Inside The Mlm Mindset

Inside the MLM Mindset

Inside the MLM Mindset The Zen of the Home-Based Business

Edi ti on 1 .0 | M a rc h 2006 Copyright © 2006 MLM-Mindset.com

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Inside the MLM Mindset

Introduction ...........................................................................................3 Who Are These People? .........................................................................5 Attraction...............................................................................................9 Money .......................................................................................................... 9 Lifestyle ...................................................................................................... 10

Hearts & Minds .................................................................................... 12 Freedom ..................................................................................................... 12 Helping Others ............................................................................................ 13 Validation.................................................................................................... 15

Honesty ............................................................................................... 17 Products ..................................................................................................... 18

Belief ................................................................................................... 20 “Culture of Success” .................................................................................... 22 Repetition ................................................................................................... 23

The Dark Side ...................................................................................... 26 Failure ........................................................................................................ 27 The Grind.................................................................................................... 29 Leading A Horse To Water............................................................................ 30

The Bottom Line................................................................................... 32 Profits......................................................................................................... Expenses .................................................................................................... Things You Need ......................................................................................... Things To Ponder ........................................................................................

32 34 35 36

The Decision ........................................................................................ 37

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Inside the MLM Mindset

Introduction “Between the idea And the reality Between the motion And the act Falls the Shadow” - T.S.Eliot

MLM … Multi-Level Marketing. HBB … Home-Based Business. Everyone has heard of them and many people have tried them, most with less than stellar results. How do otherwise intelligent and well-reasoned people get roped into these businesses and lose hundreds or thousands of dollars? Are they little more than pyramid schemes? Are the people behind it dishonest? Some people do make a lot of money and are happy doing these kinds of ventures, why do they make it? And, more importantly, are they right for you?

In this e-Book we’ll examine all of these issues as told from the perspective of someone who has a long experience in business, start-up ventures, and management; and who went “inside the belly of the beast” for a while. This e-Book will try to be as conversational as possible. It is important that you, the reader, understand what you are getting into with an MLM or HBB, or what you have already gotten yourself into. If you come away asking some important questions that hadn’t occurred to you before, then this was a success. Note that I do not consider this a “cautionary” document. As you read through it you will see that I try to be as even-handed as possible about what is really going on in an MLM. Not as much from a “dollars and sense”

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Inside the MLM Mindset

perspective – that part is easy to figure out – but more from a human dynamics angle. That is where the “magic” (black or otherwise) really happens. Also note that I will not deal with the MLM’s which are obvious scams. Most of you can spot those quickly enough. It is the ones which are run by decent enough people selling products with value which can be so seductive and lead to their own set of problems. We will also be dealing mainly with the HBB’s which combine the selling or product with the recruiting of new salespeople. So a home-based eBay store is not covered here, that is not in itself a multi-level marketing system. If there is bias in the information presented here it is this: based on personal experience and industry statistics the vast number of people who try a MLM or HBB are not successful at it. Over 90% fail. If reading through this keeps someone from making a costly mistake, it has been worthwhile. At the same time if reading this convinces someone that an MLM sounds like just what they are looking for, then hopefully they will be one of the few who makes it. “All the adversity I've had in my life, all my troubles and obstacles, have strengthened me... You may not realize it when it happens, but a kick in the teeth may be the best thing in the world for you.” - Walt Disney

I happened into MLM’s the hard way. I was a dot-com CTO when the New Millennium kicked in, and the “Dot-Com Bubble” burst. Living in the Bay Area at the time there were not many jobs at my career level to be had. I got pulled into a “house party” for one MLM, and then actually tried working within one because their products actually were very good. Some time later a friend of mine tried to start an MLM of her own for a line of health and beauty products. All the experiences I have seen were consistent from one MLM to the other. The same mindset existed in all of them, and it is a very seductive mindset at that. It taps into some very core and vulnerable emotions in all of us. In fact, at some levels it taps into our value systems and sense of self-worth.

