals, he also began an employee benefits firm with the potential to generate even more profit than his already highly lucrative accounting practice.

Norm receives eight to ten new client referrals a month from his referral partners. He receives over $100,000 in referrals annually and gives at least that amount to his referral partners.

Norm says, “We selected LBN as our networking group because of the structured/instructional based program offered, providing all members with basic direction over their networking activities. We found LBN members to understand the importance of relationship marketing and how to utilize relationships to create a marketing avenue for their businesses.

Residential Cleaning and Janitorial Service Reports 90% of Sales Come From LBN Members or Their Referrals

Mary Youtz was downsized by a major software development firm. She had worked in the accounting department in a thankless job for a thankless boss. After being let go, she and her husband started their own business and elected to use networking as their primary means of promoting it.

After six months, the firm was in the black and 90% of sales had come through members of her Local Business Network. Mary immediately recognized the value of visiting as many chapters as possible and became a regular visitor to half-a-dozen chapters in communities near her place of business. She attended every regional networking event and built relationships with those in a position to send her referrals. She brought referrals to every meeting she attended.

Mary also grew personally. She had never been required to speak in public and initially expressed concerns about having to do a sixty second commercial at her local chapter meeting. She quickly outgrew her fear and even became a speaker at regional networking events. Her friends saw an extraordinary transformation in her self-confidence and demeanor. She recently took on a role as an officer in her local chapter.

And there are hundreds of additional stories but we don’t have time to tell them all. Here are some quick recaps of a few more.

o Jim Motley started a new computer repair business with $250,000 in sales his first year largely through referrals; doubled his business the second year; then doubled it again the third year.

o Jeannie Kime, a marketer of promotional items spent two years in another networking organization before joining LBN without much success, then tripled her business in her first year in LBN.

o John Gentilia of Perfect View Blinds reported 35% of his business from LBN referrals his first year, growing to 40% his second year.

o Doris Benson of Comfort Zone Heating and Cooling developed 100 new customers in her first six months in LBN.

o Ed Koerner, a mortgage lender, got 36 referrals in his first six months in LBN.

o Brian Jenks, a commercial lender, received referrals for real estate financing for projects of $12 million and $5 million.

o Sharon Quarters, a Realtor, received leads totaling over $2 million in her first three weeks in LBN.

o Attorney, Brian Rolfe got a lead for a $50,000 client within a few weeks after joining LBN.

o Julie Greene, a financial planner, reported commissions of $20,000 on leads from her LBN group and expectations that that number would double the next year.

We could go on forever with stories of these types, but the important thing to understand is that the principles of power networking work for any legitimate business person, representing a valid product or service that is being marketed to the general public or to other businesses. The question is not whether the system works, but rather whether you are willing to learn and to apply the principles of power networking.

What is Power Networking? Webster’s Dictionary defines networking as, “the developing of contacts or the exchanging of information in an informal network as to further a career.” In its broadest sense, practically any type of social interaction could be considered networking. Most business people are familiar with the informal networking that occurs in Chambers of Commerce and other business organizations. But in a business environment where increased sales are the ultimate objective and “time is money”, informal and unfocused networking is inadequate. It is necessary to move to the description and definition of a more formal and focused type of networking.

Development of Win-win Relationships – In his book, Endless Referrals, Bob Burg defines networking as, “the development of mutually beneficial win-win relationships.” Bob says that, “all things being equal, people will do business with and refer people to those they know, like and trust.” Networking therefore is about developing relationships with others who will do business with you and will send referrals to you because they know, like and trust you. Bob’s goal is to transform networking from an “informal process” to a “formal” process focused on generating referrals that result in sales and increased income.

Note that there is a requirement that the individual giving you the referral first know, like and trust you. It is necessary for you to allow others to get to know you, and they must like what they see and have trust in you before they will send you referrals. When building a referral network it is necessary for you to develop relationships of trust.

Selling Through Networking Partners – Power networking involves selling “through” those who are your networking partners not “to” them. There are two components of the business you derive from networking as Mr. Burg describes it, business from those you know and business from those they know. The latter is far more critical than the former, because the potential represented is hundreds of times greater – assuming every business person knows literally hundreds of people. The ultimate objective of formalized networking is not to sell “to” those who know, like and trust you, but rather to sell “through” them to the hundreds of people they know.

Power networking is therefore selling to people you don’t know with the help and cooperation of those you do know. It is “collaborative marketing” predicated on the assumptions that:

1. With minimal proper training you and a partner can effectively prospect for each other, and that

2. It is easier for each of you to prospect for the other within your sphere of influence than it is for the other person to prospect with those same individuals.

This definition points out another critical aspect of formal business networking. You must train others to promote your business for you. Clearly, however, in order to train others to promote your business, you must first understand how to promote it yourself. Effective networkers must not only understand who their prospects are and how to promote to them, but must also be adept at teaching others how to identify prospects for their products or services and how to create the opportunity to make a presentation to those prospects.

