NETWORK MARKETING IS NOT something you should do without considering the downfalls. Network marketing companies inspire in you the dream of making millions in network marketing, overnight. The reality is that while some people make that kind of money, it’s certainly not overnight. The really big income earners in network marketing have usually been in the business for quite some time and, in many cases, have a client following that moves from business to business with them. This creates a large down-line which continues to make them top producers no matter what business they’re in. Can you reach that point? Sure, but it will take some time and a lot of work.
Not all network marketing companies are ethical in what they promise and provide. If this comes as a surprise that this can happen, just look at how many go out of business. They close their doors and who loses? The distributors. They wind up closing without paying out what was earned by the distributors. Some network marketing companies find ways to edge-out those who start earning too much, citing violations of little known policies. The proper due diligence and research when considering a network marketing company will help avoid most of these.
Some companies promote products that are next to impossible to sell. They make you believe that everyone is knocking down the door to get their product. Selling their product will be so easy you can’t possibly fail. Sometimes, the product doesn’t produce any of the promised effects in their literature or on their websites. The product must be as advertised and must actually be something that everyone is searching for. It will be more sought after if it over-performs the ads. When considering a product, ask a large sampling of friends and strangers if they would be interested in purchasing this product. Just because you like it doesn’t mean everyone will buy it.
Cost of the product is another consideration. Can you buy the same product somewhere else for less money? Is the market for this product affected by the economy? Also, consider how saturated the market is with comparable products.
The cost to join a network marketing company can, in some cases, be well over what it’s worth. What you get for your investment in training, tools and expert advice is often not a good value. Your percentage of profit, based on expenses, often doesn’t make good business sense, no matter what business you’re in.
There are, however, plenty of companies that offer a good value at a reasonable investment. Use this simple business formula to decide whether the initiative is really worth your while: product sale price – cost of goods sold = profit. It’s up to you to determine if this gives you what you consider a reasonable profit. Determine if you can make more in a different business with less effort. Simply, if you can’t make a comfortable profit, you shouldn’t sell it.
The requirement to maintain large inventories of product is another bad business idea. The horror stories abound of former network marketers who, after many years, still have a garage full of soap or some other product. If the company doesn’t drop-ship directly to the customer, run away. Most companies will ship directly to the customer (drop-ship) with a reasonable shipping charge. Quite often, distributors who are required to store large inventories never recover their shipping cost. If you keep accurate accounting of all your costs (including shipping), you should recover your cost and sell at a price which allows a decent profit. But are you overpricing the market? The best advice is don’t get involved in maintaining an inventory!
Time is a big consideration in network marketing. The age-old story is that you can work 2-3 hours per week and get rich. This is a myth! In order to be successful in any network marketing business, you will need to put forth a large amount of time and effort to promote your product. Time spent in marketing and sales are how you grow your business. Some products are easier to promote than others, but they never sell themselves. Home parties, sharing the product, and finding leads are very time consuming. Your up-line is not going to do it all for you. Plan to spend a lot more time than they tell you. If you aren’t using the product, what makes you think your friends and customers will? If you don’t have the desire and can’t spare the time, you won’t make it in network marketing.
The sad truth is that a very large percentage of people underestimate the network marketing industry and drop out in less than a year without making anything. The turnover rate of distributors in any network marketing company should be of great importance to the research you are doing on a company. If they don’t offer the figures on retention of customers and distributors, it is usually a sign to stay away. Successful companies are usually proud of their retention rates and will be happy to share them with you. Be careful though, some tend to inflate these figures.
Researching the financial health of many network marketing companies will give you cause to suspect their longevity and strength in the market. If they are on the stock market, it is easier to determine how well they are truly performing. Privately owned companies should provide certified profit and loss statements. If they don’t make these available, don’t consider them.
There are many good and bad network marketing companies out there. The bottom line is that you must be committed to putting forth the time and effort to make your network marketing company profitable for you. Dreams and desires won’t make you successful if you don’t put forth the time, effort and hard work required.
