MLM Network Marketing Vs The Traditional Self-Employed Business Model

Can you really succeed in MLM (multi-level marketing) or network marketing? What is your real chance for success? Have you heard people complain that only a few succeed in MLM? Or heard people complain that this pyramid, and the only people at the top make all the money? I have been involved in network marketing with the same company for 8 years. I also run a small business for the past 30 years (chiropractic and acupuncture practice in Los Angeles, CA). I am self-employed in two separate companies. I can not get fired. These people can control their destiny.

look at the traditional small business, my health practice. I started this business in 1980, and had as many as 10 employees and as few as one. My overhead usually takes at least 50% of my income. cost to start my business in 1980 with borrowed money is $ 80,000. Here are some statistics from the SBA Office of Advocacy. Only half of small businesses survive 5 years. Only a third get up to 10 years, and only a quarter to get to 15 years. Based on these statistics and the fact that the average owner's investment and bank loans for new small businesses randomly averaged $ 80,000 per year in today's money, not to an audible alarm the danger of starting a small business. Furthermore, from 15.5 million individuals whose primary occupation is self-employment, the median personal marginal federal tax rate in 2008 was 10%. This means that half were less than $ 8,025 a year, if one or $ 16.050 a year if married. Based on this we should all be screaming about the dangers of self-employment and opening a small business? As for the top earners, only 4.1% or 15.5 million self-employed in the 33% tax bracket in 2008, with annual incomes of $ 164,000 if filing one or $ 200,000 if married filing. So only 4% of the profits of the rich and 75% fail within the first 15 years. Sounds like a hard life, right?

Now compare this with MLM or network marketing business. I will use the 26-year-old billion dollar company traded on the NYSE that I worked with for the past 8 years as an example. In our American market, we have about 100,000 distributors, of which only about 13,000 are active and earning commission checks. To earn a commission check must personally purchase at least $ 100 per month of products for personal use or resell, and you must have at least one person you have sponsored or sold to purchase any quantity of products a month. Thus, 87 000 in this company or not to use the product in person at the level of $ 100, or no one under the auspices of the purchase. another 13 000 do. Of these 13,000, about 4,500 were at least $ 2,000 from the sale of products a month, earning a higher commission rates. another 8500 to earn lower rates of commission. So here we have three groups: 87% do nothing, earn 8.5% lower commission rates, and 4.5% earn more commission rates

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I claim that 87% have mostly invested nothing in terms of capital or time in their business, so I would classify them as the most casual buyers, who have signed up as distributors for the exclusive ability to buy at wholesale rates or have the option of sponsoring someone else (most of these probably thinks this job is like a lottery, just log in and get rich by doing nothing). 13 000 others were actually engaged in the business of running a business. So, of these 13,000, 34% (or 4500) are building the company and the customers of at least $ 2,000 a month in sales (according to my estimate, not an excessive amount of sales on a monthly basis for small businesses). 2010 average annual income of 4,500 is as follows: fifty seven percent of the average of $ 5,607 a year, 20% is an average of $ 9,980, 12% of $ 16,133, and 6.5% were $ 39,503 for the year. Top earners in this company are 4.5% of 4,500 and earned an average income of $ 385,198 for the year 2010.

Thus, in the traditional model of above 4.1% were in the 33% tax bracket with taxable income of $ 164,000 to $ 200,000 range in the MLM model above 4.5% earned $ 385,198 a year, and even with deductions, certainly ended up in higher tax brackets as well. So what does this all mean? This means that regardless of the model, the vast majority of people fail, or never even try, and only a small percentage actually do their job, and some even go to that accident.

It's time to stop whining about the vehicle one uses to build wealth, and start taking responsibility for success or failure. Personally, I'd much rather start MLM business with low start-up costs, generally in the $ 100's dollars, not tens of thousands of dollars, as well as traditional businesses, and put in the same sweat equity to build success.

Which do you prefer? Your ultimate success ultimately depends on you.