Nine out of 10 people who fill out a network marketing
application will fail to build a viable business. Among
that number will be people who do not take action and
people who build a business yet experience a true business
collapse.
The oft-quoted statistic allegedly from the Small Business
Administration(SBA) that 9 out of 10 of all businesses fail
within 10 years by comparison is not true.
According Brian Headd's article from Small Business
Economics 21:51-61, 2003: Redefining Business Success:
Distinguishing between Closure and Failure, 66% of
conventional businesses survive 2 years or more, 50%
survive four years or more and 40% survive six years or
more. Traditional small businesses do far better than the
90% failure rate quoted by people in the network marketing
industry.
What is the difference? Is the network marketing model
itself faulty? Many familiar sales models use the same
business model as network marketing. Real estate sales are
a prime example. Many top sales people across the
automotive, pharmaceutical, travel and other industries
have as their main responsibility to recruit and train
sales people and in return are paid commissions based on
the performance of their teams. It is not the model.
What is it then? Why do so many people fail in network
marketing?
Working with people over the past 5 years and in speaking
with other successful network marketers during the same
time, I have been able to come up with 5 reasons:
1) The cost of entry is too low: The typical start up
costs can range from 0 to $1500 dollars. Imagine the person
who decides to open a traditional business and has to
invest tens of thousands of dollars to do so. How might
that person differ from the person who can put their
business start up on a credit card? The person seeking to
open a conventional business where the investment is high
will develop a business plan. That plan will include a
skills assessment, expected expenditures and projected
revenues. If the prospective business owner realizes they
have a skill deficit that is material to their business
success, they will either set to work learning that skill
before opening their business or they will provide funding
and a plan to acquire that skill while they are in the
planning stages and before they open for business. Now
imagine the person who can simply put their start up costs
on their credit card. For the majority of network marketers
there is no planning beyond the initial start up. Most
never ask of their sponsors or themselves what they may
need to be successful other than the initial start op
costs. They never ask what skills they lack. There are
on-going business costs in addition to the start up costs
and those costs can range from $100 to $500 dollars per
month. Many do not make provision for on-going expenses.
On-going business expenses tend to be regarded as expenses
akin to the cable bill rather than investments in their
business. The low start up, then, can be a stumbling block
to success in business.
2) Lack of appropriate training: Unfortunately many
companies and teams do not offer training beyond corporate
events. In order to be successful network marketers must
master a simple formula, the Inviting Formula, and they
must use that formula 30 to 60 times per month. Without
this formula many new and seasoned network marketers will
invite the wrong prospects to review their information and
find themselves disappointed by the results. The Inviting
Formula is simple to learn and implement. Why is there so
little training available in network marketing? I believe
the reason can be found in the very reasons why people get
started in network marketing. Take the wage earner who
wants to fire his boss. He never wants anyone to tell him
what to do again; he hates his boss and wants to be free.
Take the corporate executive and the entrepreneur both of
whom are tired of managing people and are looking to build
a fleet of independent business owners that they never have
to manage. Put both groups of people together in what is
fundamentally a people business and what do you get?
People who find that they have to do what they were trying
to get away from in order to be successful and become free!
YIKES!
3) Too many people are looking for the big income score and
fail to appreciate the smaller sums of income they earn
along the way. Most people get started in network marketing
because of the big income claims. They want the six
figures. If they don't get 'em they quit. Here is a
statistic that will knock your socks off. Anyone grossing
$30,000 per year or more with their respective company is
among the top 3% of income earners for their company. Here
is another fact. The income earned through network
marketing is tax-advantaged income. Income earned through
a job is not. Anyone earning an additional $30,000 dollars
per year in tax-advantaged income who fails to make
significant strides in improving their wealth will never
improve their wealth with $100,000 per year. Finally, the
road to earning and keeping six figures and beyond is a 5
to 10 year process and there is no way around it. It is a
process that requires growth and change in the areas of
personal finance, emotional maturity, spiritual maturity,
and personal association.
4) Low EQ, failed expectations, too much hype in the
industry: Looks like I jumbled 3 different ideas into one
point but they are actually all related. There is a lot of
hype in the industry. Joe Smith the waiter to went from 0
to six figures in a year. Of course Joe Smith and his
company forgot to mention that all of Joe's family were
involved in the industry of network marketing, that all
were successful, and that Joe was working as a waiter just
to figure out what his options were. That skills are
required is just one of the "inconvenient truths" of
network marketing. The hype leads invariably to failed
expectations. If people understand at the start that
network marketing is really a business that requires a
skill set fewer people would get started and more people
would be successful. The organizations created would move
from vertical sales organizations to consumer-based
organizations as more people seek to become product users
rather than business owners. Network marketing itself is an
industry that attracts too many people who desire instant
gratification. Daniel Goldman described the Emotional
Quotient or EQ in his book Emotional Intelligence. He
found that the greatest determinant of long term success
was one's ability to delay gratification.
5) Money In, Money Out: Many people treat Network
Marketing as a Money in, Money out proposition. Imagine a
black box. On one side of the box is the word "IN" in bold
letters. On the other side is the word "OUT" in bold
letters. It would be easy to think that just because you
put money in, you should get money out. Investments rarely
work out that way. See the trouble is that "black box".
Something goes on in that black box that transforms inputs
into outputs and therein lies the rub. As an illustration,
I was on the phone with a prospect the other day. He said,
"I have been scammed so many times, what I need is a person
who will work with me, show me the ropes, train me…are you
that person?" My response was, "yes, we have a training
program that begins with our training manual. We have
weekly calls and I will be meeting with you a couple of
times per week and giving you assignments each time we
meet. You won't progress unless you do the assignments and
attend the training calls…are you that person?" Stone cold
silence. He never did answer my question. With my first
company, I received motivational materials at a cost of $60
dollars per month but no training. In my second program
there was training galore that I didn't take advantage of.
I thought my team's system would build my business for me.
When I realized that it wouldn't, I had a choice, quit or
continue. In order to continue I had to ask myself some
questions, among them, What skill or skills do I lack?
There are 2 skills required in network marketing A) the
skill of inviting which has embedded in it the stills of
listening, sorting and sifting and B) The skill of training
which requires the skills of boundary setting and the skill
of setting expectations. I lacked the skill of inviting.
I learned my profession through experimentation, direct
observation and practicing. I applied those same
strategies to learning the skill of inviting and I went
from sporadic checks to consistently earning multiple 4
figures per month.
----------------------------------------------------
Ouida Vincent has been generating leads online for her
primary network marketing business and teaching duplicable
strategies to her team from her home for over 5 years. To
pick up her team's Light House Marketing guide to Network
Marketing on the internet, go to
http://www.passiveincomesecretsonline.com
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