Network Marketing – a risky business

We can’t avoid risks in life. Although network marketing is low risk, too many people make the mistake of thinking it is risk free. One thing that contributes to that is that the start up cost in most companies is very low. But don’t forget you will have to make monthly product purchase in most cases.

Then you have a sponsor who is trying to get you in his deal and who tells you that it will cost you next to nothing; you are desperate to fire your boss and you are off on the wrong foot.

Sure it’s nothing like the cost involved in setting up a franchise business which could cost you many thousands of dollars. Traditional businesses usually cost a lot as well with offices, inventory etc.  If you are one of the majority in the MLM industry for whom it will never be more than a part-time venture, then it won’t cost much either, but nor will you earn much. So let’s look at where the money can go.

• Monthly auto ship – you will need this with most companies. It should be a value product you use. But still it is a regular financial outlay that you must account for.
• Free lead generation – so is it free? At first it is if you work on the social networking sites. But at some point you will have to phone people or travel to meet them. If you are developing your business internationally, calls cost money. Even using Skype means you will have to buy a monthly subscription to call phones – not a lot but it’s not free.
• Lead generation systems – there are a stack of these costing from 20 dollars a month to several hundred. The expensive ones are not necessarily better but at some point you will have to make this investment.
• Advertising – paid advertising should be used very carefully or it can really eat your budget. Currently Facebook advertising is amongst the best value. Pay per click is another way to go and there are many more. Once you get into this, you could be looking at a rock bottom minimum of 50 dollars a month for it to be worthwhile.
• Your blog – sure a WordPress blog is free but that is just the start. The standard themes offered by WordPress are not impressive. For something more professional you might have to pay 100 dollars. Then there are monthly hosting fees. You might want to buy article submission software to make life easier and that could be around 100 dollars.
• Sundry costs – if this is a serious business then you will have to be prepared to invest in other things too. I have a 20 dollar a month subscription that allows me to make recordings of conferences or training calls I make. I use this for my own reference and for team training. Serious personal development will mean you must buy books and CD’s. Even just one a month will be a few dollars. You might need to buy a webcam to make videos for your blog or YouTube.

My monthly outlay is around 300 dollars, apart from some of the ‘one-off’ initial payments and further tools. I will likely be increasing that soon.

If you are new to network marketing and this is too much for you, then maybe you should be doing something else. Because apart from the necessity of the investment in the first place, you might lose it. If you don’t make it work (and most people don’t) then the money is gone.

With even these costs and risks, I believe network marketing is one of the best opportunities you can get into. But don’t fool yourself or a naïve new prospect. It will come back to haunt you and will leave a bad trail behind you.

Do you agree? Please leave a comment and post it on of you like it.

Related posts:

1. Network Marketing Tips – celebrate all the way
2. PYXISM – A genuine business opportunity?
3. Network Marketing Prospecting – tips from the top
4. Building your MLM business – should you sponsor everyone in?
5. Infinity Downline – an overnight fortune or is there a catch?

Tagged as: Auto Ship, Generation Systems, Lead Generation, Network Marketing, Pay Per Click, Social Networking Sites