The MLM Home Business Opportunity Blog

Getting into an MLM or network marketing opportunity almost always requires an outlay of money. It’s a miniscule amount compared with starting a brick and mortar business, but it’s still something.

Some companies require an outlay that is less miniscule than others, by the way. If you need to come up with $500 or more, realize that there are great opportunities out there for $100 give or take. Companies that want a bundle up front make me nervous.

In any case, even if the requirement is as little as $35, some people are going to say they would love to join but just can’t come up with the cash.

James Hosmer discusses this phenomenon in his article called “But I Don’t Have Any Money.”

As James points out, if you let this objection beat you, you’re losing a prospect. As long as your company isn’t one of those that demand hundreds and hundreds of dollars, you’re actually facing one of the easier objections. You’re a whisker away from a new recruit.

James advises a very direct and blunt response. You tell the person that a lack of money is exactly the problem that your MLM opportunity is going to solve. That’s what you’re doing there.

People have money for the things they want to have money for. James remarks that money to repair the car, the water heater or even the TV would undoubtedly materialize. Why not for a life-changing opportunity?

If you aren’t comfortable being so blunt, you can get the person over this hurdle. Be creative. Depending on how you retail your product, there will be a way for product sales to pay for the starter kit. If you don’t have a plan or two along those lines, ask your upline.

You need ready responses for the most common objections, and this one ranks near the top.

James gives us all something to think about. If we’re not happy with our lives right now, continuing to do the exact same things we’re currently doing can only bring us more of the same. We can’t expect anything to change unless we’re willing to do something different.

You can read James’s article here.

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Time to dig into this.

Do you know how the circles of MLM work? You draw a circle at the top of a page and put your name in it. Then you draw some lines coming out the bottom of the circle, and each of these lines has a circle connected to it. Each circle in that new line represents somebody that is recruited or sponsored into the network marketing opportunity.

And then lines come out of the bottom of these, with circles connected, and lines and circles and lines and circles and lines and circles. Forever, we hope. Again, each circle represents one person.

Let’s compress this for now. Just think about the circle representing yourself and then the horizontal (going from side to side) line of circles immediately beneath you. We’ll call this line the first level or tier. I mentioned in Part 3 that infinite growth represented a potential problem for the company. The company cannot pay an infinite number of commissions on a sale of the product. So, how far can the company allow that first level beneath you to grow?

Notice that the growth here will be from side to side, that is horizontally. If you keep drawing circles in the row immediately beneath you, you will soon run out of room at the side of the page, not the bottom.

The answer to the question is, the company can allow the row to grow infinitely. Mathematically speaking there is no danger of bankruptcy. How can that be? Because the commissions of MLM flow up the line, not from side to side.

A simple way to see this is that there is no line connecting circles that lie side by side in the same row. No line, no commission flow. You could have a million circles in the first level beneath you (nice thought, huh?). If the person represented by any one of those circles makes a sale, the only people in the diagram who will make a commission will be that person and you. Of course there is somebody above you, too, but let’s not worry about that for now.

Just realize that horizontal growth is not the type that poses the threat of infinite commissions to the company.

Here is the first question you can ask about a particular MLM compensation plan. Do all the people that I myself recruit get placed into the first level beneath me? It may seem intuitive to you that your own recruits would be first tier, but frequently that’s not the case. Since the company can allow infinite horizontal growth, we’ll want to understand why the company would choose either to keep all your recruits at that first level, or not.

If the company does in fact put all your recruits into the first level down, here’s the next question. Do they allow that row to grow indefinitely? That is to say, will you yourself always get a commission from the sales of every single person you ever recruit, or will you eventually lose some of them?

That’s enough to think about for now. I hope this is making sense.

In Part 5 we’ll thicken the mix with vertical growth.

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I remarked in a previous post that your personal judgment of the product is the single most important predictor of your success in an MLM home business.

In a recent article, Koz Huseyin suggests that a lot of people are attracted primarily by the pay structure. Since we are in the middle of looking at how pay structures or compensation plans work, I thought this would be an informative intermission.

The first thing I’ll point out is that Koz mentions network marketing opportunities that promise to pay up to infinity. We ourselves have touched on the concept of infinity with regard to compensation plans, and we’ll have a lot more to say about it.

What is Koz’s main point? Simply this. Without a passion for the product, no matter how enticing the pay structure is, you will not have the motivation and energy to persist in the business. The pay structure by itself, no matter how generous, will not keep you going. But a product you enthusiastically endorse will.

Judge the product with all your instincts as a consumer before you ever consider building a business around it. Don’t just hunt for what looks like the latest and greatest money making scheme.

See Koz’s article.

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So now we’re ready to see MLM compensation plans not only from our own point of view but from that of the company as well.

I mentioned in Part 2 of this series that the company itself wants a large and motivated sales force. A large motivated sales force equals higher total sales.

Where does this well directed herd of sellers come from?

