MLM to Choose?

(EDITOR'S NOTE: This article was written in response to a message posted by Linda Bruhn in an Internet news group. The original message appears first, followed by the response by Victor Jasin.)

In article <54-xeVD.libruhn@delphi.com>,
Linda Bruhn wrote:

> Is there a difference between MLM opportunities and a business of
> your own?  Sometimes.  In my opinion, and through my own experience,
> I tend to think of a genuine business opportunity in a different way
> than many Network Marketers. How? Why? Take your typical new and hot
> MLM opportunity.  Any Company can make a "Heavy-Hitter" great money
> in the first few weeks or months of operation, those big $$$'s we all
> aspire towards.  But who pays for that success?  IMHO, the cost is
> the pocketbooks of the "little guys" who follow that dream, because
> so-and-so in the upline has already made $XXXXXX his first few weeks.
> And if someone can, they can too.  This just isn't so in most cases.
> One must be led by desire to own a business of their own, not by the
> "dream".

IMO there is a DEFINITE difference between starting a NON-MLM business and an MLM business. I have had experience in starting and helping start both. The basic desire and philosophy is indeed common (independence from employment constraints and an aspiration toward financial security and success beyond the limits in ones JOB salary/wage/commission limits and a strong motive toward self direction and for earnings to be the sole source of performance determination).

Beyond the above, there are MAJOR differences.

- legal structure and general business responsibilities. ie. employees vs. downline, pyramidic and MLM marketing practices regulations that are specific to MLM business, tax filing, record keeping, creditor and banking relationships, knowledge and understanding of business milieu, etc.

- financial criteria as to start up capital.

and many others that are specific to the business you choose vs. MLM generically.

The reduced risk, organizational initiative and planning, and the ability to enter MLM with little or no understanding of the marketplace or products is what makes MLM most attractive to those who have no specific business, product or marketing skills to get started IMHO. This no prerequisite and prescreening is also what IMO results in the high rate of turnover in MLM.

Now as I have identified some of these differences, I would also add that they are by no means an indication of POTENTIAL. The DESIRE to be in business for oneself can indeed be satisfied by becoming an independent distributor for an MLM, but IMO this is quasi-independence.

You are not accountable as in a JOB for salary reviews but the limits to your activities in some cases is greater than non MLM's and in other cases less (as in agency agreements or franchise obligations). MLM is most like a franchise and originally was governed by existing franchise laws before MLM got it's own flavor.

Now the restrictions of franchising and MLM are much the same, except the Franchisee is usually significantly pre-screened (in most reputable franchises) as to commitment, resources, suitability, experience. As a result there is a greater VESTED interest by the franchisor and expectation to make your franchise succeed.

Of course there is a heavier capital burden, but that's all part of the COMMITMENT and RESOURCES aspect that IMO any legitimate and serious business undertaking must address. In MLM your heart might be there and your desire may also be there, but you don't have to put anything on the line to indicated this and as such all too often "talk is cheap" and is also IMO why so many MLMers get the label of "Dreamers" and subsequently fade away.

> The questions one might ask oneself, before joining any
> MLM? 1. How long has the business been in business? (makes a BIG diff-
> erence!!) 

Now this is where I beg to differ. The average person seeks MLM for reduced risk and uncertainties thus plugging into a tried and true uniform mechanism that enables them to follow a pre-tested plan. This is where my "quasi-independence" assertion comes in.

If you indeed have some business experience (whether it be MLM or otherwise) the element of risk is somewhat altered as the risk weighting is based on not just unknown financial, management and market conditions but in ones own ability to adapt and function under a level of understood commitment and effort. As an experienced person you are able to investigate by way of due diligence as you would with any other business undertaking, to review some of the uncertainties and become better acquainted and knowledgeable in the factors that one will have to contend with. The performance and effort to the experienced business person, goes without saying unlike the underestimation that happens all too often with a novice business/MLM entrant.

If you understand the risks academically and have sought to investigate all the areas of potential uncertainty, then you are in a position to make an INFORMED decision and weigh RISK vs. RETURN. Of course long term increases your odds of longevity, but also due to familiarity brings with it significantly more competition from fellow distributors. I personally would rather risk my informed decision on a startup than KNOW I have to contend with a lot of others who have tried and moved on, or continue to supply the product and opportunity I wish to enter into.

ANY NEW business has a higher degree of risk, but also carries a higher return potential given it succeeds and flourishes. MLM is no different in that aspect.

If you are not confident or do not know the proper methods of pre investigation or due diligence, then I would have to say stay away from ANY startup business.

