Skin = money
It’s funny, I’ve heard the term “skin in the game” several times in the past few weeks. It’s been mentioned as a reason that people in network marketing fail … or quit.
What exactly does “skin in the game” mean?
In this case, it means the amount of money that you have invested into your business.
How much did it cost you to join your company? There are some companies that don’t charge anything to join them. There are some that charge a small, annual fee to be a distributor. Then there others that charge you an up front sign up fee. They can range from $100 all the up to $500.00, or more.
The typical fee is about $300.00.
What people are saying is that $300.00 is not a lot of money to spend in order to open up a business. I agree with that, relatively speaking, $300.00 is not much money to spend to go into business. If you were to open up a traditional business, you could spend $10,000 up to $100,000 or more, depending on what kind of business you were open.
If you were to buy a franchise, you can expect to pay $20,000 up to $1,000,000 or more. Some franchises require that you own the land that you are going to put their building on. That’s a lot of money to be spending in order to get a good business running!
Looking at the $300.00 fee of the typical network marketing company, you can see that it isn’t much money to have invested.
The question is this. Do you have enough “skin in the game” to motivate you to build a network marketing business?
That’s a really good question.
To some people, $300.00 is a drop in the bucket and it doesn’t matter if they make any money from their business or not. To others, it is a decent amount of money, but if they lose it they won’t be broke. Still others are scrapping together their last dimes to buy into a network marketing business.
No matter how much “skin you have in the game,” no matter how important that $300.00 is to you, only 3% of network marketers will ever make any money. Less than 1/4 of 1% will reach the top levels of their company’s pay plan.
Are these statistics really a function of having so little money at stake?
I used to think that it was a main contributor to the failure rate in network marketing. I am kind of thinking that it is a part of the equation, but not the whole thing.
Let’s say that you spend $100,000 to buy a doughnut franchise. You open the doors and you’re running your own business. Yay! I can pretty much guarantee that you are spending all of your time at your little doughnut shop! You have $100,000 on the line. If you lose that much money, you’ll probably go bankrupt. You’d be working 60-80 per week in that shop. You’d probably only leave to shower and change clothes. With that much money on the line, you are certainly motivated!
Hopefully, all of your hard work pays off and your doughnut shop is the talk of the town and over the next few years you work your way into make $100,000 of profit per year!
I admit that fear of going bankrupt will motivate you to work hard. You only have one job and that is to make your doughnut shop a success. You can spend all of your time on that task.
Now compare this to the average network marketing business.
A network marketer usually has a job or two jobs. That’s 40 to 60 hours out of their week. After their 40 to 60 of work they need to spend time on their business.
There’s the problem.
After the typical network marketer has worked their 40 hours or more, for that week, they need to find the time and energy to run their own business.
First, I would think that someone with a full time job isn’t very likely to invest $100,000 into a franchise. Second, even if they were so inclined to invest $100,000, they know that they don’t have to time to run it properly. They would probably fail.
If it cost you $100,000 to open a network marketing distributorship, would you have to the time to run it, properly? Not if you have a full time job.
Now there are some people who are totally motivated and very good at time management who can make the time to run a business. They are able to reprioritize their lives in order to run their business in the time that they aren’t working their full time job. I would guess that there are about 3% to 4% of people who are willing to do that.
Here is my follow up question. If you were to spend 40 to 60 hours on your network marketing business, would you be successful?
I think that most network marketers would answer that with a “Yes!”
Is it the amount of money, the amount of “skin you have in the game,” or is it the amount of time that you are willing to make to build your business?
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