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Sometimes the articles I post generate a flood of comments. Sometimes they only generate a trickle. And sometimes it just takes a while for the conversation to get started. The latter seems to be the case with yesterday’s guest post about scams and pyramid schemes. Things started slowly, but today the comments have been interesting. For example:
- Veteran Military Wife buys MLM products on eBay for a fraction of their price. (Love it!)
- M! says that the best way to make money off MLM is to be the bartender at one of their conferences. (Ha!)
- Eight describes a typical recruitment scenario (which matches my own experiences).
- JenK tells a couple stories about MLM.
- And finally, Missy says that her parents have wasted their lives on MLM.
It’s because of stories like these that I’ve said time and again: Get Rich Slowly readers are the best on the web. It’s you folks who give this site value. I’m just the bus driver. Speaking of “best on the web”, here are a few personal finance articles I’ve enjoyed recently at other sites:
For the past few months, I’ve been contributing material (in the form of old posts) to MSN’s Smart Spending blog. I love my editors. I’m learning a lot from them. One of them, Donna, just had a daughter get married without breaking the bank. In fact, Donna says it was a “frugal hack wedding”. Sounds like my kind of affair! Congrats to Donna and her family.
Meanwhile, at Consumerism Commentary Sasha recently offered an introduction to ethical consumerism. She discusses moral boycotts and voting with your dollars. Does your spending reflect your beliefs?
Finally, Penelope Trunk at Brazen Careerist posted some great advice today. “You already know what you should be doing next,” she writes. “You can figure out who you are and what you should be doing by telling yourself the stories of your childhood.” What you did and valued when you were a child has real value, and if you take some time to just ignore the baggage of adult life, you may find that you can learn from your younger self. Great stuff.
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May 12th, 2008 at 8:57 pm
J.D. you may be the bus driver but you drive an intellegent and thoughtful bus. The people who post on this site are awesome. This is my favorite site. I learn so much from you and all the other posters. I see different points of view and a new way to look at different topics. Thanks for driving the bus.
May 12th, 2008 at 11:41 pm
Not all MLM stories end badly. I do know a guy personally who made over $1M with MLM. He also sat me down and explained exactly how he did it. There was a math formula and a recruiting process. Last I heard, he still had a recurring cash flow of several hundred thousand a year, even though he no longer sold the products.
He did not try to recruit me to join his downline.
I should probably persuade him to write a book on how he did it. I knew him before he joined the program…smart guy, and very wise with money and investments.
For him, this was a ticket to early retirement. He didn’t get emotionally invested and didn’t get hung up when others didn’t want to join his program. He only recruited a certain number of people, and he had a formatted list of questions to ask them.
Of course, I have known many others who failed off of MLM. I am sure he is the one out of every 100 or 1000 who actually succeed at these things. I have joined a couple and never really made much with them, either…because I didn’t write out an entire plan like he did.
Personally, I prefer owning my own business. (He owned his own business too… doing business consulting and writing business plans and financial targets for other companies. I guess that’s not surprising.
)
I think it goes to show that you can make money in anything, really, if you’re smart about it and don’t get carried away. For most people, MLM will not work. For most people, owning your own business will not work. Neither is an easy path to riches. But both have the potential to make you rich.
May 13th, 2008 at 2:51 am
With a good system backed by strong support/products, MLM is infallible and there is not much risk.
May 13th, 2008 at 5:26 am
I was in Amway for about 4 years and did everything I was told. The problem is that it costs thousands of dollars to stay in these “businesses” and usually the people who fall for their lies don’t have the money.
The products are overpriced. The people are NOT your friends. The business model is questionable. ‘Nuff Said.
My epiphany came when I was “showing the plan” to a co-worker and trying to explain how so many people can make money from one bottle of shampoo. I thought to myself, “YOU don’t believe any of this so why are you trying to convince HIM?”
I just closed up my stuff and talked about college football. He never mentioned “the business” again.
May 13th, 2008 at 5:36 am
ericabiz: I’m sure it’s possible to get an MLM scheme to work for a specific individual, but the nature of a pyramid scheme/MLM is that it probably didn’t work for *any* of his downstream people. I know he’s not strictly responsible for their success, but I could not make my fortune off the backs of people I felt I was exploiting to their detriment (since they have little hope of doing well in the scheme).
May 13th, 2008 at 6:26 am
I know you can make money with MLM. It is just too easy making money on a non-MLM business. And so many are scams that it is hard to find one that is legitimate! Slipping away from MLM for a moment…
My spending does reflect my beliefs though I’m not much of an activist. Mostly I am pretty cool if an actor (musician, etc) has a strong political belief and will respect that. Same thing with companies. It is this right to have your own opinion that makes this country great.
There are a few exception. Mostly it is due to their ethics, not their views. My kids will never wear Abacombrie cloths because of their child exploitation. In the business world there are a few companies I won’t work with (I can’t trust them). Otherwise I am open minded.
May 13th, 2008 at 6:56 am
You inspired me to write about my own experience on my blog. It really wasn’t that bad. I didn’t make any money, more like lost money. But it did teach me a lot and it helped me create some really good habits like reading and saving money.
May 13th, 2008 at 12:03 pm
I’ve worked for a direct marketing company (which also happens to be MLM) for the last 15 years, and altho it hasn’t made me a millionaire, it’s been a great extra stream of income for our family. I don’t have to carry an inventory, or buy monthly quotas, I actually sell the products (lots of them) and everyone who buys them raves about them. Not all of these companies are scams; mine happens to serve a large group of parents, teachers and librarians who want their kids to love learning.
