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March 30, 2011

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I know a guy who has started a number of these businesses (he is a former marketing exec for P&G)and he told me there is zero money to be made selling the products. All the money is made finding people to sell the product. He claims he's never tried to sell the product himself- he spends all his time getting people to buy into the system/sell the product.

He lives a very expensive lifestyle so he must have some cash flow from these businesses.

Several friends of mine in college got involved with some multilevel marketing programs and convinced me to go to one of the intro seminars. I decided to go because I don't like turning down opportunities until I fully understand them. Personally I was turned off by the strong emphasis the speaker put on money, I don't like to think that I am someone driven by monetary goals and it definitely had a cult type vibe to it.

In the end did not pursue it, however I decided that multilevel marketing is not necessarily a bad thing. It often appeals to people who haven't built up sales techniques and social skills and puts them directly in contact with other people who have those skills. The only way to advance is to be able to successfully convey those skills to people in your downline. So ultimately it's taking human greed and desire for money (which in itself is usually a bad thing) and turning that into a system where people ultimately become better people and more connected individuals in society. That said, no system is perfect and the human element can lead to people trying to game the system. That said, it is a very interesting game that takes advantage of human greed to try to turn it into a good thing.

The only way to make money at these things is if you know (and can influence) lots of suckers, and then don't feel bad about knowing that the only way you make money is if lots of other people lose money.

"he told me there is zero money to be made selling the products. All the money is made finding people to sell the product."

Put your two thumbs together and put your two index fingers together. Hold them up in front of you to form a three sided shape.

Keep that shape in mind when you think of the structure of a MLM business model and then read the following link and compare it to the quote from Tyler above. See any similarities?

http://en.wikipedia.org/wiki/Pyramid_scheme

About 7 years ago, I was working in the corporate world 50-60 hours per week , making a decent salary but had very little time with my wife and children. So, on a part-time basis I started with a network marketing / direct sales company. Spending a few hours each day in the evenings after work I started advertising and learning as much I could about running the business from the successful people in the company. Now granted, I have a very intense work ethic, but with in 1 month I was in profit several thousand dollars. Within 6 months, working diligently I was able to leave my corporate job and do the business full time, generating a consistent 30-50k per month in income. That was my experience..

I was involved with Amway in college. Very good products. Very good experience. Works best for those with a very outgoing personality. I LOVED the books and tapes and the people. I wasn't successful and didn't make much money. However, I can honestly say my Amway experience opened up a world of opportunities for me; especially with respect to goal setting, identifying dreams, and realizing that owning a business was a real possibility. Thirteen years later, I own a $6MM Revenue per year health care business. I can honestly say that my current reality is, in part, a result of my positive experience in Amway.

LOL. VIS is full of CRAP!

How do you know if a pitch is a big fat lie.

1. They tell you nothing about the product or system.
2. They claim to have put in very little time (few hours each day).
3. They refer to the people who are there to help you who are supposedly experts (he was learning as much as he could from the successful people already in the business. Note these are just more rip off con artists. They don't know a dang thing other than how to get you to believe all their bull crap).
4. They refer to rediculous outsized money making opportunities from this secret unmentioned system. (30-50K per month).
5. When you try to see what is behind the curtain you need to provide lots of contact info and get nothing but a slick sales pitch about how this will allow you to do less and make more (follow the link to the website on his comment. Just a slick pitch with a teaser to enter your cell phone to get started in the system. If you were to enter your cell phone number this would result in you talking to one of the successful people in the business he talked about and getting hard sold by them).

VIS is completely full of crap. There is not a true statement in his comment.

If you watch the video at his site it comes off exactly like the late night real estate con artists.

Please do tell us VIS what products you sell, how you sell them, who you sell them to, and how you are able to make 50K per month doing this and why everyone doesn't just do this then?

There may be MLM systems that work for some people. I assure you what VIS is pushing is not one of them.

discussions of MLM brings people out of the wood work to hock their wares. That's what VIS is doing. If you like snake oil, you will love whatever system it is VIS is selling.

I took a direct sales job once right out of high school. I QUICKLY realized that I just wasn't a salesman.

I think if you are going to choose a multi-level marketing company to start your business with, better choose a company that has salable products or products that can be easily be sold.

I know some people look at these things as get-rich-quick or pyramid schemes but some of my friends are stay-at-home moms or single parents and have gotten involved with selling MLM kitchen equipment, jewelry, and makeup etc. as a side business. These women are genuinely trying to help their families make ends meet. It's a tough call when I get an invitation to a "party": on the one hand, the people are nice folks who are just trying to make some extra cash in a tough economy. On the other hand, the "frugalist" in me knows that none of these products is ever a good deal and I know I can find cheaper products of equal or higher quality elsewhere.

