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Is Network Marketing the Ideal Business Model ?

Aug 17, 2007
It is often said that network marketing is the perfect business. It seems logical that many people in the business say this, since a statement like that could draw new people into the business. "This really is the perfect business!" could be just what your prospect needs to get the courage to make the decision and join your network marketing company. But is that all it is? Just a great statement to be used in an attempt to close people, or is there actually any truth to it? Of course not everybody shares this positive image of the industry. Many people think quite the opposite of network marketing. Busloads of people would laugh when someone would refer to it as 'the perfect business' because they don't even consider it a business in the first place. They might still have the picture of a bunch of housewives gathering around the kitchen table to sell each other plastic cups and lingerie as a hobby. Obviously not everybody evaluates a business by the same criteria but with global revenues exceeding 100 billion dollars it just doesn't fit the description of a hobby anymore. It's serious business.

Fortunately a lot has been written on the subject over the years, by people outside and inside network marketing. Robert Kiyosaki is a good example of a successful entrepreneur and best selling author, who has not made his fortune in network marketing. He isn't even in the business. But he is a strong advocate of the industry because of its power and potential. He also explains why, in his opinion, this industry offers the best chance of success for an individual that wants to start a business these days. He claims that network marketing companies have a system in place, much like a franchising formula, that have proven to produce results if you stick to the system.

So if we have established that network marketing is indeed a business, the question still remains: "How perfect is it?" To answer this question let's look at this from the perspective of someone that wants to go out and start a business.

If you were to start a traditional type business the first thing you need would probably be money. In many cases a lot of it, so you would need to talk to a bank. Of course this bank is not just going to throw money at you until you convince them that your business has a good chance of success and that you are a good candidate. You may even have paid a professional to put together a solid business plan. So before you make your first dime, you are spending valuable time and money to even be considered to get the money you need from the bank.

Now let's say you qualify and you get the money from the bank. Then you go out and start your business. You rent the space for your store or office and in doing so you have to put down a deposit for the first month or two and you probably have to sign a contract for a minimum duration of your lease. This will account for at least a couple of thousand dollars. Then you have to get the furniture and equipment to make your business actually look like one. Depending on your type of business that can range from hundreds to many thousands of dollars that you must spend just to get your business up and running.

Of course it doesn't end there. You'll have to take care and pay for: insurance, advertising, accounting, legal fees, taxes and a bunch of other things that you may not have anticipated, but will prove to be necessary nonetheless. In most of these cases it will take someone else's knowledge and that someone wants to get paid for their service.

Now you may realize that with all of these things to take care of you're required to work your business full time. And this is not full time like 40-60 hours on a job. Most entrepreneurs work 60-80 hours or more per week. Still, you can't be in the store all day and do it all by yourself. So you decide to hire someone to help out. Here comes the nightmare of all companies: employees. They'll work hard when you're there and slouch when you're not. When they show up late or call in sick, you have to open the store. And they'll never work as hard as you do, because it's not their business, it's only their job. Nevertheless you must pay them before you can even pay yourself.

And then we haven't even discussed all the outside factors like: competition, government regulations, technology, city circulation plans, customers that refuse to pay and too many more to mention. A change in any single one of them could put you out of business in no time. The sad truth is that over 90% of all new businesses go out of business within the first five years of their existence. Yet how much money do you put on the line to have a chance in a business like this?

Now let's compare this with the business of network marketing and see what the differences are. If you start your own network marketing business the initial investment is very low; probably less than $500. You don't need an office or a store to rent because you work out of your home. There is no need for extra insurance, legal fees or expensive marketing advice, because all of these things are taken care of by any good network marketing company. Most companies also offer valuable training at minimal cost that will vastly increase your chances of success.

You can start your business part time and you can work when and where you choose. Perhaps the most important advantage of the network marketing business model it the leverage is offers. You can leverage yourself by sponsoring others into your business and helping them build a business for themselves. Yet these people on your team are not your employees, they each have their own business. Therefore they'll be more motivated to work because they are not working for you, they are working for themselves. This way you can build a network of thousands of independent distributors scattered all across the globe through different levels in your organization that you can benefit from. It's like having thousands of stores all over the world without having to pay rent on any of them.
Does this make network marketing perfect? No, of course not. Nothing is perfect but anyone who seriously evaluates network marketing can't help but come to the conclusion that it offers some remarkable advantages over traditional business.
About the Author
Mr James started My Business Tips Online in 2006 to provide business advice, etc and write articles about his industry-full article here
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