The sales force of an MLM company grows when individual distributors — that’s you! — grow their own individual businesses by recruiting or sponsoring as many people as possible into their downline, also known as their group or their team.

Your own growth as an independent distributor feeds ultimately into that all important total sales number that the company has as one of its two primary goals. At this point your personal goals are in line with the company’s goals. That’s why you’ll get a lot of motivational and other support from the company itself. It needs you.

However, the growth of your own downline also represents a problem for the company.

What is the attraction of an MLM home business opportunity to you? What is the real allure? It’s that indefinitely growing downline and the limitless commissions that flow back up from it to you. All those people out there selling the product. And each sale putting money in your bank account! It’s an inspiring picture.

What’s the problem from the company’s perspective though? Theoretically, your downline could grow infinitely. But an individual sale made by an individual distributor cannot be divided into an inifinte number of commissions. The company would go belly up overnight.

What’s more, the company is motivated to keep the number of commissions per sale to a minimum. Remember primary goal number two? Healthy profit margin. This translates: Keep costs down!

Suddenly, your personal goals and the company’s goals appear to be diverging.

But bear in mind that the company needs you. And you need the company, don’t you? You won’t have much of a business if the company goes bankrupt. Also, the stronger the company is and the higher its profits are, the better its product, its advertising, and its overall support will be.

In Part 4 we’ll start to look for a compromise. See you then.

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We have already established that your MLM income will be directly affected by the structure of the compensation plan. But here’s something else to know if you want to understand these plans fully. The bottom line of the company itself will also be directly affected by the structure of the compensation plan.

Let’s pretend we own an MLM company. What will our basic goals be? Well, that’s pretty easy to answer, because it’s the same answer we’d give for any company. High sales numbers with an excellent profit margin.

The profit margin represents the amount that’s left from the sales after we subtract the costs. And a major cost is going to be the amount we pay our sales force. What does that mean for us as owners of an MLM company, as we consider how we’ll structure our compensation plan?

Let’s think first about sales. We’ll have to push the product out the door to get that number up. So we’ll need a large and motivated sales force. That would suggest that we ought to be as generous as possible in the compensation plan, or at least lend the appearance of being so.

Remember, appearance and reality can be two different things, especially within the maze of a complicated MLM pay structure.

Now, what about that profit margin? It’s rather unfortunate perhaps, but the reality is this: The less we pay our sales force, the better our profit margin.

This is the same for any business, of course. How much does a company want to pay in salaries, for instance? Well, an amount that will result in both motivated employees and a healthy profit margin.

When we look at MLM compensation plans, though, we tend to lose sight of this fundamental aspect of business, largely because we have a hard time thinking about anything but ourselves.

If you can keep the company in mind, compensation plans will begin to make more sense to you.

See you for Part 3.

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We’re always told that we need to understand the compensation plan of any MLM home business opportunity that we’re taking a look at. The problem with that advice, although we hate to admit it, is that MLM compensation plans are complicated. You see circles, then you see stars, and then you pass out in confusion.

After you wake up, you find a book by a top MLM guru, or you go online, and you read very carefully about the different types of plans. And if you’re at all like me, you still just don’t get it.

Something is missing in the description. You begin to suspect that it’s much too complex for the average MLMer to grasp.

That worries you a bit, but you understand the basic concepts behind retailing the product, growing your downline, and earning money from both sources. You especially understand that the bigger your downline gets, the bigger the payoff, right? And you get a better and better handle on the particulars of your own plan as time goes on.

But real leaders in MLM understand how compensation plans work in general. The biggest earners are the people who do what it takes to make themselves the leaders of their business. And real leaders study and learn.

I don’t care what industry or pursuit you’re talking about, the leaders are inevitably the students of it, and they are the students of life in general.

So let’s see if we can get our minds around compensation plans. This is far too large a topic for one or even two or even three posts. This will be an ongoing series, which I may or may not do consecutively. I’ll see how it goes.

What you can look forward to is an explanation of compensation plans as I’ve come to understand them in my own terms. It may seem a bit different from what you’ve heard or read elsewhere, but to understand these plans myself, I found that I needed to add some clarity to the typical definitions you find out there.

Even if you’re already comfortable in your knowledge of this topic, I hope I’ll be able to give you added perspective and insight. See you in Part 2.

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You can find a lot of advice on how to choose the MLM home business opportunity that’s right for you. You should research the company. Make sure it conducts business reputably. Study the trends of the market. Understand the compensation plan. Know what sort of support and training you’re going to get. And on and on and on.

The problem with that type of advice is that for many of us it’s just not a doable proposition. How many companies can we study in that much depth? How would we even begin to acquire all that information?

What we really need is a starting point, something that makes immediate sense to us. Here’s the starting point I’d recommend. Be absolutely certain in your own mind that the product you’ll be selling is one that you yourself would buy — at the retail price! — even if you were not involved in the business.

Better yet, you’re already buying it.

