Starting a business used to be a simple affair. An individual would make or buy some goods, paint a sign and start selling them from home or a barrow. Over time the operation of even the smallest business became increasingly complicated. Businesses of all sizes now operate in a global economy. Competition continues to intensify. Government regulation is ubiquitous. Professional advisers are not an option, they are mandatory.
The prospective business owner of the 21st Century requires an enormous range of skills and access to significant capital. The challenge is bigger than ever before and that trend will continue.
In response to these developments, new business models have evolved. They have evolved in direct response to the demands of the current era. They represent adaptation to a world that has changed completely. The old paradigms are failing more often than they succeed, but they still have adherents who dismiss and scorn the new arrivals. These are the descendant of the flat earth society. They contend that the new models are not “real businesses,” but hobbies or even scams.
All new business models are met with resistance until a tipping point is achieved. As with any new idea or innovation the early adopters confront scorn and ridicule, but successful ideas not only survive but progressively gather momentum. Eventually the early adopters are recognised as either visionaries or the lucky ones in the right place at the right time. A classic example was the success of the franchise phenomena. Franchising came close to being outlawed in many parts of the world during the first 20 years of its emergence. Franchising is now all pervasive in every conceivable line of business. The franchising model evolved over time from a rough and ready mechanism into a precision instrument that could be rolled out across the globe with a predictable rate of success.
Network marketing is now approaching a tipping point similar to that of the franchise industry some 10-15 years ago. Its multi-billion scale is poorly understood by many otherwise well informed people. The myth that network marketing or direct marketing is somehow associated with pyramid schemes still survives in the minds of some who are not actually familiar with either direct selling or what constitutes an illegal pyramid scheme.
A new generation of people untouched by earlier versions of the model is now being exposed to network marketing as a consequence of its adoption by Fortune 500 corporations. For these organisations it’s a highly effective means of distributing products and services and clear evidence that the model has achieved maturity and legitimacy.
This trend has converged with recognition by millions of individuals across the globe that establishing a home based network marketing business represents a low cost – low risk means of entering the ranks of business owner, or “B Quadrant” as defined by Robert T. Kiyosaki.
There is also a convergence with trends in the job market. Job security no longer exists. An increasing proportion of people have been made redundant at least once in their working lives. These people are highly receptive to options that will give them greater control over their financial destiny and personnel affairs.
Network marketing permits individuals to own and operate a business within hours of making a decision to sign up. At nominal cost they can acquire a business in a box that cost millions of dollars to develop. A business that can be operated from a spare bedroom and PC.
Uniquely, the independent distributor not only gets to retail the company’s products to a global market, but also has the right to license others to do the same and be paid an on-going percentage on their volumes i.e. residual or passive income. That’s a major advance on the franchise model, which is not only more restrictive but depends on the traditional employer / employee relationship to achieve productivity and income leverage.
The network marketing model has matured substantially over the decades. The rough edges of the pioneering companies have been addressed by new entrants. They are unencumbered by legacy compensation plans that made a few people enormously rich at the expense of the many. These companies focus on training, retention and early rewards for success. They make financial independence an objective that can be achieved by a large middle class of distributors within a 1 to 3 year time scale.
Distributors are no longer required to hold inventory or deliver products. All aspects of inventory management, delivery and payment are managed by the company. The independent distributor’s responsibility is to focus on increasing the volume of products going through their respective organisations with the aid of sophisticated internet technology, but without a requirement for employees or premises.
In the words of Dr Stephen R. Covey: “I think network marketing has come of age. It’s become undeniable that it’s a viable way to entrepreneurship and independence for millions of people.”