Times have changed…
Ideas age rapidly in the face of a changing environment. Whatever concept people have of Network Marketing, if it is negative, is most likely out of ignorance or prejudices that are based on isolated circumstances. When I say “out of ignorance,” I am including lack of research. This is unfortunate as Network Marketing is now recognized as the future for entrepreneurs by people such as Warren Buffet, Donald Trump and Robert Kiyosaki. The previously mentioned “mis-attitude” might be similar to hanging onto the idea that all investment is bad because of the Stock Market crash or that you cannot trust anyone because one (out of six billion) ripped you off. Instead of hanging onto the past, let’s take a look at some facts. What exactly is Network Marketing?
What is Network Marketing?
Simply put, Network Marketing is the moving of a product or service through a network of people who are either customers or marketers or both. A network can be structured as a multi-level, affiliate (advertising for another company for a commission) or it can be a system of duplication similar to franchises. All network marketing companies are NOT the same.
Is Network Marketing or MLM a Get-Rich-Quick Scheme?
Multi-level marketing, or MLM, is called a “pyramid” or “Ponzi Scheme” derogatorily by the ill-informed. Most people who call it that cannot differentiate one business from another and rarely know what those terms mean. Clearing up the definitions can alleviate that. Let’s clear up “Ponzi Scheme” first.
Charles Ponzi Was A Real Person
In the field of investment or securities fraud, the phrase “Ponzi scheme” refers to a real person and event. According to the article “‘Ponzi’ Schemes” on the United States Securities and Exchange Commission website, Charles Ponzi raised over a million dollars in three hours in 1921. People gave him money as an investment with a promise that they would get a 50 percent return in 90 days.
That sounds too good to be true even today. A good rule of thumb when considering an investment is “If it sounds too good to be true, it probably is.” Never spend money you cannot afford to lose. That being said, any money opportunity could be a “Ponzi Scheme” if you are being lied to. But applying that term to all Network Marketing would be ridiculous. What about a “Get-Rich-Quck Scheme” or “Pyramid.” Let’s clear up those next.
What is a Pyramid Scheme?
Any so-called opportunity where the money rolls up to the top and other levels in the structure need to get people “below” them could be considered a pyramid. But what would make them an illegal scheme? Typical examples are chain letters asking for money and you are required to send the letter to a certain number of other people and this eventually creates a great deal of money coming to you. This is not marketing. It is a scheme. There is no product and the last people in the chain supply the money.
The importance here is whether or not the offer is an illegal scheme and not so much if the structure is a pyramid. Most large companies are a pyramid. The structure is few or one at the top and most at the bottom. Those in charge receive the highest pay and the menial jobs at the bottom are paid the least. Are you being paid what you are worth? That’s what sets one company apart from another – a chance for advancement and being paid commensurate to your worth.
Examples where people get paid for their actual work would be subcontractors, salesmen, those paid wage plus tips, jobs with available bonuses and the like. The truth is that when people are paid for the work they do, only lazy people complain.
Why Would Someone Call Network Marketing a Pyramid Scheme?
In truth, unethical marketing companies are to blame. The savings Network Marketing companies enjoy from the lower overhead, reduced advertising costs, avoidance of minimum wages, etc., would ideally cover the commissions paid out to its marketers. However, some companies inflated the price of the product or services and compensated or appeased their customers with a message of “sign up two people and your product is virtually free.”
However, if the customer or potential marketer fails to sell the product or sponsor other marketers, they end up paying too much and quit, knowing their “sponsor” and the company made money off their purchases. This causes a lot of “drop-off,” known as “attrition.” Marketers have to work twice as hard to keep a customer base and eventually, the marketers will quit, too. Now, having wasted a lot of time and money on a product or service they may not have wanted or needed, these people will refer to all network marketing companies as pyramids.
The truth is far more optimistic. Valid companies do not inflate their product price beyond its proper exchange rate. The companies that have made it through the decades offered services and products worth the price in the eyes of their customers. Therefore, this can be another rule of thumb in searching out a valid network marketing company. Before one decides on a home business with network marketing, he or she should be certain about being a willing customer. If so, and the money you spend is an amount you can afford to lose, then the experience you gain will be worth the price no matter how the venture turns out.