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Inside the MLM Mindset

Who Are These People? "People are like stained-glass windows. They sparkle and shine when the sun is out, but when the darkness sets in, their true beauty is revealed only if there is a light from within." - Elisabeth Kubler-Ross, Psychiatrist and Author

My first brush with MLM’s came at my bank’s ATM. I was getting some cash and someone else drove up in their BMW to do the same. He seemed a decent young gent, clean-shaven and successful looking. At the time I was reeling from the dotcom I helped found going under so I was kind of looking for “something.” Usually people do not talk at the ATM, but this guy said “Hi.” I replied and his next question was what I did for a living. I replied that I had been a CTO. Next thing I knew he had given me his card, which has his own business name on it, and invited me to a “house party” he was having that weekend for people who he’d met who seemed interested in a home-based business. I had nothing better to do, so I went. Almost everyone there was out of work at the time, like me. Everything seemed genial enough; conversation was slanted towards all things future – plans, goals, dreams. And then easel came out with the presentation. The “home-based business” was selling a well-known line of products for the home; essentials like cleaning products, toothpaste, and so on. I quickly left, feeling like I’d been led on.

Sound familiar? So just who are these people who pull this kind of routine on folks they do not even know? For the most part they are decent, honest people. Usually it is the people who are good at running an MLM who get you in the door and signed up. And these people were most likely in the same position you were in when they found you. They were looking for a new way to make money, someone clued them into the MLM and, for whatever reason it resonated with them. They do not mean to lie. They do not mean to make your situation any worse than it is.

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Inside the MLM Mindset

If you are successful in the MLM, they will be happy for you (and for themselves, of course, as you’re making them money too). So for the most part you can dismiss the notion than anyone who is an MLM is some dishonest greed-head. They believe in their system because it worked for them. And they have been assimilated into the system, which changes the way they deal with and view others. “Only the mediocre are always at their best.” - Jean Giraudoux

Something you will notice about folks in an MLM, especially when they are talking to you as a possible or actual new member, is how overpoweringly cheerful they are. You will never see a happier bunch of people. Every “team call” is a flow of verbal “High Fives.” While it is always good to be around positive people, their behavior – and the fact that they are all acting that way – should raise a question: Why Are They Acting This Way? A number of reasons, actually. The first is that the managers are mostly making a lot of money from their groups. They have reason to be cheerful – they work 20 or 30 hours a week at home and have a very healthy income. To them the MLM/HBB is a wonderful thing. So to some degree their cheer is genuine. And, of course, a lot of professional salespeople are naturally outgoing and cheerful; so there is some of that in there too. The other motive is that if they are upbeat, you will be too. And the more engaging they all are on the phone, in conference calls, and in email the more likely you will bond with them and sign up. Remember, they want you to buy something from them; and then they want you to start selling product for them. You will not do that for someone who is grumpy and unpleasant to talk to. If you do join, or have joined, one of these ventures, though, you will start to notice something after a few weeks of attending team calls and training calls. You will find that they keep repeating the same things; they keep reacting to good news and bad news the same exact way. Week after week, regardless of who it is of what the news is, the reactions and words they speak are as predictable as anything you can name. Unless you are a similar personality (a “morning person” type), this will become tiresome and start to sound very false. You will start to see that

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there really is not any kind of personal level concern; not like you would find from a manager in an office job. They are “distance managing.” Trying to provide support in a detached manner from a far off location. The trap these managers have fallen into is that they have been at the business so long that they do not realize that their words sound hollow to a new person. They are actually more or less unconcerned with you other than your ability to sell product, but they are so used to a group-think of how to manage a team that they continue to spew platitudes. If you are accustomed to working for or with people who are more or less “in it for themselves,” this will not bother you. You may appreciate it, in fact, and ignore most of what gets said on these calls. But if you buy into their “team” concept, and the notion that your manager really did mean it when he/she said this business would improve your life, then disillusionment starts to set in. And, of course you need to do a personal check here as well. A cheerful disposition is pretty important to run an HBB. You will be on your own, trying to convince total strangers to buy what you are selling. There will be bad times as well as good. You will need to put your own feelings aside and project a positive attitude on the phone. “The first myth of management is that it exists. The second myth of management is that success equals skill.” - Robert Heller

One final note. While there are some very sophisticated techniques being used to recruit people into an MLM/HBB, the people doing it are most likely not any smarter than you are. Do not equate wealth with intelligence. As we will discuss later on, much of the success in an MLM comes from mindless repetition of the same sequence of activities. Many of the “big shots” in an MLM also crave being the center of attention. It is an ego trip for them to be the one that everyone else looks up to and whose advice is sought out. So while you may wonder “How can he say the same junk 3 times a week every week?” some of these folks really do thrive on being in that spotlight. If on the other hand you would like to be that person – the one who is the envy of every other sales person – then the MLM could be your ticket. It does allow an unrestricted and relatively quick path to peer recognition and being seen as an expert in the trade.

