If you can fog up a mirror, chances are you’ve been approached by a well-meaning friend or relative who wanted you into their network marketing business. Touting residual income and commission checks too good to be true, his frenzied zeal likely had him faking injury to escape and ducking for cover the next time he saw them.
The truth is that the vast majority (some say as high as 97%) of network marketers quit before their business is viable. In addition to a slow ramp-up phase, there’s that seedy reputation to deal with: pyramid and Ponzi schemes, distant cousins taking you out to dinner just to try and sell you on their cleaning products business. “Reminds me of an Amway salesperson” is rarely meant as a compliment.
network marketing now
That was then, this is now. Network marketing, also known as direct selling or multi-level marketing, is coming out of the shadows and becoming widely accepted as a viable and profitable business model.
Why? For a number of reasons. In this economy, it makes sense to run a business that you can’t get fired from. Residual income is a very good thing. And just as important, network marketing is the great equalizer.
the great equalizer
Where else can you become a “franchise” owner for a few hundred dollars with the potential for significant residual income within 3-5 years? Where else does education, social status, ethnicity, or gender make no difference to your prospects, your chances, your potential income?
Perhaps that’s why Donald Trump and Robert Kyosaki endorsed network marketing in their book Why We Want You To Be Rich, stating that it gives the average person a chance to “play with the big guys.”
The (slow) road to riches
In his book, beach Money, Author Jordan Adler shares his network marketing story: 11 MLM Businesses That Failed Before They Strike Gold with number 12. “Gold” is relative if you look at his commissions for the first six months: less than $100 per month. Most people give up at this point. Either they have other jobs and are trying to do network marketing on the side, and their lousy returns and other interests get in the way, or they’re trying to keep up with their network marketing and lose their patience.
Months 7-12 hours averaged $800 per month. It’s still not enough to pay the bills, and the few people who were still holding on would probably have taken this as a sign of things to come and jumped ship. An entire year in business and earning only $800 a month? In her sophomore year she averaged $2,113. Two years in business and earning a little over $25,000 a year. Again, most people would be disappointed by those results, even if this was in the early 1990s.
Fast forward a year. Your monthly income? $34,000. Yes, monthly. What happened? A little thing called momentum. Once the snowball starts rolling, it gains speed and circumference. After his third year in business, at a point where 97% (or more) of the world would be gone, Adler was racking up phenomenal raises every month, from 5 to 60 percent. So, in less than four years, he was earning a residual income salary enviable by most. Yes, he was still working to build the business, but he didn’t have to work too hard, he reports. The ones he brought in took care of business for him. Now it was his job to support them, nurture them, and free them to earn even more money.
Fast-forward again to today: $100,000 or more per month isn’t unusual for Adler, and when he’s “only” making $50,000 per month, he checks to see what went wrong. Is this an isolated case? No. As Trump and Kyosaki remind us in Why We Want You To Be Rich, network marketing has produced more millionaires than any other industry. Although rare, Amway founders Rich Devos and Jay Van Andel, for example, have a combined net worth of $6 billion. It is good to be king.
Yes, there is opportunity, and it does help if you start when the company is young. The further up the “upline” you are, the better your chances of making a fortune before the market gluts.
Pyramid is not a four letter word
But isn’t MLM a pyramid scheme? Scheme no, pyramid yes. The more people you have under you in the business, the more money you’ll make, generally speaking. It makes a difference if and how they run the business. But isn’t a corporation built the same way? The head of the corporation earns the most money, and each level below has diminishing returns. Network marketing puts you at the head of your own business: you can create your own empire, even if you are a few levels above you.
Not All Network Marketing Opportunities Are Created Equal
But before you jump into the next network marketing opportunity that comes your way (and you will), here are some tips to keep in mind when evaluating the company.
1) It should be low start-up cost and low maintenance cost
2) It must be a fairly young company, but not too young. You must have some legacies to lean on and have an oversight committee. If it is not a young company, a long-standing company that does not have a saturated market is also fine.
3) You must provide a product or service that you both understand and believe in, otherwise how will you sell it?
4) You must have integrity. This starts from the top down. Find out who the owners are and where they were before launching the business.
5) You must have little or no competition. .It must be a unique product or service.
6) You shouldn’t have to buy and stock inventory (My favorite reason; some people don’t care about this.)
I have two friends in network marketing business. Both are doing well, in the $1000+/mo range. I also know, through an acquaintance, a woman who sells a nutritional supplement and makes a confirmed $10,000 per month.
I buy these products, I love these products, I believe in them, and yet I would not want to represent them. This brings me to the next requirement:
7) You must feel passionate about the product you represent
Chances are, you’ll spend months, even years, making very little money in network marketing, so you can’t participate just for the potential income. You must believe in the product with such conviction that you would represent it even if (read: when) you don’t get paid to do so.
