By now, a large percentage of the world's population is aware of what network marketing is. In fact, it can now almost considered uncommon to find someone who hasn't encountered a network marketer or at least heard of one. Network marketing is also commonly known as Multi-level marketing (MLM) and also, Direct sales.
Many people who know about this business are also aware of the many bad stories surrounding this venture and are consequently skeptical about the business.
Of course, these bad stories are usually mere misconceptions and myths and also, a lot of people are also afraid of falling victim to a scam. The intriguing thing, however, is that despite the many bad things people have said about MLM, a huge number of Americans, reaching millions are involved in the direct sales industry in some capacity and the industry grossed about $36 billion in the year 2015.
Now, you may be pushed to ask, what then is the actual fact concerning network marketing? Is it trustworthy? What are the chances of succeeding in this business?
According to Jon M. Taylor's e-book which he titled "The Case (For And) Against Multi-Level Marketing", which is based on research conducted on various compensation plans belonging to more than 400 network marketing companies, the following is the case:
SUCCESS RATES AND DROPOUT RATES
From his research, he was able to see that about 50% of the sales reps, at the minimum, dropout in the first operational year while about 90% at the minimum, left after operating for five years. Reaching the tenth year, the ones remaining are usually those close to, or already at the top, which makes up for about 5% of the reps.
To provide some perspective, he compared those figures with the failure rates associated with small traditional businesses based on stats gotten in 2008 by the SBA (Small Business Administration). According to those stats, over the first four years, at the minimum, 41% of these traditional businesses survive, while seven years put that number at 31% and a total of about 39% remain profitable for as long as the business is run. Consequently, from the study, the percentage of failed traditional small businesses in 10 years, is about 64%.
Network marketing businesses are not granted Small Business Administration loans, or other funding programs meant for small businesses, because of the high rate of failure, as well as other considerations.
HOW MUCH TIME AND MONEY DO I INVEST IN NETWORK MARKETING?
It depends. For those companies who compensate based on how many recruits are brought in by a sales rep, as well as how many products are sold, a minimum of about $25,000 was the estimate provided by Taylor. That amount covers internet, incentives, computer supplies, travel, and products and so on. Before arriving at that figure, he actually joined one of these companies and did everything he was asked for a year. Of course, these days, that amount will be much lower, due to the advent of things such as free online marketing, online training etc. which have made running and growing any business much cheaper.
On the other hand, companies who compensate based on how much product is sold, everything, including starter kit, internet, office supplies, marketing expenses and so on, could amount to upwards of an annual $1,000, for a campaign that has been properly launched.
IS NETWORK MARKETING A BUSINESS THAT MUST FAIL EVENTUALLY?
Well, not exactly. The thing is, Taylor's e-book, seemed to imply that the cause of these high failure rates, is a problem with Network marketing as a business, which is not exactly the case. Before closing your mind to this venture completely, consider some things,
1.) It is much cheaper to begin and run, that other business ventures. The numbers quoted in Taylor's book, are small compared to the investment required to start up other businesses. One can start an MLM business for a mere $100 or less even.
2.) The low cost of starting this business is one of the reasons many people fail at it. They rush into it, without any knowledge or research, because they see it as a cheap way to make fast money. Which isn't true. A lot of mistakes are made by people who get into MLM. Lack of research into what the business actually requires is one mistake. Some people just go ahead and sign their contract before reading and understanding fully. Some dubious sponsors – who you should stay away from - fail to divulge all the information, and some reps, unaware of this, rely solely on what said sponsor, tells them. All these mistakes are not a flaw in the business itself, but in the people looking to get into the business.
3.) Due to how cheap it is to start-up, it is also quite easy to walk away from. Many people don't put in enough work and bail at the first sign of failure.
4.) Again, many people think it is a get rich quick scheme with minimal work. It really isn't. MLM is a business and should be approached as such. Everything you would do, to succeed in a traditional business, applies when you venture into Network marketing.
5.) Personal input is what will determine your success or failure. Work hard and make smart decisions and take the bad with the good. These are necessary steps towards MLM success.
WILL I BE SUCCESSFUL IN BUILDING A PART-TIME MLM BUSINESS?
Various factors determine your success really, some of which are
The reason you're getting into the business matters. Some people may just want to earn a little money, so they can sort out their debt, or just enough so they don't have to get another job and have more time for their kids. These are modest goals and can be reached and usually are. As time goes on, as you build, you can then broaden your goal and try to reach it.
2.) MLM COMPANY
Make sure the company you join is a good one. Do not be blinded by the exaggerated claims. Do some research and ensure it is a good company with compensation plans that are to your advantage.
3.) YOUR ATTITUDE TO WORK
Put in effort and make smart decisions geared towards achieving your set goals.
In conclusion, do your best to learn about the top MLM companies with favorable compensation plans and research the business as a whole. When you do join, put in work. Effort matters in every business, and coupled with smart decisions, you just might succeed like some others have.