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Inside the MLM Mindset

Things To Ponder Can anyone be this cheerful 24x7 or is it an act? What other jobs have the same tendency towards befriending total strangers? What do you think of people with these jobs? What was the person who is trying to recruit you doing before starting an MLM, and why aren’t they doing it any more? Do you have the capacity to put your own personal problems aside and be as cheerful as the others when trying to make sales? Are you afraid of speaking in front of a group of people? What if it is a conference call? How much do you depend on your supervisor at your current job to reinforce your sense of self-worth? What if there was no supervisor?

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Inside the MLM Mindset

Attraction “The biggest mistake people make in life is not trying to make a living at doing what they most enjoy.” - Malcolm Forbes, businessman

What drives people to try a HBB? One of the reasons is often desperation. The loss of one’s job, especially followed by a prolonged period of unemployment, tends to make a person much more open-minded about finding ways to earn a living. Of course, the MLM companies know this too. If you start a HBB you will find that a surprising number of your recruiting is done to people in various states of un- and under-employment. However, the two positive driving factors can be grouped into the categories of “Money” and “Lifestyle.”

Money “I was part of that strange race of people aptly described as spending their lives doing things they detest to make money they do not want to buy things they do not need to impress people they dislike.” - Emile Henry Gauvreau (1891 ~ 1956)

Obviously just about anyone wants to make more money. The nice thing about an MLM or HBB is that the only person standing in the way of your making a lot of money is you. The commission and sales systems that the companies have work and work fairly. If you can sell product and bring on new people, you can make very good money. “Can” and “will” are, of course, two completely different things. And that is where a lot of people get tripped up. The person on the other end of the phone says: “You can make a lot of money.” But you hear: “You will make a lot of money.” That is just human nature, but it is a trick of the mind that the MLM’s use in their selling technique. The amount of money you can make is actually quite good … eventually. And here again is another trick of the mind that the MLM’s use against us. When we look at the charts and figures of how commission works, and look at the examples they give of a “typical” team, we automatically put ourselves in the role of that team leader. In our minds we have already built that team. But it can take a year or more to build a large enough team to generate a comfortable living. It usually takes several years.

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Inside the MLM Mindset

If you ask the person trying to convince you to join, they will not tell you that last part. They will tell you what is possible, and what you will make once your groups gets to a certain size. And that how long it takes to grow your group is “up to you.” They are not lying to you, but they are not answering your question either. They. Are. Selling. “Behind every great fortune there is a crime.” - Honoré de Balzac (1799 ~ 1850)

Another appealing aspect to a HBB is that it is a revenue stream that cannot be taken away. Anyone who has been through a layoff or a company running out of money will not want to repeat that experience. A HBB is yours, it will make money as long as you work on it; and as long as the company whose products you sell stays in business, no one can shut your business down but you. Of course once you get one HBB running smoothly you can start looking to start others and diversify your income. And nothing short of complete financial collapse on a national level will stop your checks from coming in. This is a very powerful concept, especially since most people spend their careers working for someone else.

Lifestyle “Living well is the best revenge.” - George Herbert

One of the aspects of a HBB which really grabs people’s imagination is the idea of working at home. Of not having to slog through traffic, or deal with office politics, or deal with any of the other down sides of the normal 9to-5 life. And, speaking as someone who has spent years working at home as a technology consultant I can assure you that all those things are great. In California you can reclaim as many as two or more hours of your day by not having to drive through traffic to get to your office. You do not have to shave or get dressed to work in a home office – you can sit there naked eating Hot Fudge Sundaes and run a HBB just fine.

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Inside the MLM Mindset

For many people this is one of the things which makes transitioning from a traditional job to one in the home so appealing. Especially in these days of downsizing and out-sourcing. No job is safe and the stress of when the next layoff will come can become overwhelming. There are pitfalls, however. It is not easy for everyone to maintain focus at home and get work done. There are so many distractions. Spouses, children, pets, household chores, your home entertainment center, “it’s too nice a day to work” … the list is endless. To make a home-office work you have to commit to work at home. You have to deny yourself the leisure activities you left the office environment for in order to get work done. Adding to this is something else the person who signed you up for a HBB likely did not tell you: you are your own Human Resources Department now. You need to get your own insurance, do quarterly tax returns, and handle a lot of business administration issues yourself that otherwise you knew that “the company took care of.” The plus side here is that any expense run up in doing these things is a deduction.

