I was approached today by a customer of mine who was kind enough to invite me to join him on this "business venture" of his. I shuttered, immediately knowing the direction he was going to take the conversation in; my mind racing over all of the things I could say to pull myself quickly and painlessly out of this impending conversation.
You see, I'm somewhat of an expert on rejecting these propositions because I have been asked to join these things several times. I'd be flattered that somewhat thought enough of me to want me to make a lot of extra income like them, but really that's just nonsense because most of these people I don't know well enough to merit that courtesy.
My business-oriented mind kicks in and I realize that on many levels, these businesses are doomed to fail from the start. Sure a few acorns at the top of the tree might be raking in checks that would make all but a few people envious but by the time those "testimonials" happen, the little guy is just going to get trampled on in the process.
Generally the structure of the business is as follows. First, you start out paying an entrance fee into the company ("to test your loyalty" etc) though they reassure you because you won't have to pay anything monthly again. That's sure great, because last time I checked, a company paid ME for my services, not the other way around. Then there is this website that is given to you for "free" where you can sell stuff. In this context, stuff is substituting another four letter s-word synonymous with crap. Really, the products themselves don't matter because that isn't the main focus stressed through the sales meetings they put on.
The crux of it all is what makes these schemes ultimately fail. So much so that they now refer to themselves as "multi-level marketing" in hopes of avoiding the negative stigma of calling something a scheme completing overshadowing the fact that these business formats are illegal. They ask you to bring on two or three more people, and that when you do that you are "moving up" such that you'll get to pull yourself and those people up as they bring in more people to the company.
Now even if nothing else about this business plan has smelt fishy this is where the red flags should be held high. I mean we can forgive the fact that a company wants you to pay them for working for them and its not like other sales organizations don't sell crap and or focus on their product line ups, but this... this is too much. Why? Well take it to it's logical conclusion. If you have to bring in even two people, and so does everyone else at your level (as had been done before you) then everyone that was brought in had to bring in two people, one must realize that at some point there will be no more people left to bring in. And if your primary business function is doomed to fail from the start, I'd like nothing to do with it.
How is it doomed you say? Well I did the math to figure out how many times the cycle could occur in full before 7,000,000,000 (7 billion) people would be involved. Turns out, if one person starts this company and asks only two other people to join, and those two people ask only two other people to join, and then in that next tier they only ask two people to join each, the number of times this could continue is just under 30 full times before EVERYBODY on the planet was a participant. That is a very finite number for a company that would like me to earn hundreds or even thousands of dollars a pay check. If you have to bring in three people each, that number is even less at only a little less than 22 times. Subtract all of the people that would find this scheme stupid or those that are too young / old / sick etc. and that number gets even smaller. The mathematical proof behind where these numbers came from can be found at http://i45.tinypic.com/dr6p8z.png.
Remember, once a person has joined, they aren't going to join again. This is unlike a normal participant in a company (customer) who may return several times to that company because they continue to need the product. Furthermore supposing the company realizes this and shifts attention to that free sales website they gave everyone, in affect everyone is their own supplier and would just buy from themselves.
Suffice it to say, I really wish a greater awareness over these multi-level marketing programs would go out so that people would be better informed about the decisions they make, and more importantly to whom they give their money to.
I seem to get sucked into these at times.
ReplyDeleteLet me review-
Olde Worlds Products
It was a company started by a couple former Amway MLM's who wanted to be bigger and better than Amway. Their products were great, they had done their research to actually improve on the Amway products. But Amway was so entrenched in the publics mind as being the alternative to grocery store cleaners, there wasn't room for another.
Tahitian Noni Juice
The stuff tasted bad. You had to hold your nose and take it like medicine. Thankfully a few tablespoons were all that were needed, per serving. But for the rest of your life?
They had another problem- You can't make too many outrageous claims to fixing your health, or else you'll get nipped by the gov't. So you had to take the stuff by faith, and remembering the testimonies you heard on all those cassette tapes you purchased, at an outrageous price.
I'll probably get sucked into another someday. Hopefully my wife will tell me we're too broke to try it again.