When a person starts a business, there are certain key factors that should be kept in mind. One is that most businesses do not turn a profit in the first two years. Next is that even while a profit is being turned it may not be significant enough for the owner to directly benefit from it, meaning that he or she may have to go for two to three more years without drawing a salary.
For these reasons, it is not uncommon for businesses to fail prior to the five-year mark. Between lacking necessary capital, unrealistic expectations, unexpected changes in the market, and the need for alternative sources of income, such as a night job or venture capital, to cover personal and business overhead, many budding entrepreneurs fail to bloom. Rather, they die on the vine.
There are some exceptions, though, and they usually lie in home-based business opportunities, such as network marketing. Due to the flexibility and relatively low overhead of running a business through Amway, Avon, or Juice Plus, many of the entrepreneurs involved find themselves maintaining their business registration even in years when they are not earning any money; sometimes, even, after several years of never having made any.
All of this begs the question: when is it time to quit?
Business is Business, Even if it’s Amway
As noted before, most businesses cannot expect to turn a profit early on. The same would go for those trying to build a network. After all, registering for a business of this kind ranges in costs from $10-$200. Then there are meetings. For those holding refreshments can be included as tax write offs since they are part of the cost of doing business, but it should be noted that they are also taking away from one’s bottom line.
Additionally, those who pursue networking seriously will be purchasing educational materials, such as books, CDs, and seminar tickets as well as inventory to sell to clients or hand out as samples to attract them.
After two years, one must evaluate whether any difference has been made from the first. Has a profit been made? If not, was there any difference in the losses that would persuade an independent adviser to encourage another year of staying in business?
Just as one would have to consider keeping a bar, restaurant, stationery store, or smoothie shoppe open, a smart business person will keep his business accountable to its purpose, which is to make money.
Profits Make Good Business Sense
Just as there are reasons to stop being in business, there are reasons to stay in business. The most obvious is when one turns a profit. Consistent profits, even if they are not always growing, make a business worthwhile, allowing for the joys of increased means through enlarged cash flow.
When one increases his means, he may find that he has more options in how he spends time with family, where he goes on vacation, and what kind of home he can live in.
Contrary to this sense, many people involved in network marketing fail to draw any conclusions on whether they should ever cease operations. After all, they’ve seen people in the industry who had been in a position of losing money for years to see it all pay off. Also, they’ve heard stories of others who built large networks over very short periods of time because they were able to find the right people.
How Long is Too Long in Network Marketing?
Some networkers would object to any notion that there is an appropriate time to quit being in business. What these people fail to realize is that those who consistently return the same losses year after year are not necessarily quitting the idea of being in business, they are merely freeing up the thousands of dollars it takes to maintain a networking business each year.
The truth is that certain business fundamentals are universal. While it may be true that a person in Amway could make it big after 20 years of never having earned a dime, it is also true that if that same person spent 20 years not making a dime as a realtor, he’d be a fool to have been doing it so long. After all, both jobs pay purely commission and both require time to build a base of clients while enduring overhead.
People should measure their first two years in Amway very carefully to look for disparities in cash flow. If there is none, then the third year should be approached with caution. If there is no profit at the end of five years, then it is time to take the knowledge that has been acquired over that time to seek out new ventures, because any time spent beyond that is too long.