Things To Ponder Do you have the discipline to put in an eight hour work day if you are not in an office setting? No … really … can you not watch TV, not play video games, not gab on the phone with your friends, not go to the beach / slopes / mall / whatever? Has some recent career event made you start looking at starting a HBB, or have you always wanted to “be your own boss?” How long are you willing to wait to get the kind of cash flow you desire? If you have a family, are they ready to support the risk of transitioning to a HBB?

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Inside the MLM Mindset

Hearts & Minds “Too many people are thinking of security instead of opportunity. They seem more afraid of life than death.” - James F. Byrnes

If you have experience with self-help courses, New Age books, or any one of the flavors of meditation you will quickly see that a lot of what is discussed during “team calls” and other group meetings within an MLM are at the very least borrowed from those techniques. What is being said during these conversations are the same things that motivational speakers charge thousands of dollars to let you hear. And it is very powerful stuff. It is beyond seductive to have someone who is clearly successful tell you that “you can do it,” “you will succeed,” “we’re here to help you make it,” “you are not alone.” Especially to someone who may be vulnerable at the moment due to a career reversal or some manner of life crisis. Whatever event has caused you to consider not rejoining the regular workforce is leverage. Is this evil? No, It is good salesmanship.

Freedom “Freedom in general may be defined as the absence of obstacles to the realization of desires.” - Bertrand Russell, Philosopher and Essayist

Freedom is a big selling point for a HBB. The freedom to work at home. The freedom to be your own boss. The freedom to make as much money as you have the time and/or talent to make. And the freedom that comes from having a lot of money, once you make it. For a nation of work-a-holics, almost all of whom are making less than they would like to be, this is a powerful attractor. The people trying to convince you will play the “freedom” card liberally; from any one or all of the angles just mentioned. Are they scamming you? Not really.

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Inside the MLM Mindset

Obviously a HBB offers the freedom to work at home and be your own boss. And if you make it work you will have the money to do things you may never have been able to afford before. But the real freedom of financial independence will take years to reach. Just like any job or career path you are not given the “Keys to the Castle” in your first month. It will likely take six months before you even start to show a reasonable profit. Expect a HBB to be supplemental income at best for at least the first year or two. Then there is the issue of just how much personal freedom you have working at a HBB. There are many time commitments that seep into your day: sales calls, team calls, training calls, placing orders, trips to drop things off to be shipped, managing your online systems … it is quite possible to work ten or more hours a day at all of this. And if you do not do this work no one else will. This is your business, after all. Until you have built up a team at least a couple of levels deep you will not be getting very much commission, so any money you bring in will be from your own sales. Assuming you keep your day job this means you will be spending almost all your free time working on your HBB. The problem here is that you suddenly have no time for yourself, yet the HBB is not making much money. The promise of freedom starts to become distant; you are working harder than ever yet do not seem to be getting close to the kind of independence (financial and personal) you were promised when you joined the MLM.

The key thing here is perspective. If you are serious about a HBB and eventually breaking away from the usual work environment you must be prepared to invest years in building your business. As long as you go in with that expectation you will have a better chance of riding out the growth period.

Helping Others “Life's most urgent question is: what are you doing for others?” - Martin Luther King, Jr., Minister

Of all the philosophies that many MLM’s espouse, this is probably the most powerful. Personal freedom is something we all want, but all kind of feel

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Inside the MLM Mindset

guilty about having. But helping someone else get that freedom, helping them make their lives better, all through being successful at the MLM is something that few people can argue with. Some MLM’s even put this right in their advertising: “Make Money and Help People – Great Home Business Opportunity” And this concept is usually driven home pretty hard in the training information and company literature. It provides a morally clean reason why you should talk someone into joining your team – because by doing so you are showing them the path to make all their dreams come true. You are doing them a favor, right? Sure, It is a sales pitch; but a very powerful one. It not only sells the potential buyer, but it reinforces the seller’s own sense that he or she is doing something very righteous. It detracts from the dollars and cents that are flowing and puts the whole interaction on something closer to a spiritual level. And it ties into most people’s moral upbringings – how many of us would exert as much, or more effort, to help someone else than to do something for ourselves? The dichotomy here is that it actually is possible to help people get to better lives though MLM’s and HBB’s. But you, as a manager or team leader, will need to spend a lot of time coaching these people to get them to perform. And the problem here is that there just is not the time in the day to coach that many people. You will end up settling on four to eight people who make up your core team that generate your income. And those four to eight people will do the same. The message of “helping others” is not a lie, really. It is possible to do it. But you will not be able to do this for everyone you recruit or your own profits will be affected; you will be spending your time coaching this recruit instead of building up a team of people who can produce without all the extra help. It will be up to you to decide where that line gets drawn.

