New MLM Company? Think Twice Before Joining Here s Why
By: Michael Massie
Submitted: 2011-12-23 14:40:38 | Word Count: 610
Signing up with a brand new MLM company can be an alluring option for both brand new and veteran network marketers. We've all heard amazing stories of people who "got in early" with well-known and established companies. Those stories inevitably start with, "And they got in at the beginning..." and end with, "...and now they're mega-millionares."
Without doubt, the stories of network marketing stand-outs who got into Direct selling organizations like NuSkin, Amway, Herbalife, and Shaklee in the beginning and who are now multi-millionaires encourage and motivate those just starting in the industry. However is getting in with a start-up all it's cracked up to be?
[ advertisement ]
The Statistics Are Not In Your Favor With New MLM Companies
Let's examine at the industry figures, shall we? Many multi level marketing specialists estimate that 9 out of 10 new multi level marketing companies go bankrupt within the first two years. As authority and long-time industry trainer Rod Nichols states in his book, Successful Network Marketing for the 21st Century:
"This means that if you choose a company that is under two years old, you only have a ten percent chance of success."
When you evaluate the possibility of joining a new MLM company from that perspective, it unquestionably makes it much less alluring, doesn't it? But, there are also other disadvantages involved with joining new companies. Let's consider a few to find out if joining a brand new company is really worth the dangers.
Pre-Launch MLM Companies Frequently End Up With Giant Troubles
One more seemingly appealing path to riches in network marketing is to join a company that is in pre-launch. "Pre-launch" is when a new company lets prospective reps pay to join before they are even selling their products or services. As Mr. Nichols says in his book, they do this to acquire money for their formal launch.
The difficulty with this is it brings to light the reality that the company is under-capitalized to begin with. And, chances are that they will run out of cash flow at the most inopportune times; for example, when they are going through their initial substantial growth spurt and have to pay out substantial commission checks to distributors.
Peculiar Things Happen to Downlines in Pre-Launch...
Furthermore, strange things can occur with downlines during pre-launch. I have an associate who got in during pre-launch with a certain new company that shall remain nameless. She put forth a tremendous effort to build up a downline prior to launch, despite the fact that all her sign-ups were only on paper.
As it turns out, she hooked a "big fish" by attracting a substantially successful and experienced network marketer into her downline. This individual had a track record of growing large downlines, so my acquaintance was sure she would be set when the company launched.
Sadly, in order to make the opportunity more appealing to Mr. Big Fish, her upline leader decided to place him quite a few levels over my friend in the organization. To say the least, my colleague was devastated, and switched over to another new MLM which has since gone out of business. And to my knowledge, she has almost certainly left the industry, possibly for good.
So Is It Worth The Risk?
Is it really worth it to join a new MLM company? For me, the response is a certain "no". My advice is to examine any new multi level marketing company methodically before joining. Examine at their management, ask about their financial backing, scrutinize the products, and then weigh the risks carefully. There's no sense playing the new network marketing company lottery, unless you are completely sure you are holding the winning ticket.
