Is Network Marketing Worth It – A Guide For Beginners

Wanna know what my very first side hustle was?

I know what you’re thinking, ” It’s network marking captain obvious, I read the title of your article.”

OK, I guess I made that one a bit easy but if you’re reading this article you’ve likely pondered the idea to join a network marketing business and like you, you’re probably weighing all the ups and downs and wondering if network marketing is worth it.

So in this article, I’m going to share both sides of my four and a half years of experience when it comes to joining a network marketing business but first I want to share how I got started in this type of business.

What is Network Marketing

First, before I do that I just want to share what a network marketing business is just in case you’re not exactly sure.  Below is the definition that Entrepreneur.com gives for network marketing.  I also put together this quick video to help you out as well.

Definition: Network Marketing – A business model in which a distributor network is needed to build a business.  Usually such businesses are also multilevel marketing in nature in that payout occur on more than one level.  – Entrepreneur.com

To give you a little better understanding of how this works I’ll share the commission structure I had while working for World Financial Group.

• Level 1: Associate 25%
• Level 2: Senior Associate 35%
• Level 3: Marketing Director 60%

The way this worked was that if I made a sale I would earn 25% of the total sale and the senior associate directly above me would earn the spread between my commission and his which would be 10% and my Marketing Director would earn the spread between that.

Typical companies that run this type of business model are Avon, Pampered Chief, Tupperware and even the company I worked for World Financial Group. Their are a lot more these companies if fact you can check out this site that give a comprehensive list of all kinds of different network marketing companies.

How I got Started in Network Marketing

I started my network marketing business in the spring of 2004 when a friend of mine stopped over to go over a few financial ideas.  Little did I know that he worked for a financial network marketing company called World Financial Group.

After that meeting I knew that this opportunity was exactly what I was looking for.  I got started right away learning the in’s and out’s of financial services.  I got my life insurance and securities licenses, and for four and a half years I worked my tail off.

I called tons of people, went to there houses, sat at their kitchen table, and educated them on the financial basics like the rule of 72 and the debt snowball plan.  I attended weekly and regional meetings and even won a few awards as a rising star.

In the end though I just couldn’t make a go of it but I learned two very important lessons from my first side hustle.

• I learned how to manage my money.
• I learned how to run a business that gets results.

Little did I know that those two lessons would become the foundation of things to come.  Yes my first side business was a huge failure but I feel its the mistakes and the failures that make us better.

The Downside to Network Marketing

Now that I’ve shared what network marketing is and how it works I want share a few of the downsides when it comes to this type of business model.  Also I just want to share that not all of these negatives apply to every network marketing company across the board but most will.

So with that let’s jump in.

• You get paid less in the beginning.  First off, as I mentioned in the video above you won’t get paid as well in the beginning.  When I started with World Financial Group I only got 25% of the commission but I also want to mention that you’ll also never get 100% of the commissions in this type of business either.  A portion will always to the company you are working with.

• You have to be ready to sell.  Network marketing also requires you to do a lot of direct selling as well.  This was probably my weakest area when it came to this type of business.  I could teach people all kinds of great financial information all day long but getting them to take action and buy was never my strong suite.

• You need to build a team.  However if you want to be successful with network marketing you need to build a team of people who can sell products as well.  Otherwise your business will depend on you entirely for each sale.  I found this hard to do as well simply because most people did not like the idea of starting a network marketing business.  However if you’re someone that finds it easy to meet people and build relationships, building a team will be easy for you.

• Finding leads can be hard.  One of the hardest parts I found with network marketing was finding new leads.  After I had exhausted my list of friends and family it became tough to find people to talk to and occasionally I would get a lead here and there but it was tough to say the least.

• Requires a fee to get started.  Another down side a lot of people argue about is that these companies typically require a fee to get started with.  When I started working with World Financial Group it cost me $100.  Some would people argue this because it should not cost you any money to start a business however if you want to be affiliated with a particular brand it will cost money.  However I also feel this weeds out tire kickers as well so you don’t people who sing up and never do anything.  Typical frees range from $100 to $200 in most cases.

• May need to get licensed.  This one applied directly to the network marketing company I was in because in order to sell investments or insurance you need to be licensed. This was not a lot of fun and also required a small investment to get as well.  The company you join may or may not require this but I thought I’d at least mention it.

• They use old marketing tactics.  Another area I did not like was the fact that the company I worked with wanted us to use a lot of old marketing tactics.  This meant getting on the phone and making a bunch of calls.  I hated making phones and asking people to do an appointment and then getting that weird awkward silence from people.  With things like social media and email marketing it could have made the whole process easier because it could have attracted people who were actually interested in what I offered versus talking to a bunch of people who weren’t.

• Commissions only go so deep.  Finally, the last downside to network marketing was that commissions only go so deep.  What I mean by this is that if I had to many people in my down line I eventually would not get the commissions anymore.  With World Financial Group payouts stopped and six people deep.  So if I hired someone, who hired someone, who hired someone, who hired someone, who hired someone, who hired someone, who hired someone, if that very last person in that chain of 7 people deep made a sale I would not earn a commission.

The Upside to Network Marketing

Now that I’ve covered the downside to network marketing I thought I’d share the upside to getting involved in a business like this.

• You can start part time.   First off, almost all of these companies allow you to get started on a part time basis.  I worked 4 and a half years when I was in it which was great because it allowed me to get a lot of experience in the beginning to learn the ropes before I decided to go full time which I never did.

• You get a structure to running a business.  Another great reason to get started in a network marketing company is because they give you a structure and a system to follow.  In fact the company I worked with had an entire book dedicated to showing you how to run your business step by step.  If you’re starting your own business from scratch then this can be a bit tough.

• You’ll get support from others.  One benefit I really liked about this business model is that I had a team to support and help me out along the way.  Every week we had training meetings and every quarter we had a regional training in Cincinnati.  I learned so much at these meeting on how to run my business I usually never missed them.

• You’ll earn residual income.  Finally the biggest benefit to this kind of business is that you’ll earn residual income from it over time when you build a team.  Not having to spend every waking moment working to make a sale sounded like a great idea to me and you just can’t find any other type of business that does it quite like this.

Who Should Join a Network Marketing Company

So now that you know the up’s and down’s when it comes to network marketing you might be wondering if this is still a great fit for you.  So below I’ve outline a few characteristics that might help you identify if this is right for you.

• If you don’t want to start from scratch.  First off, if you don’t want to start from scratch and just jump right into a business that has a structure and actually works from day one, then this might be a great opportunity for you.

• If you don’t want to deal with product creation.  Second if you don’t want to deal with product creation and maintaining your own product then this may be the opportunity for you as well.

• If you’re great at sales.  Finally if you’re someone who enjoys doing sales, talking to new clients, and tracking down new leads, and building your own team then this is the business opportunity for.  If you’re someone who is more of an introvert and doesn’t enjoy those things this just may not be for you.

Is Network Marketing Worth It?

So is network marketing worth it?  For me it just didn’t work out, I didn’t like calling people on the phone, and doing sales.  These are probably the two most important things you have to know how to do in this kind of a business and in the end I just had to realize no matter what I did I wasn’t going to enjoy it because of those two factors.

However this might be different for you.  You might be an outgoing individual who enjoys meeting new people, striking up a conversation, making sales, and even building a team.  If this is you, you may want to look into this kind of business.

So what are your thoughts about network marketing?  Do you like it or not?  Feel free to share your thoughts and comments below.

Cheers!