Signing up with a brand new direct marketing company can be an appealing option for both new and veteran multi level marketers. Everyone has heard eye-opening tales of distributors who “got in on the ground floor” with companies that are now household names. Those tales unsurprisingly start with, “And they got in at the beginning…” and end with, “…and now they’re incredibly wealthy.”

Of course, the tales of multi level marketing stand-outs who got into direct selling companies like NuSkin, Amway, Herbalife, and Shaklee in the beginning and who are now mega-millionaires inspire and spur on individuals just getting started in the business. But is getting in with a start-up all it’s cracked up to be?

The Facts Are Not On Your Side With New Network marketing Organizations

Let’s study at the industry data, shall we? A lot of MLM experts estimate that 9 out of 10 new multi level marketing companies go bankrupt within the first two years. As author and long-time industry coach Rod Nichols says 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 examine the prospect of joining an MLM company from that perspective, it undoubtedly makes it much less attractive, doesn’t it? But, there are also other negative aspects associated with joining new companies. Let’s explore a few to find out if joining a new MLM company is really worth the risks.

Pre-Launch Companies Often End Up With Huge Problems

An additional seemingly attractive way to wealth in network marketing is to become a distributor for a company that is in pre-launch. “Pre-launch” is when a new company encourages potential reps to pay to enroll before they are even selling their products or services. As Mr. Nichols says in his book, they do this to raise capital for their formal launch.

The difficulty with this is it highlights the actuality that the company is under-funded to begin with. And, chances are that they will run out of cash flow at the most unfortunate times; for example, when they are going through their initial significant growth spurt and have to pay out huge commission checks to distributors.

Crazy Things Occur to Downlines in Pre-Launch…

Furthermore, odd things can happen with downlines in the course of pre-launch. I have an friend who got in during pre-launch with a certain new company that shall remain anonymous. She invested considerable time and effort to build a downline prior to launch, despite the fact that all her sign-ups were only on paper.

As it so happened, she hooked a “big fish” by getting a very successful and experienced network marketer into her downline. This person had a history of growing big downlines, so my friend was sure she would be set when the company launched.

Regrettably, in order to make the opportunity more appealing to Mr. Big Fish, her upline leader decided to position him quite a few levels over my friend in the business. To say the least, my friend was crushed, and converted to a different new MLM which has since gone out of business. And to my knowledge, she has doubtless left the industry, possibly for good.

So Is It Worth The Gamble?

Is it really worth it to join a new Network marketing business? For me, the answer is a certain “no”. My advice is to examine any new direct selling company thoroughly before joining. Examine at their leadership, ask about their financial backing, scrutinize the products, and then weigh the negative aspects cautiously. There’s no sense playing the new network marketing company lottery, unless you are definitely convinced you are holding the winning ticket.

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