New Network Marketing Companies – Why 95% Fail Within 730 Days?


There are so many new Network marketing companies launching their business in the past 6 months worldwide.

It has become more difficult for opportunity seekers to decide which company that they should join. It is disheartening that 95% of company fail within 24 months. In order not be to a part of this statistics, the best way is to look at the reasons why they fail.

These are the four major reasons why a company fail

1) Management team

a) The management team is very crucial to ensure the success of any companies. In the network marketing industry, it is very important to have someone with network marketing experience in the team. This person must have proven track records of running successful companies.

b) A strong company should consist of a team from various expertises. The whole team must consist of expert from management, marketing, financial and research team.

2) Product

a) The product must satisfy a market demand. It should be in front of the market trend. If you have a product that solves people financial challenge during the recession time, then you found a hot selling product.

b) In order for the company to remain in the business, it should have more than one product to market. Company with only one product is like putting all the egg in one basket and eventually it will reach saturation.

c) A very important consideration is: Does the company produce their own products or they are just another distributor for other company? The benefit of manufacturing their own product is to ensure highest quality and constant supply to the market.

d) The market that company products served should not be seasonal in nature. If the company is selling Christmas decoration products, then they are going to have sales during the year end and it will have difficulties to survive throughout the year.

e) The company’s product must be able to pass the following screen test “Would people buy these products if an income opportunity were not attached to them?” Are the products or services fairly priced? This is an acid test that the products are in demand and that is vital to any network marketing companies to remain in business.

So these are few key factors about product that you must take into consideration

3) System for effective training and support

a) A proven training system is crucial for any network marketing companies to stay in business. It must consist of marketing and products training. Most companies focus too much in product training but neglect marketing training. This is fatal as product does not move until it is market to right audience.

b) A support system to help distributors to sell products and recruit members must be in place. There must be seminar or webinar where distributor can lead the prospects to find out more information.

It is important to find a company with a support system that helps network marketing reps to grow their business.

4) Change in compensation plan too often

A new company in order to attract more distributors to join would do so by paying them a higher commission up front. This is perfectly fine if the company’s sale volume increased and the running cost can be averaged down.

Problem started when the sales volume does not match the company expectation. The company is not making enough profit to sustain their operation. The obvious thing for the company to do is lower their payout commission.

No distributor likes to make less money than they used to be. So a lot of distributors started to switch to another company. As a result, especially in the case of newly started network marketing companies, the resultant drop in sales volume is hurting them so badly. They may eventually have to shut down their operation.

So any companies offer you a high payout plan especially they are new, please be very cautious as they may eventually has to face the issue of sustainability.

These are few of the important consideration before you decide to become the distributors for that company. If you have been careful with your selection and with your commitment to grow this business, you will be successful in a very short time.


Source by Ngoh Kwong Meng