Thursday, May 24, 2012

Oh no! You're Not Involved in One of Those!

I want to pick up again the discussion of Network Marketing. In previous posts, I've talked about network marketing's enduring image problem, made a good faith attempt to find an objective definition of it, and reviewed what I find to be the most attractive features of a network marketing business. This time I would like to consider some of the most common objections and concerns that people raise about direct selling.

Before getting started though, let me admit right up front that network marketing is not for everyone, any more than being a fighter pilot or a brain surgeon is for everyone. Not everyone is suited to or even wants to own their own business. The timeless advice "Know thyself" certainly applies here.

That being said, here are some of the reasons I commonly hear for dismissing network marketing out of hand.

"Its a pyramid scheme." This from people who regard Social Security as a serious pension program! A pyramid scheme is a fundamentally unsustainable system that involves the promise of payments to participants primarily for the enrollment of more participants into the scheme rather than supplying any real product or service to the public. This objection arises from the fact that network marketing, by its very nature, usually involves recruiting people into the program. But here is the key consideration - are you compensated based upon the number of people you recruit or for the amount of product/service sales your distribution network produces? If no one else ever joined you in the business, would you still make money?

"Its too risky." Generally, the exact opposite is true. Fees for establishing a distributorship are generally quite modest, and most reputable network marketing companies offer a "buy back" guarantee should you change your mind down the road. And really, how risky is employment  (a business in which you have but one customer - your boss)?

"You have to get in early to make money." This is a variation of the pyramid scheme concern. And for a pyramid scheme it is most certainly true. For network marketing companies, just the opposite is usually true. There is a high failure rate among new network marketing companies, so it makes sense to look for one that is several years old rather than just launching. And again, if compensation is based upon product sales and not recruiting, the longer a company has been around the more likely they are to offer good products with a good support structure behind them.

"Its too expensive." While it is not unusual to find the products to be somewhat more expensive than similar products found in stores (quality considerations aside), the business itself is anything but. Overhead is extremely low, initial investments are modest, inventory carrying costs minimal and there are significant tax benefits.

"I don't have the time." People find the time for the things that are truly important to them. Einstein managed to find time to develop the Special Theory of Relativity while working a full time job as a clerk in the Swiss patent Office. A network marketing business is unusually flexible in that people can scale the amount of time they will work on it to their interest and availability. Naturally, people who put in more hours will grow faster, but, again, that is a choice the owner can make.

"I don't want to annoy people by trying to sell them things they don't really need or want." Who in their right mind would start a business selling things they believed people did not need or want? Find a network marketing company that offers products you like, use and believe in. Others will too.

"I (my spouse, my crazy Uncle Elmo) tried it before and never made any money." Did you ever attend a movie that you thought was just awful? Ever have a horrible meal in a restaurant? Did you stop going to the movies? Stop eating out? Learn from the past and do better.

This is hardly a comprehensive list, just things I commonly hear. Network marketing is simply one model for marketing, selling and distributing a product. As such, you should subject it to the same scrutiny that you would give any investment or business opportunity that you might want to consider. Next time we will wrap up this series of discussions by taking a look at what that scrutiny should include.

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