10 Things About MLM...

You may not know that I own a direct-selling company. You know, like Amway, Avon, Tupperware. And you probably don't know that another name for direct-selling is Multi-Level Marketing or MLM. Yes, the dreaded 3 letter word in our lexicon.

Not all direct-selling companies are structured for MLM type compensation (although 95% of them are...), but all MLM companies are in fact direct-selling companies. I am not here to explain what is MLM or direct-selling. You can go to the Direct-Selling Association of Malaysia official website (Google it), of which we are one of its esteemed members, and find out more.

I'm just here trying to jot down some thoughts I have about this business, and observation being in the industry, not as a distributor, but the actual owner and chief executive of a running concern. Especially in light of the recent controversies surrounding them.

10. MLM is not a GUARANTEED profit-making business. It is, like any other private enterprise, carries with it the risk of failure. The reason why you hear so many people failing is that the number of people joining is huge. It's recorded that over 4 million Malaysians are registered direct-sellers. Assume that as a general rule, all businesses has a 20% average success rate. Therefore, more than 3.2 million direct-sellers could be considered unsuccessful. So next time you hear someone complaining that they make money off MLM, you know they're part of nature's 80/20 law.

9. Fortunately (or unfortunately), we really cannot determine the exact criteria of a successful MLM-er, meaning that while MLM is definitely not for everyone, we really cannot say who these "everyone" is. From high-school dropouts to PhD. holders, professionals to car wash cleaner, fat to thin, old to young, women to men, married to single, friendly to downright scary...I've seen them all succeed in this business. When you cannot screen prospects, you have to accept everyone, and when you accept everyone, you run the risk of a higher NUMBER of failures (although percentage wise, you're right on par with any other private enterprise).

8. No one is NOT SUITABLE for this business, which means that almost EVERYONE feel that they can do it. And when they feel that they can do it, and then they fail, they automatically assume there's foul play. Reality is that this is NOT an easy business to succeed in.

7. But no business in this world is easy. For some, doing MLM is second nature, and they transition well into the business. For others, it takes time, effort and most importantly, perseverance.

6. Unfortunately, perseverance is not the easiest trait to possess. The barrier to entry for a legitimate MLM business is relatively low. Imagine investing RM 100,000 in your own restaurant. Now imagine investing RM 100 to 1000 to join a MLM business. Which one would be easier for you to quit in? In fact, when you open a restaurant, you're probably expecting not to make money the first 6 months, and you'll still be committed to it. But when you start a low-cost business, it's so easy for anyone to just close shop when they're not making money in the first 6 weeks!

5. Because the barrier to entry is low, and the concept is a bit different, a lot of people don't treat it as a legitimate business. When you don't take the time to strategize, organize, execute and all the other things you'd normally do for a normal business, you start down the path of failure. How many hours do you spend a day running a restaurant? How many hours a day do you spend on your MLM business? See the difference?

4. When the barrier to entry is low, and the potential profit is high, and the number of pax involved is huge, you can generally guess that there's bound to be a group bound on cheating others. Like the doctors that over-prescribed medication, or the lawyer that embezzles your money, no business enterprise is free from cheaters. But in a volume game like MLM, the number of people involved in a scam can multiply like rabbits.

3. Unfortunately, there's no way to determine a legitimate business presentation and a fraudulent one, until the con has been executed. I've had cases where my registered distributor goes around collecting money from people but never delivering the products. As a general rule, any presentation where you don't have to sell a product, should be viewed with caution.

2. People who claim to have failed in this business can be categorized into two categories : those who accept their failures, and those who don't. The latter group, based on our informal survey, either has an unrealistic expectation or did not understand the concept or was deliberately misled by the promoter. Those who did accept, often admitted lack of focus, lack of commitment and lack of effort in the process, from failure to attend training to failure to even try the product they purchased.

1. This business, if done right, and ethically, can result in a beneficial two-way relationship between upline and downline in a huge group that is not only reasonably profitable, but also has a close-knit family-like relationship that goes beyond dollar and cents. Sometimes, I've met people who are perfectly happy to earn an extra RM 500 a month, while I've also met those who RM 50,000 a month from this business is not good enough. To each his own.

A lot more observations on these, and other matters concerning the industry.