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July 30, 2003
Small Businesses Fail
By QBlog in
One of my favorite rationales for joining Quixtar is the "95% of all small businesses fail within the first year" argument. I've heard this numerous times. Some wide-eyed prospect starts asking about the success rate of Quixtar and the Platinum IBO just smiles and says, "Well, didn't you know that most businesses fail within the fist year?"
This argument all but admits that Quixtar has a high rate of failure. The logic that they are using is that since most businesses fail, there is always risk when you start a new endeavor and Quixtar is no exception. However, with Quixtar the difference is low cost of entry, strong support team (supposedly free) and a proven business model. Yet behind the smoke and mirrors, what they are really saying is that if you join Quixtar you very likely will fail, but since you're only investing a small amount, your losses are minimized. That's just a stupid way to sell a business and it's one of the reasons I never got interested in Quixtar as a business for myself.
However, the real problem in the above argument isn't even the indirect admission that Quixtar mostly results in failure. The real problem is that the example compares apples to oranges. Sure, most businesses fail, but not all businesses. And if you want to start looking at specific businesses (or types of business) you'll find very different success and failure rates across the board.
For example, it's commonly known that restaurants fail quite frequently. Their success rate is pretty low. Yet, a McDonald's franchise is almost a guaranteed success. See the difference. I know, McDonald's has a much higher (almost prohibitive) franchise fee but there are many other examples. The point is that when an IBO says that all businesses are great risks you can know that this isn't entirely true. Some types of businesses are riskier than others and Quixtar is much riskier than most. It may cost less to get into but in the long run, it's not all that much cheaper than some other business ventures.