C O M M O N M Y T H S A N D M I S C O N C E P T I O N S
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.
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
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
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
5-Quality of products may be less, due to the amount
of commissions that are paid up to the channel of
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
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?