Facts, Myths & FAQs about MLM

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Isn’t this an illegal pyramid?
Actually, there is nothing inherently illegal or unethical with a “pyramid shaped” organisation. According to noted author and educator, Dr Karl Dean Black: “Above a certain size, any organisation that distributes products or services ends up shaped like a pyramid, with multiple levels that get bigger as you go down. Delegation creates a multi-level pyramid.

Our government is also a multi-level pyramid. So are our schools and churches. All successful business, because they distribute products and services, end up shaped like a multi-level pyramid.” “Our government distributes services down a pyramid, but we give it power from the bottom, with our votes. Marketing companies distribute products down a pyramid, but we give them power from the bottom, with our dollars. So pyramids set up a flow that runs two ways: first down, then up.

Value flows down the pyramid; power in response flows up. If value stops flowing down, power (in the form of dollars or votes) stops flowing up, and the system collapses.”

An illegal pyramid scheme would pay commissions to their participants based on the recruitment of more participants. These participants normally do not have to purchase any product at all, or the product in question is not something one would normally buy at its price. Back to top

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If it’s so good, why do so many people drop out?
Every year, thousands of people graduate from universities. At the same time, many drop out too. Does that mean that universities are no good? In any industries, there’ll be people who succeed, and people who fail. It depends very much on that person’s desire to succeed in his/her endeavour. Back to top

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Is it true that the top always makes the most money?
In a typical corporate structure;

In such a structure, most people start from the bottom and slowly climb their way to the top. But as long as the top doesn’t make way, it’s quite unlikely that most of them, if any at all, can reach the top.

In Network Marketing, everybody starts from the top and build their way down by adding value – in terms of training and education – to the people they bring in. The person who gets paid most – regardless of entry level – is the one who brings in the most people and give these people the most value in terms of training and education. Back to top

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What if I don’t like to make money from friends?
So it’s ok to let strangers (sales assistants, retailers, etc) to make money from your friends? When you open a shop and sell products of great value, who do you hope would patronize your shop – your friends, strangers or enemies? If your friend is already buying similar product, but you know very well that the value of your product is much better, won’t you want to recommend it to your friend? In fact, your friend would be angry if you don’t.

In legitimate, ethical Network Marketing companies, the products are normally of much better value and quality than those we find in retail shops. And when your friends benefit from the products you recommended and decided to tell more of their friends, they may end up getting the products for free! For that, do you think your friends would be angry with you for making money from them? Back to top

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Are product prices inflated in order to pay commissions?
In the past, a manufacturer might make a product and sell it to the sole agent, who sells it to the importer, who sells it to the local distributor, who sells it to the retail store. The manufacturer supports the retailers by conducting a large multi-media advertising and promotion campaign to create awareness so that people like you and I come to know about it and we might just go down to the retail store to buy it.

This entire process takes money – lots of it too. Each layer of distribution must make a profit. And advertising oftentimes accounts for more of the cost than the actual product. As a result, a product sold for $100 often costs less than $10 to manufacture. This old-fashioned system serves neither you nor the manufacturer.

Enter Network Marketing. Now the product goes directly from the manufacturer to the distributor, and in many cases, the consumer. Because all the middlemen that used to exist between the manufacturer and consumer are cut out – the money that would normally go to these middlemen can now be used more sensibly.

It can now be used for better R & D to create better quality products, better raw materials in products, and to reward the consumers – like you and I – who are actually doing the work by referring the products to our friends and families. Back to top

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Do I need to be good at sales in order to succeed in this business?
No, although having some sales experience is good. If you try the product and get enthusiastic about it, you are automatically selling. Some of the most successful network marketing people start out thinking they can’t sell.

Salespeople try to ‘close’ a sale. Network marketers try to ‘open’ people to what is best for them, by giving them all the information they need. It’s just like telling someone how much you enjoyed a TV programme, except you might get paid for recommending a product. Back to top

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Is Network Marketing ethical?
It all depends on your motives and methods (why and how you do it). The principles on which Network Marketing is based are completely ethical.

However, unethical people can introduce practices (such as “front end loading”) which are entirely unethical. Others try to cover up the fact that their business is MLM, or the identity of their MLM company, or that you need to sell, using deceptive practices that are, in reality, unethical.

None of this means that MLM itself is unethical. It just means that, like in industries where a great deal of money can be made (cars, white goods, real estate, etc), you’ll find people who are prepared to exploit and manipulate others for gain. MLM is no different. All this really proves is that there’s obviously a lot of money to be made in MLM, or those parasites wouldn’t bother. Back to top

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Is it true that I have to recruit, recruit and recruit in order to succeed?
In any organisation, recruitment is essential. Our government recruits, big corporations recruit and all companies recruit. Recruitment is necessary when an organisation grows or when employees leave. In Network Marketing, recruitment is absolutely necessary in the beginning.

When your organisation grows to a certain size, what you would be doing most of the time is training and education. You can make some money and save some money in MLM. But, if you really want to take advantage of the unique leverage offered by MLM, you need to sponsor/recruit.

It’s like riding a bicycle. You can get yourself an old single-speed bike that has no gears. If you want to go faster, you have to pedal faster. If you want to climb a hill, you have to push harder, even though your speed is almost at a standstill. It’s hard work, and it takes a long time to get anywhere.

On the other hand, a 10-speed bike means you can cruise at high speed in high gear, with very little effort then, when you need to climb a hill, you simply drop the gears back to low and put in a little more effort and get there much quicker for a lot less effort.