Referral Partners – But why would this person, your friend who is generating referrals for you, want to work so hard to promote your business to others? What is in it for him or her? Obviously, he/she expects something in return and although that reward could take any form, the ideal form of remuneration is the referral of someone who could use his/her products or services. This reciprocity must exist in order for formal networking relationships to endure. And this concept of reciprocity leads us to yet another definition of focused business networking: it is the creation of personal wealth through the capture and exchange of referrals. If you want to receive referrals from others, you must be willing and able to give referrals in exchange for those you receive. If you do not give in return, the relationship will not endure and you will no longer receive referrals.

We refer to these special types of relationships where referrals are exchanged on a regular and ongoing basis as “referral partner relationships”. They are the pot of gold at the end of the rainbow, the mother lode! One such relationship can result in hundreds and even hundreds of thousands of dollars of referrals. The majority of your business networking efforts should be focused on finding and developing these relationships. Several such relationships can result in a flow of referrals sufficient to satisfy your needs for the lifetime of your business.

Strategic Partners – Closely allied to the “referral partner” concept is that of the “strategic partner”. A “strategic partner” is an individual who offers a product or service complementary to your own and who is willing to work together with you to offer your products together or to collaborate on marketing efforts. By collaborating with a “strategic partner”, you can broaden the range of products or services you are able to offer your clients, thereby increasing sales or broadening your customer base or, you can leverage marketing expense through joint marketing efforts, thereby reducing marketing costs or creating the opportunity for marketing efforts you might not otherwise be able to afford. Because they are dealing with the same or similar customers to your own, “strategic partners” can also be “referral partners”.

Traditional Networking versus Power Networking – Traditional networking, a style of networking where you market yourself by allowing others to get to know you and hoping that at some point in time they will either use your products or services or will refer someone else to you, is being replaced by what can be called “power networking”. Power networking is a style of networking where you market your business through the development of powerful, proactive partners who market your business for you in return for your help in promoting their businesses. Structured networking groups, both formal and informal organizations designed to teach referral based networking and to assist in the development of teams of referral partners, have sprung up to assist in this process. In this book, we will explore the nature of structured networking groups and their role in helping you apply the principles of power networking.

Myths and Truths about Networking

Myth #1: Networking is just belonging to a ‘Good Old Boys Club’ and is solely for the purpose of camaraderie and fellowship.

Truth: With proper training, networking can be focused to develop business relationships leading to significant referral business, rather than just meeting other people over a social lunch or at the bar during ‘happy-hour’.

Myth #2: Networking is a waste of productive time.

Truth: Networking with the purpose of developing referral partner relationships can be far more productive than spending time selling. One effective referral partner can result in hundreds or even thousands of sales over the lifetime of the relationship.

Myth #3: Networking is only for aggressive, loud-talking salespeople.

Truth: In networking, aggressive, me-oriented people seldom succeed. They find it difficult to build respect and trust which are the underpinnings of any referral partner relationship.

Myth #4: Networking brings people together who are struggling and have no real influence in the marketplace.

Truth: Networking attracts both successful and experienced business owners and professionals, as well as relatively less experienced individuals. The important point to remember is that everybody has a database of contacts with whom you have interest in connecting.

Myth #5: Networking takes too much time with little or no result.

Truth: Networking is a highly leveraged activity as you meet a number of professionals in a very short time. Those you meet are attuned to the development of referral partner relationships. As illustrated earlier, the results can be extraordinary.

Myth #6: Networking is expensive.

Truth: Networking is one of the least expensive forms of marketing available. Local Business Network (LBN) charges around $30 per month for members. Many members can recoup their expense for an entire year with one good referral. For some, the benefit to cost ratio runs in the hundreds.

Myth #7: Networking is primarily for small, non-professional businesses.

Truth: Networking can benefit all types of businesses. Experienced professionals like accountants and attorneys, technology firms, small retailers, home based businesses and others are a few examples.

Key points:

To summarize what we have learned in Chapter One:

1. Focused business networking involves the development of mutually beneficial win-win relationships called “referral partner relationships”.

2. These relationships are built on trust and involve collaborative marketing to those within each other’s sphere of influence.

3. To be effective, they require education and training on how to recognize prospects and generate referrals.

4. Referral partner relationships must be balanced and require both parties to consistently generate and exchange referrals.

5. Strategic partners are individuals who offer complementary products or services to customers similar to those you serve. Collaboration with them can broaden your product offerings, expand your markets, and create opportunities to leverage marketing expense.

6. Power networking refers to the marketing of your business through powerful proactive “referral” and “strategic” partner relationships.

7. Structured networking groups are designed to help you develop these partnering relationships.

Action Plan:

1. Read Bob Burg’s book Endless Referrals.

2. Take a look at your current business situation. Can networking help you?

3. Are you ready to commit to networking as another way to grow your business?

4. If you are already using networking, are you satisfied with your results? If not, continue reading with a commitment to master networking.

Would you like to see Chapter 2? For a free copy of the next chapter, visit http://www.networkto100000.com