Monday, September 7, 2015

MLM Basics: Six Factors to Consider When Evaluating an Income Opportunity

There are always new income opportunities launched daily. Many of them are downright... WTF? How can any one put money into something like that? While others do look pretty legitimate.

However, it seems nobody bothered to compile a list of things you should know BEFORE you even consider an income opportunity, i.e. basic financial competence... or even basic critical thinking competence.

So here a list of six factors for you think about before you even go to any seminars or such:

One or two examples are noise, not proof

Everybody puts their best face forward, but the emphasis is always on being the "authentic self". If you are poor, you won't come across as a millionaire for long. Same thing with income opportunities. The talkers will usually parade their top earners, but how many of them are there, and do they have an income disclosure statement? How many people actually made decent amount of money?

Most MLMs participants (90% or more) make minimal money. Average sales (not profit) as per DSA for 2014 is about $2000 per year per participant. If a few people made six or seven figures, then the vast majority made practically nothing. And since you're starting, you'll make practically nothing for a few years. Is it worth the time to "try it out" for a few years? Can you afford to?

There are no "secrets" nowadays

In the age of Internet there are no 'secret' ways to make money. ANYTHING can be researched. Something you have no data on, you can Google. If even Google can't find much on it, you either have a language barrier (the "opportunity" started as something in a different country, like China), or it's so new there is nothing on it (who? what? WTF?). NEITHER of which you should touch, no matter how much it had been talked up.

Most likely, the opportunity involves selling something you don't understand, but think you do... Amber, Bitcoin, other cryptocurrency, and so on. As you have no information to judge, you will tend to rely on the PR copy, and that's when you run into problems, as PR copies do not have to be the truth or the whole truth.

Distrust Promotional (PR) Material

Promotional material are often mis-represented or designed to mislead.

One company was found to have promoted a study that later turned out to be possibly faked.

Another company used two studies of less than 100 people each in China to "prove" that their supplement is good for everybody around for world, any age, in any form (shake or energy drink).

Yet another company used a hypothetical paper written by the founders themselves to justify a supplement they sell that had not been proven to do anything.

Beware of people telling you to ignore negative information

Because there are no more "secrets", some promoters have started to teach "avoidance", i.e. "avoid negativity", and claim it means avoiding any information that would have triggered "caution". Such avoidance is often accompanied with slogans such as following quote from Zig Ziglar.
Positive thinking will let you do everything better than negative thinking will.
The problem is this is a misquote, and it does not have the context. Instead, here's the entire quote, from Zig Ziglar's book "Raising Positive Kids in a Negative World", that explains what was REALLY meant by the quote:
What Positive Thinking and Negative Thinking Do:  No, positive thinking won't let you do anything; but it will
let you do everything better than negative thinking will. Positive thinking enables you to more effectively use the
ability, training, education, and experience you have....  -- Zig Ziglar, from "Raising Positive Kids in a Negative World"
What's left unsaid: If you don't have the necessary ability, education, training, or experience, you are NOT going to succeed whether you have positive thinking or not. 

Negative thinking is thinking in pessimistic terms, like "we'll never find enough customers", etc. This is very different from information that warns of negative results like, "here's proof that this company is not as legitimate as it claimed to be" or "you don't have the experience or the ability you need to succeed".

People who tell you to ignore "negative" information, even warnings like "you lack the training, ability, education, or experience", are reciting a slogan they do NOT understand, and expect you to follow blindly, like sheeple.

Beware of Reality Inversion

Often in suspect scam opportunities, the reality had been inverted, and words you thought mean one thing had been redefined to mean something else, but you won't realize this until you have already joined.

What does "promote" mean to you? It should be "marketing", "trying to sell", "advertise", and so on.

But at some companies, promote means buy, and not just buy, but autoship, i.e. have stuff shipped to your door every month (and your credit card automatically charged), because your job is, according to some promo material is to buy stuff for "some to drink and some to share" (i.e. give away).

The fact that the company automatically reclassifies you as a "customer" if you cannot recruit additional downlines should make their intent quite clear: recruit and buy (for yourself), not sell.

Find Smart Allies

Smart allies are the ones who will tell you, to your face, that the battle is lost and it's time to cut your losses and run, or you're going down a path that can lead nowhere, and WHY, in "5-year-old" terms (like ELI5 topics on Reddit).  They are the ones who can explain things to you when you run into something you don't understand, and when applicable, admit when they don't understand, and find other experts who do.

People who tell you yes, you are smart, you have to be to recognize the potential.... who always sound understanding, and so on, blah blah blah... have a good chance of being sycophants and yesman/yeswoman... who wants your MONEY and time and sweat... by fluffing your ego.

There is a Chinese saying: honest advice is difficult to accept  忠言逆耳

Know how to tell the difference between smart (and honest) allies... and sycophants.


Hope you find these tips helpful in not get "taken for a ride" and came back with lighter wallets and a dazed look.

1 comment:

  1. Apparently you have secrets you don't want to share with the public, eh?