Recruiting increases the amount of product flowing through your MLM business, exponentially. And it boosts your rewards exponentially, too. It reduces the amount of time and effort required.
Best of all though — and you should never, ever lose sight of this reality — it gives you the opportunity to help other people become successful, financially independent, confident, and provides you with a large group of people, who share your own values, with whom to enjoy the journey and share the rewards. Back to top

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What is the best kind of products for Network Marketing?
If there’s one kind of product that’s best suited to MLM, it’s products that are genuinely consumable. That is, people use them up, then come back for more, regularly. That means you acquire a customer once, then just keep on selling to them over and over and over again.

Products that cost a lot of money and are bought only once (or only every few years) can be successfully sold by MLM. But you have to keep finding new customers every month.

Low margin products are usually not very successful in MLM, either. In particular, food and grocery lines, and especially when they put you in direct competition with large supermarket chains.

For every company that succeeds in this area, there are many more that fail. Sure, lots of people join, because everyone buys these types of products.

But when margins are tight, and supply is often unreliable (lots of “out-of-stock” lines), the cost of making more than one delivery to supply a single customer order can make the business unprofitable very quickly. Back to top

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Can anyone really succeed in Network Marketing?
Yes, they can, providing they meet the conditions on which that level of success depends. This is what separates the winners from the losers in any area of life, not just MLM.

The difference in MLM is that those conditions are achievable by anyone willing to create a clear vision for themselves, then invest the time, effort and discipline needed to realise that vision. It requires some basic knowledge, attitudes and skills. It does NOT require any particular gifts or talents, although these can help speed up the rate of success.

The secret of success in MLM is leverage — the extent to which you can duplicate your achievements through sponsoring, training and supporting others to do what you do. Back to top

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How much money can I make in Network Marketing?
How much (and how fast) money can you make depends very much on how serious you are in this business and how much effort you are willing to put in.

If you treat this business like a hobby – doing as and when you find some spare time, or only when you feel like doing it – you’d get a hobby check.

But if you treat this business like a business – putting in consistent effort of talking to people about this business for at least 7 to 10 hours a week – you’d get a business check. Back to top

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I am a senior corporate executive. Will it affect my professionalism and status to be seen doing this business?
To us, professionalism is about how we conduct our business, not so much of the title. Have you heard of ‘professional’ conman/gambler/ swindler?

This business system is endorsed by best selling authors like Denis Waitley, Zig Ziglar Stephen Covey, Brian Tracy, Robert T Kiyosaki, etc. Even our local NUSS Graduate Magazine calls it the ‘Wave of the Future’ (Aug 2001 issue). How ‘unprofessional’ can it be?

At the end of the day, when you need to borrow money from the bank, the bank will look at how much income tax you’re paying, not at the title printed on your name card. Back to top

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What would my relatives/friends/colleagues think of me?
Do your relatives/friends/colleagues pay your bills? Most likely not. If not, why should you bother about what they think of you? Peer pressure is one of the reasons why many people don’t succeed in life. Most people are so afraid of their peer’s opinion that they do not dare to live their dreams.

If the right thing comes along and we feel that it is the right thing for us, we should not hesitate. What others think of us is really none of our business. Back to top

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I am really busy. How do I find time to do the business?
Busy? Busy doing what? Busy building somebody else’s dream? In Network Marketing, all you need to do is put in consistent effort of 7 to 10 hours a week for the next 2 to 4 years to gain complete financial freedom.

It’s like taking up a part-time MBA course which requires you to attend classes for 3 times a week for the next few years.
Although having an extra MBA doesn’t necessarily guarantee a pay rise or a promotion, people will find time to attend those night classes because they believe there’s still a possibility.

Similarly, when you see the potential of this business, you will find time. Back to top

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I do not know many people. How can I do this business?
Although knowing many people gives a person an added advantage, it does not necessarily mean that he/she will succeed.

The key to success in this business is not how many people you know. It is having a dream and the tenacity to follow through with your dream, regardless of any hardship.

We have people who have few contacts succeeding and we also have people who have lots of contacts and yet failing in this business.

Due to the exponential growth feature of Network Marketing, often times, one extra person brought in each by the people in your organization can ‘explode’ to thousands more! Back to top

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How much money do I need to invest?
Depending on the type of program you participate in, your initial investment should range from S$400 to $1800. And your monthly investment in this business should be about S$220 to S$500, again depending on the type of program you choose.

Please note that a legitimate, ethical Network Marketing company will not ask you to invest tens of thousands of dollars in order to start the business. Back to top

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Will I be made to buy a lot of products to sell to other people?
No. Most companies give you options to buy just enough for personal consumption or buy some extra for retailing.

An ethical distributor will not coerce you into buying lot of products to sell. The choice is very much yours. Back to top

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There are already so many network marketing companies in Singapore. Won’t the market be saturated?
Yes, Singapore is small. But how many people do you intend to recruit/sponsor? Did you know if you have 1000 (less than 0.05% of the population) people in your organization, you could be making a five figure monthly income?

Furthermore, our type of business does not restrict you to only operate in Singapore. The whole world is your market! Back to top

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Many people are already doing network business…isn’t it too late for me to join now?
Many people pass this statement because they thought many people they knew were already in this business.
However, when we asked them to name a few, they could hardly come up with 5 names.

Even if they could give us 10 names, that doesn’t mean they can’t do this business. We are sure these people know more than 10 people in their life. Back to top

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There are so many Network Marketing companies out there, which one should I join?
There aren’t any hard and fast rules to follow. These are our few suggested questions you should ask:

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Tagged as: Business, MLM