Example..

My marketing and sales career started off in all the wrong ways. At just 19 years of age, and with less than 30-days involvement, I unknowingly became a victim in one of the largest MLM scams in the history of network marketing.

Equinox International began in the early 1990s and on April, 25, 2000, the Federal Trade Commission issued a notice that Equinox indeed was an MLM scam, and settled the court case with a penalty of $40,000,000 in restitution to the victims. My portion of the payout came 10 years after I had been scammed and was a paltry $40.05.

The sordid details of my story aren’t as important as the lessons I learned from the brutal experience. If you are contemplating entering the world of direct sales, follow these signs to avoid becoming a victim in an MLM scam.

Signs It Could Be An MLM Scam:

Over Promising Job Ads or Job Descriptions: If the “help wanted” job posting sounds too good to be true, it is. The biggest red flag of a fishy opportunity is anything that talks about making an enormous monthly income without any experience.

A “Weird” Job Interview: If you show up for a job interview and the whole thing feels a bit off -- follow your gut. In my case, instead of a legit sales interview, I was whisked away into a group to hear a presentation on water filters and cleaning products. Once the presentation was done, I was taken to a one-on-one interview and interrogated -- I mean pressured -- I mean convinced to join the company.

Outrageous & Unfounded Product Claims: A successful business is founded on successful products. If the company you are considering becoming a representative for has bizarre products or products which seem a little too good to be true, use caution. The last thing you want your name tied to is a faulty product or a product which is the focus of litigation.

Pressure To "Buy-In": All MLM businesses will have some start-up costs. Because you are an independent representative, you will need to pay for all your office expenses, product kits and so forth. However, in my situation with Equinox, every new representative was asked to “fast-track” to a management position by buying tons of inventory for $5,000. It was touted as an investment in your business. Anyone not willing or able to come up with the cash was treated as an outcast.

High Pressure Sales Tactics: If you are presented with a “really good” deal on a product kit or other company item, but the deal is only good until you walk out of the office, red flag. Any company not willing to allow you to go home and speak with your family about an opportunity or the cost of something is not going to be an ethical business partner.

A Push on Recruiting Sales Reps Rather Than Selling Product: It is basic business theory – a business must sell product in order to be successful. If a company isn’t focused on acquiring more customers to buy its products, but rather, interested in "building your team" of sales reps, consider this a red flag. The foundation of any good MLM business should be in its customers.

Unsettled Energy: From day one, I failed to acknowledge the biggest sign that something wasn't right – my gut. I felt unsettled from the moment I walked into my so-called interview to the moment I no longer had ties with the company. In further hindsight, the other representatives also displayed a sort of frenetic energy. Everyone seemed positive about the company, but in a very desperate and frantic way. Don’t fail to trust your instincts.

Poor Company Communication: Don’t be afraid to ask hard questions. If you don’t get solid answers back or feel you are getting chastised for not being a positive thinker or believing in the company, consider this a red flag. In order to be successful at any business, you need strong support and solid training. A legitimate MLM company will want to make this kind of thing easily assessable.

Pay For Training or Other Business Items: If a company routinely pressures you to pay for training (outside of a typical annual convention) or asks you to pay for office expenses - like renting a desk - this is another red flag.

Poor Better Business Bureau Rating: One of the most important things anyone can do when looking to join a business is to check out its Better Business Bureau rating. If you see warnings or information suggesting negative experiences, run the other direction.

The Real Problem with Network Marketing and Multi-Level Marketing (MLM)

It never ceases to amaze me the extreme polar views on the topic of network marketing and MLM. Some people are passionate about it in the extreme, and there are even top celebrity authors like Robert Allen, Mark Victor Hansen, and Robert Kiyosaki doing it and advocating it. Yet, in many circles, you might as well declare yourself a leper as admit to being in network marketing.

So, what is the problem with MLM and network marketing?

Maybe it's the pyramid structure? But you can't really take issue with the tiered compensation structure—almost every large sales organization in the world has that. Salespeople get commission, and sales managers get overrides or bonuses on top of that, and sales directors on top of that, and VPs on top of that.

Or maybe it's the fact that you have to pay to participate in it? But that can't be it—that's a standard franchising model. And I assure you, the franchise fee of most traditional franchises dwarf the sign-up cost of any MLM program by comparison.

Now certainly, there are illegal pyramid, or "Ponzi", schemes. This is where the money is all being made off of signing up other people, with little or no real product ever being delivered. But in spite of whatever perceptions people may have, the fact is that Amway, Excel, Meleleuca, PrePaid Legal, USANA, and many others have sold millions upon millions of dollars of products to happy customers, many of whom are NOT also reps. So, there may be a perception problem here, but if so, the perception is out of line with the reality.

But surely the bad reputation MLM'ers has some more basis in fact than the occasional illegal pyramid scheme?

The real problem with MLM is not MLM itself, but some of the people it attracts. Network marketing is just a business model, and it really amounts to "micro-franchising". Its upside is that it has a very low cost of entry, with the potential for exceptional revenue, and there are those who achieve that.

But those same things that make it attractive make it attractive to many who are NOT really qualified or prepared to become business owners. The salient characteristics of MLM make it attractive to people who:

·         have not done well in their business or profession and have little money saved up to invest

·         have no previous experience owning or running a business

·         have no previous experience in sales

·         have little or no experience developing business relationships other than that of employer/employee/co-worker

·         are not satisfied with their current level of income

·         have unrealistic expectations of the amount of work involved compared to the revenue realized

Don't get me wrong—I'm not saying that there's anything wrong with any of these things, or that this describes even a majority of network marketers—only that it describes a disproportionate number of network marketers, and that many of them never do anything about it.

