Many of you out there want to be an entrepreneur, or you want to earn extra money, or find an easy path to the money that you need for new things, new stuff, and your future. One question. Many people right now and are also tempted or drawn into the idea of an MLM or network marketing. Is an MLM the answer, or your answer? I’m not going to give you an answer or the answer, because I want you to think about whether that particular opportunity or situation is good for you.
But wait a minute, this explanation is not just about MLM or network marketing, because I want you to think about any business in a similar vein. I want to give you the thoughts and questions that come to my mind, so that you can ask yourself whether it’s network marketing or whether it’s some business you want to do it on the side, whether it makes sense, whether it makes sense to you or whether it makes sense at all. If you’re going to be spending your evenings and weekends starting a business, in any case, be careful on how you do it.
First of all: Can you make money? I don’t mean success in the sense that you’re bringing in income, but are you actually making money? Net revenue, that is, after expenses, are you actually bringing in money? If you’re talking about other people or other people’s examples, for example in network marketing you’ll hear the top earners and all the wonderful things they’re making. The first rule would be to ignore the income of the top earners, particularly if they come in early or they’re given a position. Many of them have sweetheart deals to help start the company up. You don’t have that deal. If you do, congratulations. I’ve been offered that a couple of times, but have turned it down for various reasons. Some of those you will specifically hear in a little while.
You need to find out, ask, and get the actually income that’s being generated by people. Not the people that you’re talking to there at some meeting, or that knocks on your door, or that you know is a friend or family member or something else, but rather, verifiable income printed and put out by the company. Why do I say the company? Because they have a legal liability to tell the truth. Those other people that tell you all kinds of things, generally, frequently lie. If you have to rely on somebody else’s income, get their annual income for a couple years, and I mean get it by either them showing it to you on the company website or the 1099s for a couple of years to show you that they really truly earned that money. Your income must come from the company in one way or the other, or some verifiable government document.
Then, what about the income? How does the income come into the company? You’ll hear things like: “Oh, you’re going to earn income five ways, or seven ways, or eight ways,” you’ll find all, but probably one or two, are all things that are only geared if you attain some supersonic level, which there is only a couple of people up there, and those are usually the people that started at the beginning of the company. Yes, there is always an exception someplace, but very rare, and those exceptions are people who come in with a lot of contacts from major players that have been in other companies.
Ignore that, and then take a look at what you’re really doing. This is a business? Okay, then, does it make sense? What is the product or service that is being sold? If the video intro that you see focuses on the money… I’ve actually seen where some friends of mine, and I looked at them only because they were long-term friends, and they never said what the thing was. They basically talked about: “Oh, you’re going to make this, you’re going to make that,” etc., but they never made a case for whatever the product or the service was. Make sure it makes a case. It’s got to make an economic case to make this a “viable business,” not just a promise of a lottery ticket to you.
As I say this, what I also want to caution you about is the other side. Yes, there are things out there that are good. I’m not saying that MLMs are bad or network marketing is necessarily bad. What I’m saying is there are many things out there that don’t make sense, but an awful lot of people are enthusiastically in them or doing them. You want to see in the video or the website why people should be buying the product or service, why it’s beneficial, and why you would believe in it. But it’s got to be something to do with that product or service, and if it doesn’t heavily emphasize that, that’s a red flag. Then again, if it focuses on testimonials, that’s a major red flag, too, but possibly even the owners and the other people in it don’t know that it’s a red flag.
Let me explain that a bit. Testimonials don’t really mean anything in a product. I know that’s exactly the opposite of what everybody wants you to believe, but what is a testimonial? Let’s say that you, a friend of ours and I got together, and we decided to turn out a product, and that product was going to make people healthier in some way. They were going to no longer have pain in certain areas, and they would have better complexions, or whatever. What really happens? Well, what happens when products are tested out in the pharmacy world or in the medical community? They have to test everything against a placebo. Why do they test it against a placebo? A placebo falls under what’s called a double-blind test, that is even the person administering it has no idea whether they’re handing you the placebo or the real thing. Why? Because otherwise, it brings in bias.
