He seemed like an honest dude, nice enough too. He was dressed smart casual and spoke with a level of confidence like he had been speaking in front of crowds before. I recognised him almost immediately from another event, in fact, he presented a financial course sometime time ago and coincidentally I was keen at that moment to get started. We exchanged numbers and he offered to meet up to tell me more about the investment strategy I was keen to explore – forex. But, that’s not what I was about to learn.
My wife and I, along with our little boy got all dressed up to meet his family and have a morning tea out at a local restaurant. At that time, I had told my wife how I was keen to pick up some skills to use to generate some additional income through forex trading and as supportive as she is she was happy to come along and meet my friend.
As we sat down my mentor friend asked me what I was interested in learning and I said “forex”. With that he immediately went off on the tangent he had planned too and discredited forex for all that it was and spent the next half an hour trying to convince me why I should pay a joining fee to join his “business”. The model was this –
You pay a joining fee or some sort of membership fee to join a business – described as a bunch of “like minded individuals that support each other”. The idea was that for every person you subsequently sign up as well you get a cut. I presume there was some core product or service that was supposed to be sold as part of the business. I also presume this was the educational seminars that came along with it. So in summary; He nagged me to pay to join a seminar group that teaches you how to make money by signing up other people to join the seminar that teaches them how to make money the same way.
Meanwhile, across the table my wife was being bombarded with a business proposal that sold jewellery, again, a similar model – you pay a joining fee to sell the jewellery and then host parties to sell the jewellery. In turn you are required to sign other people up to join your business to sell jewellery and host parties too and you get a cut of their income from any of their subsequent signups.
This is not the first time I had heard about these business models. They have been around for years and I have disliked them for equally as long. The reasons, well, there are two of them;
- I disagree with the business model
- I disagree with how it is always sold without transparency at first instance
Now for all those out there that run a Multi-Level Marketing businesses (MLM) I will say this… I have no doubt there are some people who make a “reasonable” income from this, maybe some at “director” level or its equivalent making a significant amount. I also agree that many MLM’s are passionate and hardworking individuals; it takes time and work to build any business, especially the model offered by MLM companies. In fact, I know of a number of large corporations that started as MLMs and offer great products, many which I have used over the years. But, the underlying business model of many of these MLMs that surface today are not driven by a valuable product that improves the quality of peoples lives.
I find a business model that teaches people how to make money by getting them to buy and sell the program that teaches them the method they bought into and are now being sold on flawed and unethical.
When I first jumped into blogging over a year ago now I was bombarded with proposals from MLM’s and was quick to avoid the scene and now I rarely get approached. I find huge value in investing time and effort into building quality business and relationships based around a quality product or service that improves lives.
I know this post may piss a few people off. I’d be curious to hear your point of view. What experiences have you had with MLM business, good or bad?
Image linked courtesy of blackenterprise.com. Views expressed are solely my own. Information provided for educational purposes only. Consider the advice of a qualified financial representative before making any financial decision.