Why Are Millionaires Turning To Network Marketing?
I stated earlier that times have changed. New internet regulations such as earnings disclaimers, have reduced much of the rip-off schemes that were once there. Additionally, time has proven that people DO make a legitimate income using the internet with an international scope of consumers. Old school marketing with seminars, house parties and business meetings in your home are fading out. The internet is faster, easier and more efficient. But there are other factors.
ECONOMIC INSTABILITY: These days, outsourcing is the economically smart thing to do. A United States citizen faces competition internationally. He is no longer competing with just other local college graduates. A company would be foolish to pay a technician $80 an hour when he can outsource the job to someone who is just as qualified and will do the job for $20 an hour. In America, we have an economic situation creating “work instability” and unemployment. Additonally, our governments are weakened by paying for the unemployed and when they do, some public scream “socialism.” A country with working citizens finds less complaints. And, they need work that pays well.
CONTROL OVER THE WORK ENVIRONMENT: A few decades ago it was the norm to offer shares in the company, benefits you could rely on, staff suggestion boxes, and other features which created a teamwork atmosphere. An employee could count on tenure, feel he had a say in how things ran and a chance to work his way up to the top.
Nowadays, a sudden cutback could leave you unemployed, inadequate insurance coverage is all the company can afford, retirement funds are sometimes lost in bad investments or the company is bought out or taken over and they have their own staff choices. An employee does not feel he has control over his future. People need to be in tune with their working future and have more choices as to their benefits.
TOO MUCH COMPETITION: Competition to get a job created new political issues and tensions. Many people have settled for a pay far less than their worth. Competition continues in the work place for promotions that will only come about if one puts in the extra time and effort. Even then there are no guarantees. Valuable time with family and one’s personal recreation may be lost forever.
Why Not Start Your Own “Regular” Business?
THE UP-FRONT INVESTMENT: A few decades ago, you could solve all this by starting up your own company. To a degree, this is still true today. However, even if you wanted to start a business such as landscaping, you will need several thousand dollars in startup fees. You will need to know accounting or hire someone to keep the IRS happy and several government agencies will be interested in your licenses, insurance, how you pay your employees, taxes and whether or not you have the proper paperwork filed with the proper agencies. Got that covered? Great. There is still another consideration … time versus income.
A SLAVE TO YOUR COMPANY: Let’s say you take out a small business loan or use your own working capital. Most people sweat out the time to profit, making timely payments, they run into personal debt as they rally the business into more income than cost, all the while wondering why they gave up that cushy job with the regular schedule and paycheck. With your own business, all the risks are yours. Even if you are incorporated, the banks are not likely to give you another loan if you fail. You have to run the company and retirement is usually a long way off unless you can sell the business or turn it over.
With Network Marketing, you let the company bother with most of that. Your job is to market the product, build a team, get it set up so that it runs on automatic and then you can retire early. You make your own hours, build it to run on its own then sell the position that has been built, if you want to, or leave it to your children or best friend.
How To Make It In a Network Marketing Business
Here is what the successful people are doing. They educate themselves on how to choose the right company and the right marketing system. They do this in their spare time after work. When they are ready, they sign up with the company and set up their system. They know they probably won’t get rich overnight. Methodically and knowledgably they build the business, keeping an eye on their target and firing up their motivation constantly (important but personal).
When their income exceeds their job and they are confident that it will only keep growing due to the leverage they have established (the customer base and skill is an asset called leverage), they FIRE THEIR BOSS and find out what true financial freedom is.
Knowing the information above, many people have built their business and made their fortunes or enjoyed an extra income. A small percent did it with luck or a windfall but most network marketers took two to five years to make it to six figures. That’s an honest assessment. Where will you be in two to five years with your present employment? That should answer the question as to why millionaires and aspiring millionaires are attracted to Network Marketing.