Network marketing or MLM is now a world-famous business model which officially started in America and like a wildfire it spread to other parts of the globe. Aside from USA, big markets for MLM business include Japan, Korea, Taiwan, Brazil, Mexico, Britain and Italy.
As a relatively young industry — just like franchising — there are a lot of people who have this negative image on MLM because most would automatically link networking to pyramiding. Despite all what the critics are saying, MLM is one of the most important industries that could produce certified millionaires every year.
I think the Network Marketing industry is one of the most powerful opportunities out there, both personally and professionally.
Think about it…the skills that a person can develop to become a true leader in Network Marketing is staggering. To be really successful in this industry, it is necessary to develop qualities like vision, leadership, compassion and contribution. In addition to this it rewards those who connect with others and offer something to them in a way that is meaningful and solves real problems in their life while maintaining a sense of detachment from the outcome. Their prospects choice is always their own.
This is big stuff! How many jobs out there offer as great of a potential for personal development as this? When you get it right…the income can be pretty amazing too.
So why does this industry often get a bad rap?
There are some high profile people like Oprah (in her O magazine), Dr. Phil, Donald Trump, Robert Kiyosaki and others who endorse this industry. The IRS actually give a good list of tax advantages to individuals who have a Home Based Business (for more information on how to qualify, visit: NetworkMarketingTaxSavings.com).
So how can a lot of public opinion be low?
Generally, the initial concern for people when introduced to a network marketing opportunity is when they see the compensation plan which resembles a pyramid in shape. Instantly they fear the worst as they draw a resemblance to illegal pyramid schemes. The truth is that this pyramid structure is the same as every other sustainable business model across the world. This is best highlighted in the diagram below
Here’s what I’ve come up with…It’s a matter of MOTIVATION!
The traditional model of how to make money boils down to: Get in a lot of debt, but use the source of the debt to leverage income. In addition, the debt itself can be a powerful motivator to get up and take massive action.
Now look at Network Marketing.
No boss, no employees, no commute, little or no overhead, no payroll, no producing a product, no handling or shipping of a product, minimal customer service, no handling of cash, no education barrier to entry, and unlimited income without any geographic boundaries!
So…What’s the deal!
I think one of the biggest reasons for common opinion is the dismal statistics in this industry in general. To help explain this I will compare Network Marketing to purchasing a franchise.
The cost to entry barrier for a franchise limits it to only a very small number of people. When they get started, they will do whatever it takes to make it work to avoid being crushed by the massive debt. This means loans, personnel turnover and in the beginning, working insane hours no one should have to endure.
In Network Marketing, there is no real cost to entry barrier, which makes it easy for a large number of people to start. What happens next is, the people who are serious persevere through any learning curve and challenges to become successful, while those who make up the vast majority dabble. They might make some progress and generate a small residual monthly income, but when they hit a challenge or are short on time the stop.
If they had hundreds of thousands of dollars at stake, what would be the story? Everyone would stay with it until they found what worked for them and became successful and that would be that. Because there is nothing on the line, people can drift in and out of activity without any penalty.
If someone can work for a little bit and end up with a residual monthly income of $100 or so and then check out, is that really so terrible? How much money would you need in a CD or savings account to generate that much in monthly interest?
When people who are in this situation are figured into the statistics (the bulk are in this situation) it makes it look like no one can make money this way because their numbers drown out the 3% who are serious and successful.
Ask yourself would any of these entities lawyers allow them to be involved with a illegal pyramid scheme?
(NBA, WNBA, NHL, NASCAR, DR OZ)