Network marketing companies are widely popular with many people who want to start a home based business. The startup cost is usually very low and no specialized skill or experience is required.

However, less than 95% of the people who joined a network marketing company are able to build a sustainable and profitable business. Here are the three most common mistakes that new network marketing distributors made that prevent them from achieving the level of success they want.

1. Duplicate failure instead of success

Most reputable network marketing companies offered comprehensive business-building training and tools to all the new distributors. These training tools include business building plan, scripts for cold calling, recruitment DVD and many others. Regular training conference calls are held each week or each month to teach distributors how to build their business. However, many new distributors do not take action to learn the correct way to harness these tools. A fair number of them even adopt a wait and see attitude and hope that they will profit from the spillover from their upline.

Ultimately, these new distributors will not be able to teach and support their new team members if they managed to sponsor any of them. Their new members are likely to follow the same path to failure since they did not received proper guidance from their upline.

2. Selling the dream of getting rich instead of the product

Most new distributors promote their network marketing business solely from the angle of "Getting Rich" or "Financial Independence". As such, they focus on promoting their business to other business opportunity seekers. While there is nothing wrong with this approach, it is not very effective when building a long term residual income. Many of the business opportunity seekers are looking for a quick return on their investment. If they do not see substantial result in a short period of time, they are likely to quit and move on to other business opportunities.

A better approach will be to promote the product first. If the product is related to weight loss, then the target audience will be those people who are obese. If these people like the product, they are likely to re order the products again. This is where long term residual income comes from. In addition, it is easier to convert these loyal product users to business partners as they have already experienced the benefits from the consumption of the products.

3. Not Knowing Your Business Matrices

Since many new distributors do not have business experience, they generally do not have any idea what is the cost of acquiring a new lead, the lifetime value of a customer or return on investment. As such, they have no idea if the money they spent is an investment or an expense. Most of the time, they do not care at all.

They will continue to spend money to advertise heavily and hope to sponsor a large number of people in a short period of time. Very soon, they will go broke before they achieve their financial freedom.

To achieve success in a network marketing business, or any business for that matter, one must be ready to put time and effort to learn the correct way to build a business. Each mistake made is an opportunity to learn something new. By learning from the lesson behind each mistake you made as well as from the mistakes made by others, you can have a very profitable business that you call your own sooner than you think.

Stephen Chua is an entrepreneur who is earning an ongoing monthly residual income by applying what he learned from Success University. To learn how you can do the same as well as to claim $1949 worth of life-changing education materials, please visit Success University.