To infer that ONLY big hitters make money on startups IMO is ludicrous. There are as many NEW big hitters MADE as a result of startups as there are former BIG HITTERS that participate in such new endeavors in my experience with 3 such startups. Of course the credibility and weight is carried on former reputations, but this also is often due to those former BIG MLM successes in seeking new heights and making sound business decisions that are then shared by others.

This is also where MLM and other non-MLM businesses differ IMO. There is much associated with the NOVELTY and EXCITEMENT of a fresh and unheard of product and name. Consumption patterns of repeat users in MLM is distorted IMO, since the MAJORITY of business/consumption comes from the existing distributors. So now the flip side of your argument that startups exploit the little guy, I'd say that the long term MLM does MUCH MUCH more exploitation of distributors who are for most part nothing more than wholesale consumers of products that are almost always overpriced but encouraged because of the potential that continued consumption of those products may bring. In that scenario who is playing more on the dreams?

I ask any experienced MLMer out there, when do you do most of your retail? My experience has been "At the beginning of my involvement". Industry and regulatory information acknowledges that distributors represent a greater part of product consumption than non related retail end users so why is LONG TERM suddenly for the sake of rationalizing ones own perceived preferences or selling points, less exploitive? Who are you making those bonuses off of? The end user! Who for the most part is the distributor who is locked into monthly usage quotas to enable them to receive any kind of override or in some cases nothing more than a rebate on those purchases.

> 2. Will that company be there in the 2-5 years it takes
> the average person to build an income-producing business with repeat
> business?

Unlike other businesses MLM power is in PEOPLE and thus your successful efforts in building a NETWORK of distribution. This is your security IMO, not any one given MLM. How do you think the Yagers and Britts can command such power and influence in their ranks to establish and/or veer from corporate norms?

When a BIG HITTER is enticed into a new MLM it is because of his/her power to activate such a proven Network of distribution and consumption. Why is the BIG HITTER suddenly this monster of exploitation. These folks are true business people, who make BUSINESS decisions. If I and IMO my downline can make more money elsewhere that is what I will advise my people to do. If you are truly an exploiter then your credibility and support will quickly disappear. Milking a downline can only be done once and people will remember. Helping your downline to flourish and get revitalized will also be remembered, and thus solidify the strength and consistency of your organization. If when making such a switch you do in fact help people to make MORE money with the new opportunity then you have made a GOOD business decision IMO.

The bottom line is that in MLM you are independent if you think and act that way. The writer of the post here likes to refer to independence and yet suggest loyalty where independence gets traded for the long term CORPORATE goals. That is hardly what I would call independence! Why should I keep doing something for a company on a long term basis, when I can make more providing my Network, or pipeline for the highest bidder and where the action flows. I no that comment will bring out a lot of discussion, but I'm sorry folks my observations and experience have been that this is REALITY and true BUSINESS.

But the truth is Security is indeed YOURS but ONLY IMO if you realize and understand what is YOURS. The company is not, the products are not but the DOWNLINE is! An MLM company can come and go just like any other. Why? Because owners/founders die, retire, sell out, get into personal or financial problems, get beat by competitors, suffer supply problems, have sudden and unwanted media backlash and/or consumer group conflicts .....and so on.

You are dreaming IMO if you think MLM and being with an MLM in and of itself is the security you seek. There is much more turnover in MLM than in Non-MLM of major multi-million corporations because they are much more susceptible to business interference and backlash from thousands of undisciplined and self serving distributors. And then add market and financial conditions on top of that!

> 3. Are you following the "dream" someone has built for you,
> or do you really desire a successful, long-term business of your own?

I also agree with that. What is the PROVEN LONG-TERM success in MLM? ONES NETWORK!!!! Doesn't matter where or with whom, if you have the business sense to adapt and change when performance and demand is indicated, then you WILL IMO have a LONG TERM success with MLM in general.

>If you ask yourself these three questions as each opportunity comes
>along, you might be surprised at what your "gut" tells you.  You 
>might change your mind, as well, about Biz-ops and Business.  Anyone 
>feel the same?  Let's share ideas.    Linda

I'm sorry Linda, but I can look at the same criteria that you do and come up with a totally different picture. What basis in fact and historical trend do attribute to your conclusions? Your story seems more like the pat neat song and dance I hear preached all the time to unsuspecting new and inexperienced MLMers. IMO it just doesn't work like that in reality. Show me where long term success of income of distributors in ONE organization outperforms in any aspect (security, income level, etc.) over those so called BIG HITTERS who IMO have caught on to the REAL truth of what MLM can offer. Change and adaptability are fundamental qualities for long term success. As a leader of an organization and network you are in a better position to respond to that.