Friday, January 10, 2014

The Dream Scheme Part 4: Show Me the Money

In one of the Facebook groups I'm in the subject of MLM's (multi level marketing businesses) came up.

Don't do it. If someone approaches you with one - run. Run far away.

I've posted before on this subject. If you look at the sidebar there's a whole section on it. Here, I won't make you go find it. I'll link you over.

The Dream Scheme Part 1: Want To Make a Fortune?
The Dream Scheme Part 2: Do the Math
The Dream Scheme Part 3: What's an MLM?

There's a fascinating book on it. The Merchants of Deception tells the true story of a guy who was a high ranking distributor in Amway. You can even read it for free!

Penn and Teller did a show about MLM's. The show with the name I don't like to put on my blog. But
if you go to Youtube and look up Penn and Teller Easy Money you'll find it. Warning: Unnecessary full frontal nudity and unnecessary bad language. Just letting you know before you head on over and then come back in tears saying "why didn't you tell me about the naked people, now I'll be scarred for life!" I have no idea what naked people have to do with MLM's. It's unlikely  you will come across an MLM that will require nakedness. Although the show focuses on an MLM that sells sex. Oh yeah, another warning. Now I know some of you are really intrigued and have headed over before reading to the end of this paragraph.

If you are approached by someone about an MLM they will show you how much money they or someone they know (know as in know of) have made.

The number will likely be impressive. This will be a number that the company has put on a cheque for them.

What they won't show you is how much they spent to get that cheque.

In order to get a cheque the company has to make money. So often the distributor has sent them a cheque not only from selling the product - if they sold any product - remember an MLM isn't about selling product - but also any difference that they have to make up between the sales and the quotas.

In order to maintain a level a distributor has to send in a minimum order. If they haven't made much for sales they still have to place the order. So that comes out of their pocket.

Distributors are strongly encouraged to invest in training supplies and go to conferences - which may be in distant cities.

And lets not forget basics to sell the product - like gas to get there, or other expenses. For instance if you're in a party MLM that sells cooking supplies, you have to buy the food to cook with. You may be required to provide free gifts to get bookings. You may have to dress a certain way. As you move up the ladder (if you do) you will be expected to live the lifestyle.

Debt awaits you my friend. So before you accept that income cheque as gospel, ask them how much goes out of the business. It's a fair question because every business has expenses.

I bet they won't know.

But remember, they'll tell you, it's not about the product. It's about the people. Focus on getting people not product and the money will come.

Yeah, from the people who are buying product just to stay in the business.

Frankly I've never been able to figure out how spending ten bucks on a tube of toothpaste to get fifty cents back makes you money.

Someone show me the money.