It’s that simple. This will narrow your opportunities dramatically. And you’ll now be able to do a bit more research if you’d like, assuming you have a couple opportunities to choose form.

But the rest will tend to follow if it’s a product you truly endorse. Good companies produce good products.

If it’s a product you wouldn’t begin to use yourself or wouldn’t buy because it’s overpriced, avoid it. Be firm in your refusal and don’t let yourself get hyped. Your own appraisal of the product itself is the single most important predictor of your success in an MLM opportunity. And it’s research that won’t be so hard for you to do.

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I came across an uplifting article by Doug Firebaugh on managing discouragement, your own as well as that of people in your group.

He insightfully points out that dis-couragement is the emotion that replaces courage, just as distrust replaces trust. In an MLM home business, discouragement can be deadly. Doug lists 5 things that cause us to get discouraged, such as questioning ourselves and listening to the wrong people. Those are two that I can especially relate to.

Then he gives us four ways to fight back. The first is to work on our communication skills. Doug rightfully remarks that our business is all about communicating with people. As I myself like to put it, if you can talk, you can succeed in MLM.

The article focuses more on helping people in your team overcome discouragement than on overcoming it yourself. I personally find my own discouragement to be the bigger problem in the long run. I can encourage others if I’m feeling en-couraged myself. But I find myself to be the hardest person I know to encourage when something’s getting to me.

Doug closes the article by explaining the ADIT Principle. ADIT stands for: All Discouragement Is Temporary! That’s one to write down and keep constantly in mind.

The funny thing about discouragement is that sometimes you just have no idea what’s causing it. It’s just there. Simply knowing that it’s going to go away, sometimes for no apparent reason except that enough time has passed, can be the quickest way to get your courage back.

It’s also just helpful to remember that you’re not the only person who gets discouraged. We all do. And it’s a good idea to tell someone how you feel, your sponsor or supervisor for instance. People actually like to give encouragement. I know I do. It makes me feel useful and puts my own supposed problems in better perspective.

So you’ll be helping yourself and another at the same time!

Click here to read Doug’s article.

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I found an interesting post by Karen Miner Hurd in her MLM Maniac blog. Karen tells us that we can expect to have two different types of people in our MLM downline, sleepers and doers. For the sleepers, the business will be an incubator; for the doers, a launching pad.

As Karen very realistically points out, you cannot manage sleepers and doers the same way. In fact, she says, because of personality or “old scripting” or some other factor, you will have little control over the sleepers. They need encouragement but won’t respond to prodding.

The doers by contrast will spring right into action, Karen remarks. They’ll run at 110% and will become motivators themselves. Interestingly, Karen warns that you can put too much effort into the sleepers, to the detriment of your own prospecting. It’s actually the doers you need to work with. That’s the exact opposite of what many people might think.

This insightful post is a strong reminder that the reality of human psychology plays an inevitable role in the success of your MLM home business opportunity. And it’s not just what’s going on in your own head that will matter to you!

Read Karen’s post here.

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I found a brief article by Steve Devane that helps us to realize that success in MLM is a frame of mind.

He makes the simple observation that everyone in MLM is looking for successful strategies but that a strategy that works for one person may not work for another.

That’s food for thought. Let’s say you’ve bought a book on how to succeed in MLM, written by one of the best minds in the business. It’s loaded with strategies that have really worked for countless people. With great confidence you go out and start applying them, but you meet with utter failure on the first few you try. You’re ready to throw in the towel.

Now, it could be that you didn’t execute the strategies well. This business takes practice like everything else. But let’s say you actually performed the techniques to perfection. And they still didn’t work. And they didn’t work no matter how many times you tried it. Now what?

Well, you could give up on your business, thinking you’d made a mistake by starting it. Or you could reach the conclusion that the strategies in question simply weren’t going to work for you, or your product, or both, and move on to others.

The fruits of MLM belong to the persistent. Not to the flashy or the showy. They belong to the people who keep going, fully confident that they are going enjoy success the next time out. The fact that excellent strategies do not work for everybody is one more reason why persistence has always been characteristic of successful people.

Can you be persistent? Anyone in the world is capable of it, but moving through those insubstantial clouds of doubt proves challenging for many of us.

On the other hand, thinking like your prospect, Steve says, is universally successful. It isn’t one of those strategies that work for some and not for others. It works for everyone.

And you have to realize, Steve remarks, that your prospect is thinking about you and how well you will work as a partner in the business. It’s all about you.

I agree with Steve on this point, but only to an extent. It’s not just you. It’s also your product. The product so frequently gets forgotten in discussions about MLM. You can start thinking like your prospects long before you ever meet them.

As you are contemplating an MLM opportunity, you can have it in mind that you are about to put not only your time and money into this product, whatever it might be, but also your identity. And after you sign on, you are going to have to get others to do the same. The initial step to success in an MLM home business opportunity is to find the product that most appeals to you. When it appeals to you, it will appeal to others like you. That’s a strategy of mindset that does work for everyone.

Read Steve’s article here.

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