What happens if you don’t have this, and just have testimonials? The reason for a placebo is that 30% of the people tested turn out with a positive result. What does that mean that 30% turn out with a positive result? So, you and I, and a friend come together, we form something, we put a bunch of vitamins together, start handing them to people, and we tell them that it’s going to make them have more energy, feel better, and pains will go away, etc., whatever we want to say. 30% of the people, so if we have 100 people, 30% are going to see a positive result even if it’s a placebo. If we gave that out for free to 200 people, we’d have the potential for 60 testimonials of people who saw positive results, but it’s no better than a placebo pill. You really want something that’s been tested properly and thoroughly. That doesn’t mean, necessarily, that those products are bad that all have those testimonials.
I actually have a couple of products that I use, one just worked very well on me, I had a rash on my leg, it went away when I took it and I didn’t take it intentionally for that. It was itching, and there were all kinds of things that I tried to get rid of this rash. It wouldn’t go away with all kinds of different medications and everything, and it was itching at night, I wanted to sleep, so I put this cream on. The couple of times I put it on, the thing disappeared. A couple times it came back, I did it, and it disappeared. So it worked for me; might not work for anybody else. I don’t know, but I’m not going to join a company over it, and I’m not going to be able to tell you or promise you that something like this is going to work for you.
Let’s take a look at the income side. On the income side, you’ve got really two key things that happen: Current income and residual that you’re always hearing about. Current income is what you’re going to earn from acquiring distributors, consultants, or whatever they are that help, and you get them started. That’s usually current income or immediate sales. The other side is residual income, that’s you started it and you’ll get this income ongoing. You usually position it in such a way that it’s going to be something that you’re going to be able to retire on or so. One caution, there: If it’s a product, the statistic I hear a lot in the industry is that 80% of the people that are getting these auto-ship deliveries of products stop within three months, 80%. What that means, if that’s true, is that 80% of your residual is going to disappear as well. Actually, more than that will disappear. Why? Because in most cases, if you start losing a lot of the sales, your rank is going to go down.
One of the things you have to check is: Is your income going to go down and your rank going to go down if product sales drops? Because what that means is that every single time you’re slowing down, that would cause the residual to drop, which means you have to constantly recruit, and constantly sell, and constantly make things to keep them up to the point at which you can maintain your residual. So you really don’t have a residual passive income job. You have a real, real job. So make sure that the product makes sense, make sure it’s not some product or service that’s just going to pile up in somebody’s cupboard, so that within three months, they have so much that they’re going to cancel it or they’re going to stop it.
Also, you must find that you believe in the product or service. You must really feel honestly to yourself that this is beneficial, not just an income opportunity, because otherwise, particularly if you’re talking to friends and family and people you know, you’re pushing something on to people that supposedly are your friends or family that doesn’t really make good sense for them just so that you can make money. Make sure that you feel very good and comfortable about that product or servresiice.
Again, to reiterate: I’m not condemning at all. I’m just giving you some questions to think about, because these are the same kinds of questions you should think about if you’re going to open up a business. Somebody’s asked me recently, I said it’s kind of like sometimes these people turn around, and they say: “I’m going to open up a macramé store in a shopping mall,” and all their friends on Facebook would say: “Oh, wow, that’s a great idea.” Everybody wants to be supportive. They’re supportive to the person to open up something that’ll cause them to go bankrupt – it makes no sense. You’ve got to do the same thing, whether it be this or any other business.
Very quickly, in summary: One, take a look at the product and service. Does it make sense? It’s supposed to be a business. Does it supply some need that people have to have? Two, income, make sure you can verify it. If the company issues it, great, because they have legal liability. Ignore the top earners’ income claims, or other people’s income claims unless you can verify them; they do lie. Remember, last, residual is usually something that’s not going to last in many of the product companies, so you’ve got to turn around and say: “Is this something or is this some product collection that truly will last a long time, that somebody will want to continue to buy it over time?”
This is a little longer than an ordinary one, but I wanted to do it because a lot of people have opinions, a lot of people are joining MLMs or network marketing, but there’s also a lot of opinions in here about how whether it’s this or some other business, how you assess that. It’s got to make good economic sense. Thank you very much.