Kent Faver is a real estate appraiser from Texas and is involved in MLM, too. I found this post on an Internet Forum and asked Kent if I could republish it here for my blog readers, he graciously gave permission.
This topic is in line with my post on “Direct Questions” from a few days ago.
3 Critical MLM Questions
Those of us that are truthful will tell you we’ve felt a variety of emotions working “in” network marketing.
Many get so frustrated they go on to become anti-mlm zealots – believing that everyone should be paid something reasonable for their efforts. Actually, that’s life in the corporate world – not the entrepreneurial world. Owning your own business is extremely tough- most fail, and many fail over and over again.
There are many questions one must answer to determine if it can or will work for them — Here are three I think that should be near the top of anyone’s list.
1) Does MLM work?
2) Can MLM be done the wrong way?
3) If you quit, can it work?
Let’s begin with no. 2:
2) One critical element is doing things correctly. Based on my experiences, doing anything in mlm that is not in a one-on-one context is incorrect. This takes much more time, but is actually much more duplicatible than anything involving money spent for prospecting – including generic web sites, flash, autoresponders, leads, etc. Bottom line – you should be spending virtually nothing other than time in your sponsoring efforts. Most that quit an internet-based deal do so because they simply can’t afford to spend $50-1,000/month any longer on all their tools. This is a really another post for another day, the key element is….
1) Does MLM work? In a nutshell – yes. It works and works amazingly well. Here are critical components in mlm – sales volume and time.
In a legitimate network – you get paid off of sales volume. If you have no sales volume – you have no income. Regardless of what they tell you many companies pay bonuses on recruiting, head count, etc. Longterm, this is a guarantee for failure.
The second critical element is time. This is really where “the rubber meets the road” in mlm. I spend about 50 hours a week analyzing real estate returns and other real estate investment issues.
Real estate investing works phenomenally well – time and again. You cannot dispute the rates of return – yet most landlords fail and many fail miserably. Why?
Because its extremely tough, there are no guarantees,and in your first 2-10 years anything bad that CAN happen likely WILL happen. Bottom line – you make little money in real estate until leverage really begins kicking in and leverage will not begin kicking in until you allow TIME to pass and build up equity in your property.
So, how much time should pass before we start making it “big time” in mlm? Well, to many; 2 months is forever starting their new mlm business, but, in reality that’s no time – unless of course you’re doing it, doing it every day – then it FEELS like forever. And, if you’re doling out money on a product with no value and $100+/month on worthless tools – well, a few months adds up quickly to some rather sizable losses.
I always give this funny line to people – time passes much faster in pregnancy and graduate school when you’re watching someone else go through it. Ask my wife how long her two pregnancies lasted and she’ll roll her eyes and say forever. The first one almost killed her (literally) and the second one came pretty doggone close as well. My buddies that have gone through medical, law and graduate school fly through – I mean in no time – right? Who was going through it – me or them? Is time moving faster today than it did 10 years ago? Yes, of course – that’s life.
But in “mlm time”, or in any endeavor that requires tremendous sweat equity in ourselves – it drips by. We get frustrated with our results. “I’ve been in this deal 6 months and I’m only making $100/month! My upline’s making 10 times that amount!”
Bottom line? It takes what it takes to get where you need to go. If someone assures you you can get there faster with “their deal”….I direct you back to no. 2 – if you’re doing it wrong – it doesn’t matter – you’re eventually going to start over from scratch and have to begin the painstaking process again.
Which leads us to No. 3
3) Does it work if you quit?
I learned something a few days ago that blew me away. Someone way up in my organization is making the huge bucks and has been making this money for over a decade. I learned, however, that after three years, they were only making about $100/month!!! Would we have quit somewhere in that three years? Let’s all be honest – probably.
Is the answer to go find a “hot deal” that gets you there faster based on a dynamic recruiting machine, a killer upfront bonus, or a compressed pay plan that pays out 99% on your second level? No, No, and no. The answer is to simply go and “do it” until you get there – and make sure your company is there when you get there. Let’s look at one set of numbers again real quickly that exemplify leverage in mlm. Remember, mlm works and works beautifully based on sales volume and leverage. The critical element in leverage is not momentum – although that’s important – and its not hype, bonuses, etc, – its time.
Assume you are only finding one person per year that will duplicate what you do and not quit. One point real quick…I know people that have personally recruited 200 people and every one of them quit inside of two years.
Problem – wrong system (another topic, another day). Is this doable? Yes, and probably wildly conservative, but stick with me.
How many people do you have at the end of year 1? 1
End of Year 3? 4
End of Year 7? 128…and,
At the end of Year 10; you have 1,024 rock-solid people in your group and your likely making $20,000+/month.
Was it worth it?
How many rational, sane people would quit after three years when they have four people to show for their efforts? My guess is well over 80%..probably closer to 95%. This is why every mega money maker in mlm can point to just a handful of leaders (usually less than 5) that got them where they are – most reasonable people will quit.
Some will even become anti-mlm zealots. And, those zealots make more sense to the average Joe than someone who says “give me 7-10 years” and I’ll help you earn an unbelievable income that will last well beyond your lifetime.
But, I always get back to – is it worth it? I come away with the same answer every time.