Nine out of 10 people who complete a network marketing application will fail to build a viable business. Among that number will be people who don’t take action and people who build a business but experience a true business collapse.
The allegedly frequently cited statistic from the Small Business Administration (SBA) that 9 out of 10 of all businesses fail in 10 years by comparison is not true.
According to Brian Headd’s Small Business Economics article 21: 51-61, 2003: Redefining Business Success: Distinguishing Between Closure and Failure, 66% of conventional companies survive 2 years or more, 50% survive four years or more and 40% survive six years. or more. Traditional small businesses do much better than the 90% failure rate cited by people in the network marketing industry.
What is the difference? Is the network marketing model itself flawed? Many family sales models use the same business model as network marketing. Real estate sales are a good example. Many of the best salespeople in the automotive, pharmaceutical, travel and other industries have as their primary responsibility recruiting and training salespeople and in return receive commissions based on the performance of their teams. It is not the model.
So what is it? Why do so many people fail at network marketing?
Working with people for the last 5 years and talking to other successful network marketers during the same time, I have been able to find 5 reasons:
1) The cost of entry is too low: Typical startup costs can range from $ 0 to $ 1,500. Imagine the person who decides to open a traditional business and has to invest tens of thousands of dollars to do so. How would that person be different from the person who can start their business with a credit card? The person looking to open a conventional business where investment is high will develop a business plan. That plan will include an assessment of skills, expected expenses, and projected income. If the prospective business owner realizes that they have a skills shortfall that is important to the success of their business, they will either go to work learning that skill before opening their business or provide funds and a plan to acquire that skill while is in the planning. stages and before they open for business. Now imagine the person who can simply put their startup costs on their credit card. For most network marketers, there is no planning beyond initial startup. Most never ask their sponsors or themselves what they may need to be successful in addition to the upfront costs of the initial operation. They never ask what skills they lack. There are ongoing business costs in addition to startup costs, and those costs can range from $ 100 to $ 500 per month. Many do not anticipate current expenses. Ongoing business expenses tend to be considered expenses similar to the cable bill rather than investments in your business. Low start-up, then, can be an obstacle to business success.
2) Lack of adequate training: Unfortunately many companies and teams do not offer training beyond corporate events. To be successful, network marketers must master a simple formula, the invitation formula, and they must use that formula 30 to 60 times a month. Without this formula, many new and seasoned network marketers will invite the wrong prospects to review their information and be disappointed by the results. The invitation formula is easy to learn and implement. Why is there so little training available in network marketing? I think the reason can be found in the very reasons that people get started in network marketing. Take the salaryman who wants to fire his boss. You never want anyone to tell you what to do again; he hates his boss and wants to be free. Think of the corporate executive and entrepreneur, who are tired of managing people and looking to build a fleet of independent business owners who never have to manage. Bring both groups of people together in what is fundamentally a people business and what do you get? People who find they have to do what they were trying to get away from in order to be successful and free! WOOF!
3) Too many people are looking for the big income score and they don’t appreciate the small sums of income they earn along the way. Most people get started in network marketing because of large income claims. They want the six figures. If they don’t get them, they quit. Here’s a stat that will blow your mind. Anyone making $ 30,000 per year or more with their respective business is in the top 3% of those earning income for their business. Here’s another fact. Income earned through network marketing is tax-advantaged income. Income earned through a job is not. Anyone who earns an additional $ 30,000 per year in tax-advantaged income and who does not make significant progress in improving their wealth will never improve their wealth by $ 100,000 per year. Ultimately, the road to earning and keeping six figures and up is a 5-10 year process and there’s no getting around it. It is a process that requires growth and change in the areas of personal finances, emotional maturity, spiritual maturity, and personal association.
4) Low EQ, Failed Expectations, Too Much Industry Hype – It seems like I mixed 3 different ideas into one spot, but they’re actually all related. There is a lot of publicity in the industry. Joe Smith, the waiter, went from 0 to 6 figures in one year. Of course, Joe Smith and his company forgot to mention that Joe’s entire family was involved in the network marketing industry, that everyone was successful, and that Joe was working as a waiter just to find out what his options were. That skills are required is just one of the “uncomfortable truths” of network marketing. The hype invariably leads to failed expectations. If people understand early on that network marketing is really a skill set business, fewer people would start 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 want instant gratification. Daniel Goldman described the Emotional Quotient or EQ in his book Emotional Intelligence. He found that the biggest determinant of long-term success was the ability to delay gratification.
5) Money In, Money Out: Many people treat network marketing as a money in and out proposition. Imagine a black box. On one side of the box is the word “IN” in bold. On the other side is the word “OUT” in bold. It would be easy to think that just because you invest money, you should get money. Investments rarely work that way. Look, the problem is that “black box”. Something happens in that black box that transforms the inputs into outputs and therein lies the problem. As an illustration, I was on the phone with a potential customer the other day. He said: “I have been scammed so many times, what I need is a person to work with me, teach me the ropes, train me … are you that person?” My answer was, “yes, we have a training program that starts with our training manual. We have weekly calls and I will meet with you a couple of times a week and give you assignments each time we meet. You will not progress unless you do the Assignments and attend training calls… are you that person? ”Stone-cold silence. He never answered my question. With my first company I received motivational materials at a cost of $ 60 per month but no training. In my second There were a lot of training programs that I didn’t take advantage of. I thought my team’s system would build my business for me. When I realized it wouldn’t, I had the option to quit or continue. To continue I had to ask myself a few questions, including: What skill (s) am I lacking? There are 2 skills required in network marketing A) The Inviting Skill that has the Listening, Sorting and Sifting stills built in and B) The Inviting Skill Coaching ability that requires limit setting skills and the ability to set expectations. I lacked the ability to invite. I learned my profession through experimentation, direct observation, and practice. I applied those same strategies to learn the skill of inviting and went from sporadic checks to consistently earning multiple 4-figure figures per month.