One of the biggest problems I run into when trying to present my primary business to people desperate to do something other than work their jobs day by day is to get them to see past the words "Network Marketing" or the letters "MLM." Everyone it seems knows those words and letters, but most do not really know what they mean or can explain the business model they represent.
Many associate these words with ponzi schemes, pyramid schemes, and all sorts of scams and illegal business practices. Yet, when pressed on a particular companies sales / marketing plan, they can not explain why or how they are a scam or illegal. So, in order to clear the air about Network Marketing, let me begin at the beginning and state categorically that MLM / Network Marketing is a legitimate business model that allows ordinary people to have access to financial freedom.
Let me explain this way:
- If you go to work as a salesman for a local car dealer, you are the one who does the bulk of the work to secure the sale of a car to an interested customer.
- You are the one who responsibility it becomes to explain the cars options, its benefits, and its availability to the customer at an agreed upon price and terms.
- At the end of the sales process, you are rewarded for your efforts with a commission check equivalent to your agreed upon rate.
However, from the remaining "profit" your team leader may well receive a small portion, the sales manager (new or used or both) may receive a small proportion, the general sales manager receives his share, and in the end the dealership owner receives their share.
- This occurs with every purchase of every car every day at every dealership. Yet no one considers such an arrangement as a scam, ponzi scheme, or illegal pyramid, as it is not.
- Network marketing follows this same business model with one exception, it allows you, the salesman, to go out and recruit your own sales force. In doing so, you are allowed to make a portion of the gross profits from your team sales just like the leadership of the car dealership does with every car you sell.
Yes, but what about all the people who pay to get into these companies that never make any real money? Well, let me answer that by asking you, Have you ever known someone who began a sales career in some industry and quit soon after because they were not making any money? I have know car salesman, real estate agents, insurance agents, even doctors, accountants, and photographers who left their jobs because after all the work it took to get them there, they simply did not have what it took for them to make enough money to survive.
You see, success as well as failure happens in every industry. People with all levels of education succeed and fail all the time, yet it seems that the Network Marketing industry receives an unfair level of disrespect for what happens when someone using this business model fails! Just as in every business it is most often not the failure of the business model but the failure of the business owner to learn, grow, innovate, and plan that takes them out of the business.
That said there are three things that everyone considering their own business needs to evaluate before they make the move from employee to business owner:
- Why do I want to start a business of my own? I spoke to a very successful MLMer just who made more than 10,000 in the recent month in business and yet he said he was still struggling in life. You see its not the money alone that makes business ownership good. Money alone can not be your "why." There needs to be more to it than that! Define your "why" and see if it is big enough to withstand the challenges that business ownership in any industry can bring.
- What are you willing to do to be successful? Starting a business is about more than buying a "business kit" and customizing your replicated business site. If you do not have a basic idea of what it takes to be a successful business owner or you are not really willing to pay the price for success, you will fail! Do not start … run away!
- How will you balance business ownership with the rest of your life's purpose? If you do not find balance between work, business, family, relaxation, and personal time, you are setting yourself up for failure.
The reason we hear more about MLM failures is because the entry point for an MLM business is usually low enough that people will try again and again to succeed without taking time to consider what the real reasons for past failures were. In the end, they get very discouraged and declare the business model a scam rather than considering that they were just not educated / prepared enough to succeed.
The truth is that this business model reflects all successful business models currently in existence in a free society and that success or failure is not based on the model as much as it is based on those who think of it as a get rich quick scheme and then complain when it is not!