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The failure rate in Network Marketing

By Charles Hopkins Published 05/24/2007 | Home Based Business

Thousands of people use network marketing to build a home business. Unfortunately, it is well known that the failure rate in this business is over 90%.

There are many reasons for this, but the key one is that many network marketing companies do not have business models that support you as a distributor. As a result, the cards are stacked against you from the start.

Here are some compelling reasons why failing in network marketing is NOT your fault.

You know the story: you have done the training, did three-ways calls with prospects, purchased leads, attended the "rah rah" company events, etc. We could go on and on. The bottom line is that you STILL failed! You wonder, "What in the world is wrong with me? Why can't I make it?"

The bottom line is you are failing because your network marketing company is not taking good care of you. It does not have a strong foundational model of integrity. None of this your fault!

Here is another point to consider. Have you ever noticed that some companies have huge multi-million home offices? You see this on many of the companies' websites.

Have you ever thought about where the money comes from? In network marketing, money comes from the compensation plan. Companies don't have multiple streams of income; they just have the compensation plan. Unfortunately, in spite of multi-million dollar home offices, the money does not come back to you in the compensation plan.

If this sounds bad, things go down hill even further. If a network marketing company has a huge home office, doesn't it make sense that some sort of maintenance would be required? You know, things like a cleaning staff, upkeep for the grounds, electric bills, water bills, etc. How about workmen's compensation, 401(k) s, vacation, sick, and family leaves? What about those bonuses and cost of living salaries? A company has to have this in place for its employees. Now, where is the money to fund all of this coming from? The compensation plan!

The sad truth is that you and other distributors will never use your network marketing company's multi-million dollar building, BUT you still have to pay for it and the upkeep. That's hardly fair at all.

Let's give this further thought. With a company model such as we are discussing here, where do you think their model will go in the future? Will they have more or fewer expenses? If you yelled to yourself, "More Expenses! you got it.

Here's another thought. Have you ever wondered where your network marketing company's warehouse is located? I'd dare say that most people haven't even thought about this. Usually, most cities have places called warehouse districts with low costs and low rents. So, it makes good business sense to house company stock in these districts, right?

In reality, many times this does not happen. A number of companies have their warehouses right next to their home offices. Other than looking pretty impressive, it really is a total waste of money. Now, some companies have their businesses in warehouse districts, but many do not.

Are you beginning to see why you are failing in MLM, and how your network marketing company's business model is the problem here? With huge overhead costs, which are funded by the compensation plan, there is little to pass on to you and other distributors. Now, there are some great network marketing companies out there that have very strong business models that support the distributor, but you have to really search them out.

So, here are some compelling reasons why you are not having success with your network marketing home business. In the next part of this article, we will discover how a company's business model directly impacts your ability to build a business.