In the end I usually decline to attend the parties. I feel like that is better than showing up, consuming the food/drink provided by the hostess, and then not buying anything. Or worse, being guilted into buying something I don't need and won't use. Not sure if any of them is making any money at it.

Selling household cleaning products + MLM = Getting taken to the cleaners...

The problem with Amway and other type of products is that you are restricted to the preferred brands and don't always get the best deal for them. There is a sunk cost line of thinking that compels to keep buying the same product so you can get a return at the end of the year.

It's a bit like charging more on your credit card so you can get more 2% cash back at the end of the year.

Seems to work for some but it's not for me.

-Mike

I've made very good money in network marketing. But, I could answer YES to all those questions. You need to make sure you are offering products that truly deliver results, you would buy them yourself if there wasn't a business tied to it, and they are reasonably priced. Along with an ethical company that has a pay plan that an "average" person can make money with.

MLM gets a bad rap because there are a lot of "slick" people telling you that you can make a fortune in a short time with minimal hours. That is not true. It does take work - that is why it is called netWORK marketing.

I'm a mother of 6 children with a husband that travels 4 days a week. This industry has allowed me to stay home with my kids and make a very nice income.

Don't be tainted by the "bad" companies out there - there are great companies to! I'm living proof along with hundreds of my team members making money.

Hi Jill,

Your endorsement sounds reasonable, can you share the sorts of products you are selling?

@Mike,

Jill won't tell you what her product is. Her website won't either. Looks like she might just be selling training material on how to do network marketing but it's hard to tell. It's the typical mystery and secrecy of the network marketing model.

I'm an independent consultant in direct sales.
While it is NOT for everyone, not all companies are the frightening money-pit that some fear. I have friends who sell or have sold skin care, cosmetics, baskets, Amway, juices, vitamins, childrens toys, clothing, household decor items, Tupperware etc...and I've been approached by people eager to recruit me to join them.
After the 2008 financial debacle and a subsequent lay-off, I was working in a fast-food joint for minimum wage and being shorted on my wages from store management. A friend dragged me along to a party with the line, "You don't have to buy anything. There will be wine!"
I knew of the company, I had plenty of their products in my home that saw frequent, almost daily, use. I had a blast at that party; the demonstrator was fun & energetic. I decided it could not be much worse than wearing a fast-food uniform. I signed up within 24 hours.
1. I would buy the product. I'd already owned (and used) their products for around 20 years.
2. I enjoyed face-to-face work.
3. My goals were to supplement Unemployment Insurance while I looked for a real job during the daytime and I needed to be available for day-time interviewing hours.
4. I did a fair amount of due diligence. There is a well known wealthy owner associated with the firm. There is brand recognition. When you try to gauge the potential upside of any MLM or direct sales venture -- all you hear is "Unlimited" True enough, though typical results are meager. More important to me was the potential downside. Not only did I not have a full-time job to fall back on, neither did my husband. Start-up costs were fixed. There was no permanent tie-in to a credit card that would be debited regularly if I didn't meet a quota.
So, for the price of 5 more shifts at the horrible fast-food joint, I traded in a greasy polyester smock and humiliating cap from my McJob in favor of home parties. I average $25-$50/hour for something that is fun for me to do for a few hours each week. It sure beats fast-food.
I know of only 2 people who earn enough in direct sales to do it full time. One is in the same product line as I am, the other is a relative who sells something completely different (and has for decades). Both make the bulk of their earnings on their own sales commissions -- not from sales of downstream recruits. Neither is resting on their backsides letting the checks roll in. Both are out there generating sales.

Great questions to be asking. Network marketing / relationship marketing / mlm or whatever you want to call it isn't for everyone. There are also some pretty big issues that, in my opinion, need to be addressed better by some network marketing companies and/or team leaders.

For example, a previous business that I was in (in which I failed miserably by the way) put a huge emphasis on sharing the business face to face with people. It was what the most profitable people had done and, to be fair, it was probably all they knew. Being that I was not (and am still not) a lively social butterfly that enjoys talking to everyone that comes within a mile of me, I should have realized that I needed to take a different approach. Instead, I tried to fit through the same mold as everyone else.

While I'll never regret the actual business principles that I did learn, I've realized that the face-to-face gig isn't my thing. I've moved on to a new business recently and have found my own little safe haven of doing some marketing on the internet which works better for me, my personality, and my skill set.

There are many ways to do network marketing. Some companies do it right and are good, others are scams. Then there are different ways of building a business within the company. Some (like lying, pressuring people to buy unnecessary products, flaunting wealth) are wrong and can be damaging, and others methods can work wonderfully.

Just my two cents,
- Matt

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