NETWORK MARKETING

Carol (Business mentor, Coach and Author) - Team Member

Yesterday morning there was an item on breakfast TV about network marketing. The context seemed to be about new business ventures. Apparently over half of new businesses are now 'side hustles' and they were exploring how this might work.

Unfortunately, as usual, they had a rather unbalanced view of the issue (isn't the BBC supposed to be unbiased, or is that just in terms of political affiliation)?

The item was in three parts. The first featured a young woman who was doing well in the sector and was making about ￡5,000 a month. The second featured another young woman who had lost money and said she was "...that mum at the school gate who pesters everyone in sight" and mentioned the 'C' word. (cult)! The third featured a representative of the DSA (Direct Selling Association) talking about the sector as a whole.

It was better than many media items about the industry (particularly in the 'tabloid' press), and at the end people were urged to do their research before embarking on a new venture, but they completely missed the main points. So I thought I'd write something to put things into perspective.

Firstly, network marketing, or multi-level marketing, is simply a different route to market.

Conventional routes have three stages: a producer, intermediaries (importers, wholesalers, retailers, logistics, advertising etc) and customers. Network marketing also has three stages - a producer, a single intermediary (usually called a distributor) and customers. But most of the usual intermediaries are done away with, including expensive advertising. This means that a large proportion of the cost of the end product (or service) - often around 70% of the retail cost, can go to the distributors (with a proportion of this going back to the company to help them produce even better products). Everyone benefits - the company has more income, the customer receives personal service and the distributors are exceptionally well rewarded.

Within this framework (which is one of the most highly regulated in the UK by the way), there are two business models. In the small business model distributors simply have a small retail business with some personal customers (and, naturally, a small income - probably up to a few hundred pounds a month) . In the large business model distributors still have their personal customers but also build a team and, in return for coaching and supporting that team, they receive a percentage of the turnover for part or all of that team (depending on the company's pay plan). With this second option there is no upper income limit whatsoever.

Bearing in mind that at least 50%, and maybe more, of new business ventures in any sector go bust within five years, there's no reason to assume the same figures don't apply to network marketing. There is no guarantee of success - which is exactly the same for any business venture. However, the media coverage fails to ask WHY people aren't successful at network marketing.

And the young woman who said she pestered parents at school gates gives us a clue. The reasons for lack of success in these businesses are pretty much the same as for any others, namely lack of motivation/aptitude for self-employment or lack of training and support. Anyone who pesters people clearly has never been told that it's counter-productive and simply doesn't work. Network marketing is about building relationships, not destroying them!

Most people aren't cut out to run their own business. Network marketing differs from other forms of entrepreneurship in that most entrepreneurs are happy with - or actively seek out - risk, whereas network marketing is great for people who want to start a business but are risk averse. In the UK the maximum you can (legally) spend to get into a network marketing business is ￡200 (compared with tens of thousands for a franchise). And whereas with a franchise you pay the owner of the franchise, with network marketing the owner pays you. Otherwise the two are similar - a parent company, consumable products, a tried and tested system for operating your business (on a self-emplyed basis) and a great training and support network.

In fact, what network marketing offers is three things: an income, a way of enhancing your personal and business skills and a support network (as reputable companies function like a community, which is great for people who want to work 'for themselves but not by themselves').

So, network marketing isn't a scam, it isn't a 'get rich quick' scheme and it isn't a guarantee of high earnings without effort. It is a real business and, as such, needs to be worked properly. If it isn't then lack of success isn't surprising.

I've been involved in the sector for 18 years and it provides my main income source (which is like a royalty income - ie once it's established properly it continues even if you aren't working). It's a great insurance policy against ill health or economic downturn and it's an inexpensive option for the average person. The sector has apparently grown about 30% since Covid and now many of the 'side hustles' which I mentioned at the start, are in this sector, often providing a second income for people who already own a small business in another field.

What I find sad is the number of people who would love a business of their own, or who desperately need another income source, but are put off by - no doubt well meaning - friends or family who come up with all kinds of reasons why it won't work for them, despite having no personal experience of the sector whatsoever.

The potential can be life-changing and with what's going on in the world at the moment there's a great need for occupations that aren't stressful or precarious, but allow people to develop as individuals and as colleagues. We can offer that, but only to those who are prepared to put in some effort, be coachable and take responsibility.

If you know anyone like that I'd be delighted to chat to them about what's on offer.

Keep healthy , look after your physical and mental wellbeing and keep an open mind always,

Best wishes and wishing you success in life ,

Phil Pickles ( 20 years in Network Marketing with the same company )

[email protected]