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What a terrific question.
The reality is that the Network Marketing Industry is massively successful - around $30 billion per year. There are also countless people who have achieved financial independence because of that. Warren Buffett bought a Network Marketing company and considers it his best investment. Robert Kiyosaki calls Network Marketing "the perfect business".
So why then do some succeed and others not achieve success? In my opinion because:
1) People lack the ability and willingness to evaluate individual Network Marketing Companies.
2) People lack the ability and willingness to evaluate themselves.
3) As an industry, Network Marketing suffers from a dire lack of training.
In the first category, it seems that people are much more willing when starting a business of any kind to actually evaluate the market, the competition, their business model, etc. Perhaps this is because they are forced to in order to present a plan to a bank for a loan. This plainly still represents a tiny minority of business starters as harsh though the facts may be, the vast majority fail.
It seems at the same time that people have the impression that all Network Marketing Companies are the same. Plainly this is not the case and anyone looking at a Network Marketing opportunity should be willing to learn how to evaluate a company and perform due diligence as they should with any business.
In the second category, we are naturally geared towards "instant gratification". This can manifest itself in the willingness to keep working for a paycheck despite hating what you do, or in businesses of being thrilled at a sale yet plunging into the red overall despite that sale.
Network Marketing offers nothing in terms of instant gratification outside of relationship building perhaps. It is entirely about building. Most people are not evaluating themselves when they engage in Network Marketing and really are not willing to build something for two or three years before they benefit. The sad reality is that this is also true for any business model, which is another huge contributing factor to failure rates.
Most people who start Network Marketing cease their activity within two years. Again this mirrors all other business models. As a quick aside, is this failure? What have people spent to engage in Network Marketing versus other business startup? losing your house is failure. Spending a few hundred Dollars and making nothing really isn`t.
The third category is huge. It goes back to an ability to evaluate. If a Company is basically selling a kit and telling you to sell it to your friends, that is not training no matter how that is glossed up.
So when looking at a Network Marketing opportunity you must look at is as your business, because that is precisely what it is. Far too many people start as a "sideline" or "hobby", make little in two years, quit and then blame the industry for lack of success. That is not their fault per se, but should have been prevented before they started or their path changed through their willingness to receive good training assuming it was offered.
Now as discussed, there are many similarities between traditional business models and Network Marketing opportunities as well as a few key differences. What I look for is:
1) The market. What market is the company in? It needs to be a massive and growing marketplace. Examples:
b) The Pet Industry
c) Financial/Estate planning.
2) The Product(s). Are the products consumable? Vital for residual income. Are the products top quality? Do due diligence on the products, who created them and seek advice from people experienced with similar products outside of that Company.
3) Investment? What is the Company making me invest? Do I have to buy a "kit" or "inventory" Why? Personally I wouldn`t go near a Company that made me do so because of the statement it makes. To me it says "we achieve massive sales selling a kit whether or not you sell any at all". Therefore how good could the training possibly be? Investment for participation should be nominal.
4) The Compensation Plan? Do I need a degree in algebra to comprehend it. If it is complex it serves the Company not the individual in my opinion. It should be a no-brainer and lucrative.
5) Selling. Do I have to buy and distribute product? Do I have to note when a customer is running out and re-sell? Why? A good Company will handle ALL logistics. As a representative all you should have to do is sign customers and build your network. Time is your gold. You shouldn`t have to spend it on logistics.
6) Training. The key of it all. How does the company train me to sell its products? How does it train me to build my network? To be successful you need not only to know how to sell product, but especially to recruit and train representatives. Not only that but then train representatives so that they have the ability to train and so on. Replication of your business drive and skills is essential. That can only come from exceptional training.
With all of that in place, success becomes entirely down to an individual. Are you treating it professionally? Are you willing to build for a couple of years without huge gratification?
Network Marketing IS the perfect business model for the right individual in concert with the right company. As with all businesses, however, it is a stark bald fact that if you do not actually do something to forward the business it will not forward itself by osmosis. There are absolutely NO rewards or awards for good intentions, there are only rewards and awards for action and productivity.
So sorry for the ramble. The answer to who makes money is anyone who is willing and able to evaluate themselves, the Network Marketing Company and who is then willing and able to walk the required walk. Anyone can do that, most will not.
As a startup business, there is nothing that can possibly compare with a good Network Marketing opportunity. No house on the line with the bank, you can build your business part-time, no inventory, warehouses, employees, work from your home, no territories. If you do not succeed, the ramifications are virtually non-existent.
The sad reality is that many people have had a direct or indirect negative experience which leads them to damn an entire industry. This is the same as having a bad steak and then never going out to eat anywhere again. As anything else, there are exceptional, great, mediocre and awful opportunities. You must treat it for what it is - your own business. The reward for analyzing and treating the right opportunity with the professionalism it deserves provides a reward to risk ratio that is unmatchable in any other business model.
There is an independent video which I think provides a superb background to evaluating the industry and Companies within it. After clicking the link below, there is a link to "Brilliant Compensation". It is essential viewing in my opinion if you are entertaining getting involved in Network Marketing.
Cheers and all the best,
Thanks for starting this dialogue Rich.
I`ve failed twice in the past at network marketing and am currently involved in a third opportunity because it complements my primary business handsomely. I was hesitant before taking on the commitment again, but enjoy the rewards of using the product and have gained enough maturity and experience over the years to know what is expected to succeed.
As Kathleen and several others have mentioned, success in any business will boil down to commitment, strong business skills (ie. marketing, sales, maybe copywriting and speaking) and a serious attitude.
The problem with network marketing is many of those involved are promising others fast money, carefree lifestyles and neglect to share the truth that personal growth is necessary, specific skills must be developed, consistency must be practiced and in reality, it could take two to four years of committed effort to see significant results.
Many network marketers recruit employees who have no idea whatsoever what is required to be an entrepreneur. It`s no surprise that the attrition rate is between 80-90%. In most cases, it`s the blind leading the blind.
As mentioned earlier, MLM or network marketing are still "business" and require the same level of due diligence, commitment and discipline required of any other business.
Thanks, Leedsfan. Your reply to Rich`s question is comprehensive.
I`ve read this somewhere "To be successful, study those who are successful and what makes them tick. Further, study also those who have succeeded then failed as well as those who tried but never succeeded - what and why they failed."
In network marketing, we hear people (big and small) succeed in the business. And there is no reason why we can`t succeed in it if others have. Because others failed, that does not mean we will also follow their track. We can change our destiny by changing tactics and be aligned with our strategies.
That is why "Step 1 - Create a Life Plan of 10 Steps to Open for Business" is very important. What you really want in Life?
There are also other great site about network marketing, proving that it is the trend of the future. BTW, I visited you site and found a link that I also frequently go and a subscriber, too.