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Validation “Try not to become a man of success but rather try to become a man of value.” - Albert Einstein

Everyone needs validation; to have that feeling that you are on the “right” path. The people trying to entice you to join an MLM will use this in conjunction with the other dynamics already mentioned. They will offer you the promise of personal and financial independence, with the moral cover that you are helping everyone you go and recruit to have the life they have convinced you is possible through the MLM. And then wrap these two things up with a lot of positive affirmation that “you can do it” and “you have made a great choice for your future” … or words to that effect. And, once again, they are not being dishonest. If the business works out for you it will have been a great decision. You just do not know if that is the case yet. Just remember that until you join an MLM the interaction between you and the person you are talking to is a sales transaction. They will use every angle to get you to commit. If you were just laid off from your job, they will use financial independence as the lure. If you tell them you are not very satisfied with your work, it will be the “helping others” angle. And if you come off as someone who feels unappreciated at their job, you will get a lot of positive motivation that you can take control of your life by starting a HBB. Once you have joined, your manager or mentor will keep pressing those emotional hot buttons. In other words, the angle that they used to convince you to start a HBB is likely the same angle that they will use to motivate you to produce with it. This is not dishonest or underhanded. And you will find yourself doing the same things once you start making sales calls. It is simply the nature of the business.

Things To Ponder How much time are you willing to spend to help someone you may never meet to be successful at your MLM/HBB? What do you expect in return for this guidance?

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Inside the MLM Mindset

How much do other people’s opinions affect your sense of self-worth? What is your definition of personal freedom? What is your definition of financial freedom? Would you rather be “rich” or “comfortable?” Do you take pleasure in teaching others? Do you take pleasure in seeing people you know succeed?

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Honesty "The first person we have to tell the truth to is ourselves. If we are not going to be honest with ourselves, there is little possibility that we will treat anyone else differently." - Toinette Lippe, Author, in Nothing Left Over: A Plain and Simple Life

The first (and only) MLM I joined was actually in response to an email for a “management opportunity” for distributing “technology products.” I responded to this email and an “interview” was scheduled. The entire process up to that point looked like a company trying to find branch managers. Once the “interview” began, though, it became clear what was happening. Some months later I had a call from a financial services company. The person on the phone said my resume had been submitted to him by his Director and they’d like me to come up to an Open House. He also said that this Director was eager to get me in for an interview. It turned out to be another kind of MLM – selling insurance. The “Director” who was so eager to meet me did not even recognize my name when I introduced myself.

Here is where things start getting dicey. And here is where a lot of these MLM’s get their reputation for dishonest business practices. One of the first clues you will have that a potential opportunity is an MLM is that they will not tell you what the product or service is over the phone. Or in email. You have to “come to the meeting” or join a conference call. If you do not want to be in an MLM and get this kind of approach handed to you, simply say “no.” And “no” is the easiest thing to say to someone trying to recruit for their team. Because they hear it twenty or more times a week. A successful MLM manager goes through dozens or prospects each week. Introductory calls, interviews, team calls, recruiting calls, and so on. You will feel a lot worse telling them you are not interested than they will in hearing it. In fact, at some level they are counting on this. The technique is to slowly get you in a little deeper each step. If they told you right away it was a MLM, you would probably head for the hills. But the longer you stay involved, the more calls and meetings and emails you exchange, the harder it becomes for you to say “no.”

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Products While the recruiting methods may be less than pristine for the most part the products and services being sold by your larger MLM’s are legitimate. The one I was involved with sold a really great product, one which I still use today. Of course, not all MLM/HBB companies are quite as legitimate. And even the good ones can leave a trail of legal entanglements and bad press. Some of this is as a result of selling a product through a network. They are counting on non-professionals to represent the product and such people often will stray from the script in order to make sales or at least make the script more comfortable to recite. And this sometimes results in misrepresentation – which can lead to legal issues. “If we knew what it was we were doing, it would not be called research, would it?” - Albert Einstein

Obviously you want to check the company and products out. Before buying anything – anything – from someone from an MLM, check the company out on the web. Search on Yahoo! or Google for the company name, along with some key words like “legal action,” “law suit,” “misrepresentation,” “scam,” and so on. It is almost a sure bet that somewhere on the Internet someone has written about the group that is talking to you now. Most of what you read will be bad. And some will be bad enough to make up your mind right away. But do not confuse the impressions of the company and their methods with the impressions of the products. Separate the two elements in your analysis. If the company makes a solid product, and if you have the ability to sell it well, you can make a lot of money where others maybe have not. If the product is a horrific piece of junk, though, nothing else matters. If you see there have been legal issues with the company during your research, what were they? Was the product defective? Were people in the network defrauded out of money? Were salespeople misrepresenting the company of the products? It can be a wide range of things, not all of which necessarily mean the company is corrupt.

