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  1. 1. COMMON MYTHS AND MISCONCEPTIONS Network Marketing as an industry is in its infancy, as compared to franchising-around 100 years old, and other industries which have a longer history. It’s the most misunderstood industry due to its innovative and unorthodox ways of redistributing profits, and advanced methods in marketing. Add to it the huge upside potential with negligible capital. “Ignorance is the thief of opportunity”. Just like you would evaluate any business venture, make sure you make a decision based on factual, objective and most importantly-from the right information source. Would it make sense to ask a tradesperson who is successful in a given trade you are investigating, than someone who is not in the profession? or perhaps unsuccessful in the trade? It is common knowledge among entrepreneurs that 95% of new businesses fail within the first 5 years, and like wise, the business of network marketing is not for everybody. It pays very generously to those that have the skill and right experience in the trade. More importantly, you should choose an organization with proven systems to develop its members, than organizations which rely on luck, the short term, and fast buck thinking. “Visionary ideas are always violently opposed by mediocre minds”-Albert Einstein COMMON MISCONCEPTIONS BUSINESS SENSE- TRUTHS 1.Saturation- That it is always good to join with a new company while it is at the ground floor, that mature companies would have “saturated” the market as most of people already “ know” about the company. The truth is, know doesn’t mean they are involved doing the business, most of them are not even consumers yet, or just customers. Saturation is the silliest excuse for lack of skill in a chosen trade. It can be argued therefore that every industry is saturated as one with a scarcity mentality would argue, e.g. there are more than enough dentists and lawyers in the market, or even IT people. Christianity has been around for 2000 years. How many people are Christians in your country? If saturation were true, how do we explain the fact that refrigerator sales made record high sales in 1992? There are 21M people in direct sales worldwide (WFDSA figures). 90% of them are only wholesale users of the product. The market is people who are not in the trade- that means 4.8Billion people on earth! It wouldn’t matter which company you are in as you are still looking at the same market, whether you are with a well- established stable company or a new and risky company. You will be wasting your time and energy trying to talk to people who are already doing network marketing. The advantage you get with an established company is the security of sound management, track record of the company’s ability to sustain growth, and already fine- tuned training systems that would be able to cut your learning curve in the business. 99% of ground floor companies do not last 5 years in this industry. Truth is, luck doesn’t last. Only skills are dependable. To be successful in any company requires hard work and skill. It would be safer and smarter to look for companies with a proven track record, a solid global infrastructure and a good support system, versus experimental ventures where you would be the guinea pig, and most probably waste your energy and effort.
  2. 2. COMMON MISCONCEPTIONS BUSINESS SENSE- TRUTHS 3-Only top, pioneering people in a company makes the money. All the people at the bottom of a pyramid are working for the people at the top. All the people that are working in the plan is making the company rich . MLM companies are viewed as suppliers of products and services. Distributors are paid based on the volume of products sold. Not everyone that joins in an mlm company is a mover of products, some just choose to become users. The 80-20% rule of Vincent Pareto applies, as to any business. Thus it would only be fair to pay people who are working. In a normal corporate structure, it can be safely said that every customer and every staff of the company is working to make the boss rich. It’s normal. The boss of the company owns the “ market share”. Network marketing is a fair business, as anyone can create their own market share, and be on top of things. It would also be normal for someone who has had more years in the business to make more (assuming effort was equal) due to longevity. But it doesn’t mean that one cannot make the same amount of money given the same time. It would be absurd to think that just because you are distributing products of a certain company, you are making the company rich. The same way that every product you buy in the grocery store is making the manufacturer rich. However, common sense tells you that the supermarket makes his/her share of income. There are many cases of people who are making more money than the people who sponsor them, as they qualify for higher profit shares, with higher productivities. Fact 1 - the highest income earners of giant companies such as Nuskin, Amway, and Herbalife were making more money than the people who sponsored them. COMMON MISCONCEPTIONS BUSINESS SENSE- TRUTHS 2. The way to know how much money to make is by looking at the marketing plan of the company, bypassing the need to evaluate the company’s track record, products, infrastructure and strategy. It would be smart to know that a marketing plan “on paper” does not equate to a business. If so, there should have been too many companies more successful than Amway, as every new company that ever came after Amway, used Amway as their benchmark. Every new company and marketing plan has its share of losers and winners. Therefore, it’s more important to look for the right training and support structure to guarantee better chances of success. The best way to know, is to see “actual results” just as you would evaluate a franchise. You look at results. I.e. how many millionaires created? How much sales is created by the company? If you were paid 70% on zero sales, it still means ZERO. Use your common sense. If it were true, it should manifest in the actual sales figures of the company. The bottom line, in network marketing is numbers - the more consumers you have in your organization, the bigger your income. Amway is the oldest network marketing co. (25 years in Malaysia), but is still number one up to this moment and still consistently produces the top winners in the Mlm industry
  3. 3. 4-Prices of products are inflated due to much commissions paid to multiple layers of distributors These type of objections normally come from people who have no knowledge of the actual supply chain of all consumer goods in the market. It would be absurd to think that the supermarket doesn’t make a profit, and P&G or other multinational companies don’t have to pay regional distributors and local agents. Not to mention advertising. MLM pays direct and re-channels the budgets that otherwise goes to advertising and middle men to the buyer who in this case doubles as the distributor. Product prices should be in comparison to other products on the market for value and quality-the money you pay for your product, not on how much profit the supplier makes. 5-Quality of products may be less, due to the amount of commissions that are paid up to the channel of distributors. On the contrary, MLM bypasses the normal supply chain and advertising, to bring products direct to the consumer, and since this is word of mouth advertising, it is to the best interest of the companies to produce hi- quality products for its distributors to spread good news instead of the opposite. Most products sold on the MLM channel are impossible to sell over the counter at the same price, due to hi-budget allocations for normal advertising and mark-up for retailers. 6-Because many people tried and did not make it big, the business doesn’t work, and because I have tried it before and nothing happened after I invested in products, the whole industry does not work for me. No industry works for you. You have to work for it. Most people try to do traditional business and fail, statistics show a 95% failure rate, the only difference with mlm is the low risk due to small capital requirements. Most of the people who participate in mlm do not give it enough time and expects to make it big without acquiring skills that are specific to the trade, because there is no financial commitment . Too many people with low commitment to making a business succeed join the industry. MLM is a 90Billion dollar industry growing double digit every year- somebody must be doing it right. Other factors also apply, such as quality of support system, willingness to learn the business, different corporate cultures, and different expectations. Common sense-to be successful in any trade, know that the right info comes from people who know how to be successful, rather than the people who only know how to fail. Therefore if you are smart, who do you think would have the right information for success? People who know how to be successful? Or people who failed? If you were planning to succeed in the food business, would you pay to ask people who are successful in the food business if they were willing to show you how? Who do you think would have the right info? winners or losers?