I read your blog daily and pass it along to my adult kids who are already on their way to financial freedom. Even the ones still at home are working on getting to that place. Thanks for your inspiration and helping to sort thru all the (good and bad) advice that’s out there.
May 14th, 2008 at 9:58 am
I don’t think you can really generalize MLM’s and comment that they are “pyramid schemes.” In my opinion three types of MLM’s. An illegal one, which is a “pyramid/ponzi scheme”, a illegal legal one, and a legal one.
First off pyramid schemes are illegal. This is where one person gets paid of another person joining; no product is ever exchanged.
Secondly, the legal illegal one, is for those of you who have joined one of those MLMs who sell vitamins, juices, subscriptions, etc.. It’s not to say that your products are bad, most products are actually good, else they wouldn’t be moved. However, these companies charge a substantial price for some startup kits, tapes, books, packages, or they debit your account on automated draft each month. Why is this an illegal legal MLM? B/c this is Corporate America, if I want to slap a $500 price tag on some juice, or a roll of toilet paper, and you are willing to buy it, then that’s completely legal, and you are responsible for your own actions.
What you soon learn, is that most of these products are internally consumed. Look at the compensation packages. If you have to have thousands of people under you to make $10K a month, then the likelihood of you succeeding is very slim. These are the “top heavy” or trend-like MLM’s.
I’m not hear to preach, only to tell my story. I am currently involved with a network marketing company. Did I pay an initial fee to startup? Yes I did, first off these are businesses, not get rich quick schemes (at least mine is not). If you treat it like a job, you get job results, if you treat it like a hobby, you get hobby results. If you just bought a McDonald’s Franchise would you be there working hard day in and day out? Yes you would, then why do people treat MLM’s with such little respect? Is it because it only costs you $99-$500 to start up? Oh, so the more we pay, the better the opportunity is that correct? That is not often the case, and one must pay attention to the risk:opportunity ratio.
When I looked at my company it made total sense and the risk was zero. That’s why you need to look at your risk to opportunity ratio. I put out a hundred bucks and was reimbursed $200. I was able to have all my licenses paid for and learned some valuable lessons. The training has been invaluable.
I went from the mindset of “oh, I will always have a car payment of $350/mo, that’s just normal” to paying off my car within 6 months. I went from having 10 credit cards, to having 2, with no balances. I went from thinking I would pay off my school loan of $20K in 30yrs to paying it off in the next 6 months.
This company has taught me to establish my own game plan for my financial future. Without a plan, you can’t expect to get nowhere.
Now, I don’t think my company is entirely responsible for this, I give it up to my trainer, he has opened my eyes to what living really is, to having dreams and goals again that are realistic and achievable. This is no easy task, and IF ANYONE TELLS YOU “IT’S SO EASY AND YOU’LL MAKE MONEY QUICK,” THEN RUN!!! IT’S A SCAM.
The things in life truly worth getting are worth working for. In my opinion, it’s better to make two slow fives than one quick ten.
Lastly, for those of you who are cynical, and are quick to mock and shoot things down, then shame on you. You are ruining people’s dreams and ignorant to the fact that some of these companies who have a track record, who have been around, who’s achievements are realistic, are good companies to get involved with. Don’t get me wrong, even within a great company there are bad apples, and I have seen many in mine. It is truly your leadership and mentor who make all the difference. But, if you are cynical, or skeptical, sit down, listen, it doesn’t hurt. Most of you are grown adults, and you live in fear, in fear of the unknown, in fear you will be sold something you don’t want, if that’s the case SAY “NO!!!!!”. It is ridiculous how there are so many adults out there who cannot say no to another adult, yet you have no problem telling it to a child. Secondly, even if it’s not for you, you can still get up and go to your same old job the next day, it’s not going anywhere (on the contrary it is, it’s called globalization). In my business, my success is not measured by how well I’m doing, but only how well my team is doing, that I truly believe.
“You may have a fresh start any moment you choose, for this thing that we call ‘failure’ is not the falling down, but the staying down.” ~ Mary Pickford
“Do not go where the path may lead; go instead where there is no path and leave a trail.” ~ Ralph Waldo Emerson
June 19th, 2008 at 11:42 pm
Lots of businesses are scams and not all of them are MLMs; in fact I’d guess most of them aren’t, simply because non-MLMs are in the majority.
Even MLM companies that seem dishonest and scammy can put out good products. Some of my stepmom’s friends when I was in high school sold Amway, and some of Amway’s products are really good. I wouldn’t sell Amway/Quixtar now, primarily because (referring to other elements of your post) I prefer to spend where my values are, but I wouldn’t tell anyone they’re a scam either.
I dabbled for a little while in a MLM that makes and sells candles, primarily. I balked at the retail prices at first, then I walked into a Whole Foods one day and investigated *their* scented candle inventory. Same price range, inferior products almost all the way across the board–paraffin wax, weaker scent, etc. I was disappointed, and I felt better about what I was offering. I still use the MLM product, actually. I spent so many years being disappointed in the scented candles I tried that I’m holding on to what works.
Shaklee is good as well.
I think the main problem with any MLM business is what it is for other kinds of businesses: the person running the individual business must put forth adequate effort. Assuming the market supports what you are doing, but even that falls under the “adequate effort” banner because hopefully you did your research on what the market would bear before you jumped in with both feet. You also owe it to yourself to educate yourself about business and marketing practices. As I said, I only dabbled in my business; as a result I hardly made any money. If you don’t treat it like a real job then don’t be surprised when you don’t get paid. This is not to say that no MLM is ever a scam, but for the ones that aren’t, you owe it to yourself to put forth the effort.