TrapTwo years ago I decided to venture to a non-IT business to try something else aside from my current expertise. I read a lot stuff about business start-ups and even attended various seminars prior to entering to such new waters. I was deciding back then if I will put my hard earned money to stocks exchange or invest in a new business.

Since I was not sure how stocks exchange works back then and a friend introduces a new kind of “business” involving beauty products distribution. When I saw the products and its packaging, I was so entice with it specially when I was discussed about its marketing plan and commission bonuses along the way. So, I asked two of my friends to join us and put investment in the said business.

At start, it was good business since the sales was rising and the enthusiasm of the market increases specially the business is backed by an aggressive “network marketers.” After two years, we are about to get break even and starts the “real earning” when suddenly the supplier of our company didn’t bother to renew us without apparent reason or communication from them. Since our contract was expired we have no choice but to close it for further loss.

Here are some of what I have learned from engaging to this kind of business.

  1. Make sure you understand the business before engaging to it. That’s was my big mistake! I didn’t see at first the “trap” that this business have set me. The business that I have gone to focuses more on getting more people than distributing products. Its network marketing which its income focuses on commission getting from recruiting new people to join them! They convince people to join the company, distribute products but most importantly recruit another set of people. It’s a good thing if you’re on the network marketers side since the income is really big but for the “sales people”, supplies and sales are important which we lost it after we were not allowed to get “a much lower price” supplies from the main supplier. I tried the network marketing side of the business and earned from it however I don’t want to get more people and tell them that its a product distribution business but actually in reality its “recruiting for more commission” with products distribution as a side dish.I even realizes that I’d rather do the network marketing side than invest to the traditional business side of it because of the pain of the overhead of the latter and the management cost of it. Aside from that I didn’t thought that there’s a possibility that we were not be renewed by the company that we engage in as we are informed by the person who is into network marketing that we have the option to renew it and she is sure that it will be renewed. Which it didn’t happen and was actually part of her network marketing pitch only.
  2. Put down everything in black and white. Yeah, you should do this even if your having a transaction with your friends. I didn’t do that and resulted to receivables and affecting the relationship with friends. I now understand that money is so powerful that it affects the memory of the people. To protect yourself from this kind of people, put every transaction with them in writing.
  3. Don’t fully trust everyone. I now understand that trust is really an expensive thing. You should not trust even your business partners and let them do their thing without discussing it with the rest of the investors. Sometimes people do something to protect only themselves but not the entire organization. I trusted my partner and let him use some part of our capital so that he can engage people to join his network and let us earn in the process. But in the end, he’s the only one who earned and we were not able to use that money to get supplies to sell which affects our operation in the process. Instead of helping us through his plan, he achieved his goal by neglecting our business, and used our money for his personal gain. It is a painful event since the guy was a friend but I already moved on. We talked about it and get over with it. We are still friends!
  4. I should have engage to an IT business. I’m from IT world and should have engage to this world since this is my world and I’m good on it. Well, that’s my next plan!

I lost money in this failed business and even about to loose friends but still this does not prevent me to plan and engage in future business. I believe that failing is normal and what is important is we learned from it and should do better next time.

I compiled some of my readings in one place at Serzfus Startup Technology page of this site which can be found via the link on the sidebar. You might want to read this one right now: Great Startup Tips From Various Successful Entrepreneurs.


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