No, Network Marketing is not exactly a business. Network Marketing is misunderstood as a business.
Network marketing is like a performance-based Sales Job but the positive part is that you can add people to your downline and earn a commission on their Sales. Downline means you can add people working under your guidance.
The income in network marketing is calculated according to the Sales Turnover. You will get less commission on your downline but it can be a passive source of income(not surely).
Business is a better option that you can do instead of network marketing. Even Job is better than Network Marketing.
7 Major Differences between Business and Network Marketing
On the basis of Income
In a business, you can enjoy high profits rather than a small commission. You can earn 100% profit in business but you can hardly get a 2% commission in network marketing.
In network marketing, your income is dependent upon your Sales turnover and not on the basis of how much the company is growing. Therefore, the income in network marketing is low.
On the basis of Expansion
Expanision is the most essential part in a business to grow and scale itself. In a business, you can hire more people for the grow of the business. You can open more stores or you can scale your business in form of an online shop. You can add more products into your product line.
You can also enter into a new business from your exist business. For example- a gift seller can also scale its business by starting a new business of packing related stuffs.
In network marketing, you can never expand because it all depends on the company in which you are working. Your work is just to add more people into the network and increase the Sales turnover.
You can never be your own boss in network marketing. Company can change the business plan whenever they want which can decrease your income anytime.
On the basis of Decision Making
In Network Marketing, you are literally just a puppet. You have no decision making right in the company for which you are working. You have to deal with every complication that the companies will create.
Complications like change in business plan, change in price of the products, change in commission plan, undercutting and so many other complications.
Network Marketers just make plans to achieve their next month target for more income. There is no decision making involved.
In a business, You have full rights to make your own decisions and run the company according to your creative ideas and thoughts. You have the right to manage the money like further investments, how much money to keep in your pocket and how much to give it to others.
On the basis of Success
The success rate in network marketing is only 0.04%. This is an untold truth of the network marketing industry. It is easy to convince people and sell them expensive products which are not giving higher value.
The success rate is minimum 25% if you are starting a business. According to US Bureau, approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
the rate of success is far better in business than in network marketing.
On the basis of Income Stability
There is no income stability in any of the business or network marketing. Still, If you establish a good name in a business or negative marketing then your chances will be very low to suffer losses.
Network Marketing is not surely a passive source of income because it depends upon your Sales turnover. If your Sales turnover is 0 then your income will also be 0 rupees.
Therefore, if you add people by manipulation then it is of no use. When they came to know about the reality then they will leave the company.
Similarily, if your sales are 0 in a business then your income will also be 0 rupees.
You have to bear loss by purchasing expensive products in network marketing and you have to bear loss like rent if you have an offline business.
On the basis of Time
Both business and network marketing are time-consuming processes but business involves more capital and network marketing requires less or fixed capital.
It takes a minimum of 5 years to make a good team of enthusiastic people in network marketing. In a business, you can be a solopreneur who can manage everything on their own. Both these things need intensive hardwork to manage.
A success business also takes atleast 5 years to succeed in the marketing. Otherwise, it has to spend huge sum of money in advertisements.
Therefore, both business and network marketing are equally time consuming and requires intensive hardwork.
On the Basis of Risk
Business is way too much riskier than Network Marketing but more risk means more profit. If you risk your money in business then you will of course get higher returns in the future if you implement everything correctly.
If you play your cards correctly in a business (like creating a unique products that gives customer a very higher value) then it will be considered as your best investment.
Network Marketing requires constant but low investment. Even investment will be in form of membership or products. Risk is less because the return on investment is also very low in network marketing.
There are also fraud network marketing companies that created million dollar scams. Never invest in those companies which demands membership. Your investment will be in risk for sure.
Business vs Network marketing: Which is better?
Business is a very wider concept in which you can find the field of your passion and work on it.
In Network marketing, You have to work in an existing company with highly competitive products to sell like toothpaste, Face Creams, Courses etc.
Business is 1000 times better than Network Marketing because, in a business, you have the authority to take your own decisions and run the operations according to you.
You can enjoy the whole profit rather than a commission. The best is that everything is your own in a business.
Is Network Marketing suitable for you?
Well, I personally hate network marketing but here are some points on the basis of which you can judge that Network marketing is suitable for you or not.
- If you are good at Guidance and Sales only and not in leadership then you should opt for network marketing as a career.
- You are not good at taking crutial decisions for a whole organization
- If you have great patience, will to work very hard and never give up attitude then Network Marketing is undoubtedly your cup of tea.
- If your communication skills are great and you know how to deal with bigger teams.
- You are a constant motivator and have solutions for all the problems regarding your company.
Network Marketing Business FAQ
What is Common in Business and Network Marketing?
The only common thing in business and network marketing is team building. In Network Marketing, you have to add people and make a team and earn a commission. In business, you have to add partners or employ people in exchange of a profit share or salary.
Why do people say that network marketing is a business?
We can’t deny the fact that the network marketing industry involves manipulation because people get attract by luxury products and money.
If people know that network marketing involves intensive hard work then no one will join this scam.
Why do companies work on Network Marketing Business Model?
Companies that escape from investment in marketing campaigns will adopt the network marketing Business Model.
Despite the fact that network marketing is controversial, This leads to very low expenditure for the company.
Most network marketing companies deal in FMCG products which are very difficult to sell because of big giant companies like Hindustan Unilever, Nestle and TATA etc.