Network Marketing vs. Traditional Business

Today, I want to write a short blog post about network marketing vs. traditional business. I want to compare the two industries so you can potentially decide if network marketing, or owning a business, is for you.

The network marketing industry has a lot of critics.  Some of the criticism is deserved, but that doesn’t mean that network marketing is a bad industry.  In fact, it’s often an industry that is simply misunderstood.

Most people have an OPINION about the industry, whether good or bad, but they’ve never taken the time to honestly evaluate the industry.  They base their opinion off a few crazy things they read online or from things they hear from a friend who quit the industry.

As a result, many people have preconceived notions and never get involved with MLM.  They act as if MLM is not a legitimate business.

On the other hand, I’ve found that a majority of Americans think it would be nice to own a business of their own. Many people dislike their job, or their income, and would love to take control of their own future and be their own boss.  In many cases, being an entrepreneur is the American Dream.

And while many people dream of owning a business, most of these “wannabe entrepreneurs” do not have the capital to start their own business.  Let’s face it, in the traditional business world, you normally need $10k to $100k or more just to get STARTED in business.  By the time you get a building, inventory, insurance, employees, and other start-up expenses, you are already deep in the red!

And the odds are stacked against you.  With failure rates of 80 to 90 percent, most business owners lose A LOT of money when they go out of business. So, before you ever make a decision to become an entrepreneur, here are a few things you should know.

  • It’s hard to succeed in business
  • Most businesses fail
  • It takes time, money and LOTS of work to succeed in business
  • Just because you are good at a job does not mean you will be good at a business doing the same type of work
  • It takes a certain mind-set and skill-set to succeed in business
  • It takes most businesses a couple years just to get profitable

Now that I’ve educated you about the difficult things of entrepreneurship, let’s take a moment and compare traditional business vs. network marketing.

Traditional Business

Here’s what you can expect with owning a traditional business.

  • High start-up costs (most businesses are $10k to $100k or more, although some are cheaper and some are much more)
  • You normally need to lease or buy a building
  • In many cases you need employees
  • You will normally need inventory
  • Normally restricted to your geographic territory (unless you are an online business)
  • Normally restricted to your set location
  • You have a linear income
  • In most cases, you have to train yourself or figure out everything on your own (unless you are a franchise)
  • Normally need set hours (during business hours)
  • Work 80+ hours a week
  • Lots of financial risk (the money you have invested)
  • You normally have to quit your job before you start a business and go all in (full-time)
  • High failure rate

Network Marketing

Here’s what you can expect with network marketing.

  • Low start-up costs, normally less than $100
  • No building to buy or lease
  • No employees
  • No inventory (in most cases)
  • No territories
  • Work from anywhere in the world
  • Build residual income 
  • Free training and support system
  • Set your own hours
  • Work part-time or full-time (while you keep your day job and security)
  • No risk
  • High failure rate

As you can see, when you compare network marketing vs. owning a traditional business, you can see their are lots of advantages to having a network marketing business.

Please note, I am not telling you that network marketing is ALWAYS better than owning a traditional business.  It’s not.  If you have a dream to start a certain type of business, go do it!

But for the average person, who needs a business with a low entry cost, network marketing is a perfect opportunity.  And for the tired professional or small business owner looking for an exit strategy, network marketing is a great opportunity.

Before I close out this post I want to spend a minute and cover the failure rate in network marketing, because that’s what most people focus in on when they talk about MLM.  Here’s the truth as I see it.  Most businesses fail.  So do most marriages, diets, financial plans, and just about everything else.

Drive around your town and see how many closed down businesses there are.  If it’s like my town, there are a lot.  And please realize that most of the business owners invested tens of thousands of dollars into their business!

Look at how many people you know who have at least one failed marriage.  Look at how many people you know who started a diet, lost weight, and then gained it all back.  Look at how many people you know who go to the gym for a few weeks, and then never return.

I could go on and on here, but here’s the point.  Most people fail in everything they do! So why make a big deal out of the amount of people who fail in MLM?  It’s no different than anything else!

And trust me, most of the people who so called “fail” in MLM didn’t fail.  They quit!  And there’s a big difference.

Thanks for reading my article about network marketing vs. traditional business.  I would love if you would chime in here and leave your thoughts and comments about what I wrote.  I look forward to hearing from you.

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7 thoughts on “Network Marketing vs. Traditional Business

  1. Greg Boudonck

    You made a great point; many people look at network marketing failure rate. What they do not look at, or compare is the normal business failure rate. Traditional businesses fail as much, if not more than network marketing businesses. In my opinion, the failure rate excuse is no excuse.

    It does make sense; the low starting costs with hardly any overhead. With a traditional business, your customer base is primarily the local population, whereas with network marketing, you have a bigger customer base.

    You may some good points here. Keep ’em coming.

    Reply
    1. chuckholmes Post author

      The truth is, it’s hard to succeed in any type of business, network marketing or a traditional business. But if you do succeed, you can make a VERY nice life for yourself. And if you fail in MLM, you don’t lose several hundred THOUSAND dollars like you do with most businesses.

      Reply
      1. Greg Boudonck

        The one thing I feel I need to stress is that if a person is starting a network marketing business, they should treat it as if they started a traditional business. What I mean by that is to pretend you do have thousands of dollars invested and work with that thought pattern. Too many people in network marketing do not “put in the work” to make it succeed. For some reason they have the thought pattern that it will all magically grow.

        Reply
  2. cliff k

    I agree with you on a lot of things in this post. Indeed, lots of people have unfairly judged the network marketing industry in an unfair way. Much of what has failed is a representative sample of what everything in life goes through. That said, I am also amazed by the fact that MLM gives leverage advantage to many entrepreneurs who choose the MLM path. This synergy gathered from harvesting the efforts of many members of your tap-root leg make it easy to make money. One question that begs is, why people are so preoccupied with the so-called traditional business. The majority hold on to it without giving a chance to new ideas. With this eye opener, I am surely enlightened on what to do and not to do with my money. Traditional methods in business are very risky. On the caliber of people who love quitting early, I can refer them to the Sarah Robbins’ quotes. I have singled out number 5 and 6. Quitting is surely the easiest way to fail. There is need for some fortitude and determination in delivering commendable results. Very informative! Thanks.

    Reply
  3. Jennifer Koebele

    Thanks again for your honesty. It’s important to evaluate yourself and decide whether you do have the skillset for being an entrepreneur. There’s no shame in choosing the traditional business route if that’s where your skills are. That being said, you should never use fear as an excuse. Don’t give up the dream of network marketing if the only thing holding you back is fear. Instead use that fear to push yourself out of your comfort zone.

    Reply
    1. chuckholmes Post author

      Owning a business of any kind is not for everyone. It takes a special person to build a successful business. There’s nothing wrong with having a job either. Ultimately, we each have to pave our own way in life.

      Reply

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