As a result, many network marketers end up:

·         over-selling the opportunity

·         inappropriately discussing business in social situations

·         coming across as desperate

·         over-focused on new recruits and neglecting existing customers as a result

·         being either inaccurate or deceptive when talking about their business

Again, I'm certainly not saying that this describes a majority of network marketers, but it doesdescribe enough of them to tarnish the reputation of the rest. To pre-judge someone based on the basis of a small minority of people in that group is horribly unfair, but we must realize that most prejudices have some basis in reality, even if it has been distorted.

So what's the solution?

There's a first time for everything. And network marketing/MLM is a great opportunity for people to have their first business, their first sales role, etc. My point is this—recognize it for what it is: it's a business, and you are a business owner. And if you've never owned a business before, if you've never done sales before, if you've never networked before, you need to learn about how to do so, not just from the network marketing/MLM experts, but from established experts in those fields.

Network marketers who are serious about building a business should be reading and learning about business fundamentals, the latest sales and marketing techniques, strategies for networking and business development, etc., not just swapping tips at your team's weekly or monthly meeting. Act like a small business owner, and people will treat you like one.

Worldnetures........MLM

7 Poor Reasons to Get Involved in MLM

Network marketing, or MLM can be a great way to earn everything from a small additional income to a generous full time living.

However, many people join MLM type opportunities without really knowing what they are getting themselves in to. This is probably one of the biggest reasons for the fact that some people have very low thoughts about this type of business.

MLM works if you do it right. Period. That said, here are seven really poor reasons for enrolling in a network marketing opportunity:

1) Earning “easy money”

I know – the MLM-companies are very good a promoting their business as a simple 1-2-3 process that anyone can do and become an instant millionaire. Especially online it has almost become a standard to use super long and totally over hyped sales letters.

This is the equivalent of claiming that anyone who can open a can of beans can be a master chef.

Don’t get me wrong, I do think most people CAN make it in MLM if they put their minds to it. But you must be prepared to learn many new things and you WILL have to work for it. Make no mistake about that!

2) Expecting that “spill over” will do all the work

Many MLM opportunities are built on what’s called a “forced matrix”. For example, in a 3×9 matrix, when you have sponsored your three first new members, the fourth will be placed under the first person you sponsored. This person has thus gained one person in HIS downline, without any effort on his part.

Now, some companies would have you believe that their top recruiters are so effective that the spill over from their marketing will automatically make you, who are joining at the very bottom right now, an instant success.

This is simply a pipe dream – it will never happen. Yes, you probably will get a few people spilled over into your downline, but nowhere near enough to guarantee your success. The sheer width of the matrix on your level, means that there is an enormous amount of representatives that will have to shear any amount of spill over.

And who says the top recruiters are as active as they once where anyway? Worst case scenario, they are now working on something else entirely, because their income in this particular opportunity is already secured.

3) Thinking that a product is so great it will sell itself

This is a classic mistake, because most MLM systems simply aren’t really about the product. This fact is difficult to swallow, I know.

As a greenhorn I remember joining this lottery syndicate-MLM, thinking that “everybody” would want better chances at winning the lottery – right? The disappointment was huge when I discovered the truth – some people even made fun of any attempt to mention this great new thing I had discovered.

Likewise, in MLM, it will not matter if you are selling a breakthrough product that contains every mineral and vitamin under the sun – if you do not understand what network marketing is really all about.

4) Doing an old friend a favor

We have all been there – an old friend you haven’t met for years who suddenly calls you and want to set up a meeting about something he will tell you more about when you meet…

I’m not saying that this couldn’t be a potentially good business. But calling all your friends is a very ineffective way to do MLM, and you should never join any opportunity only to do someone else a favour. Because in the end this is about you, your money and your career.

5) Earning a lot of money in a short period of time

Most MLM testimonials always seem to go something like this:

- In my first month I made $800 and now, in my third month, I have been able to quit my job and…etc.

While not outright lies, testimonials like these are usually collected from individuals who, through luck or skill, managed to join this particular opportunity from the very beginning. They are simply at the top of the pyramid and they often know exactly what they are doing – the’re the MLM experts.

Like most offerings, MLM opportunities have a life cycle that grows rapidly in the beginning. During this phase of explosive growth it can be very easy to sponsor dozens of new people per day, with relatively little effort. After all, this is something entirely new and one well placed ad can do wonders.

However, if you join after this initial explosion, it is much more difficult to see quick results and it requires more effort to attract new people into the business. Patience, knowledge and the right strategy is required to succeed here.

6) Big name X endorses this program

This is somewhat related to the previous point. Mr. Big Hitter have made thousands of dollars with this opportunity already and he is not shy about telling anyone how EASY it was. And he’s probably not lying either. It was easy – for him.

Because, like noted above, he probably got involved in this opportunity long before it was launched to the general public, because he already knows all the right people.

He (or she), also know their stuff, and have the resources (large email lists, advanced Internet marketing tools etc.) to quickly and efficiently let the word out to a large number of people.

If you are relatively new to this game, it is a very bad idea indeed to assume that you instantly could pull off feats worthy of a network marketing guru. Would you compare your golfing abilities to those of Tiger Woods?

I didn’t think so.

7) Thinking this will be a free business to run

I’m not talking about the membership fee of your MLM opportunity here, because that is a given. But many people falsely believe that they can market entirely for free using the Internet.

While it’s true that there are some effective low cost Internet marketing techniques you can use, you should never fool yourself into believing that Internet marketing will be a no cost affair. Moreover, the online competition is usually quite fierce.

To summarize; MLM can offer an exciting new way to earn money. But your motivation for joining a MLM business shouldn’t be based on one of the misconceptions mentioned above.

Treat your business like a business, and you will be okay.