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Things To Ponder: Do you want to be associated with a company which uses tactics which tell you not to disclose what you are selling to a potential new partner? Are you personally capable of this kind of deception? How much do you need to believe in a company and it’s products to be able to sell them? Can you stay within the boundaries that the company has defined in representing the product? Or do you have a tendency to ad-lib?

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Belief “Believe those who are seeking the truth; doubt those who find it.” - Andre Gide

When I joined an MLM it was shortly after the “Dot-Com Bubble” burst. Jobs in the Bay Area were scarce and things looked bad. Sitting home sending out resumes and watching everyone you know starting to get The Fear that comes from being out of work for a long while is not much fun. It is very depressing. When I joined the MLM, suddenly my Instant Messenger was alive with a dozen new “friends” in my group. Everyone was enthusiastic and supportive. We had twice-weekly team calls and everyone was in a good mood and hopeful for the future. It was addictive. It felt great to be part of something that could succeed in an economy where all I saw around me was failure. And it felt good to not be alone. One person on our team went to his local Lexus dealer after he made his first sale – to get brochures on the car he wanted to buy once the money started rolling in. Within two months, three quarters of these people had dropped out. Including the fellow who wanted that nice new Lexus. I was having a lot of trouble closing sales myself and two months after that my manager took me off her Instant Messenger buddy list and I never heard from her again.

When someone is trying to convince you to join a MLM or start a HBB, they are selling you two things. One is the company and products. They are also selling you a product you may never have thought about: yourself. They are selling you to you – the concept that if you believe in yourself enough to make this HBB work you can get everything you ever wished for. What’s so bad about that? What is bad is that the opportunity will only deliver to at best one in ten people who try it. They are pumping you up to get you to buy into a business system which has very poor odds of making it. And it is very easy for them to hide behind their words. Your success is, in fact, more or less governed by your ability to adapt to their system and stick with it. There is nothing they put in your way of making nearly unlimited wealth – unlike a regular job where someone else decides what to pay you. All of these things they tell you are true.

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But what it costs in terms of time and money and perseverance to get to that place they are promising is quite simply beyond what most people can afford to invest. A lot depends on the luck of the draw – if the leads you buy or the places you advertise attract people willing to buy as opposed to just willing to listen. This is beyond your control. Then you need those people who bought from you to do what you did – sell product and recruit people. Their success is as uncertain as yours, but you are counting on them to be good or lucky or both. This is beyond your control as well. Suddenly this “sure thing” of a business is looking much less certain. The company will get you to focus on the things that are absolute – the commission system, the lack of limits on commission, the quality of the products. They want you to believe – in the system and the products. If you believe absolutely in what you are doing you will not be so likely to look at all the unknowns and pitfalls which cause nine out of ten of these businesses to fail. "We should be taught not to wait for inspiration to start a thing. Action always generates inspiration. Inspiration seldom generates action." - Frank Tibolt, Author

Now, to be fair, some people just need a shot of inspiration to emerge from their cocoon and take flight. That is why motivational speaking is such good business. So for someone who may always have had a talent for sales but never the opportunity to do it “their way” and in a system where they get decent commission, a MLM business may be exactly what they are looking for. They will get a team of people who will encourage them (as long as sales are being made) and the freedom to find their voice in selling the products without anyone looking over their shoulder. For someone like this, a HBB may be the best thing to ever happen to them

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Inside the MLM Mindset

“Culture of Success” “If your happiness depends on money, you will never be happy with yourself.” - Lao Tzu

Once inside a MLM or HBB network you will start to notice some words which get used a lot. “Team,” “Success,” “Goals” and so on. Nothing too surprising, really, for a business model where they need to motivate people to do something they never have before, and believe they can make it. By “Culture of Success” we are not referring to a group of people who are all successful. In this case it is a group culture focused on striving for success. On creating the belief that success is possible to people who may have never had any significant business success in their lives, or to people who have fallen on hard times. This is a valuable support system when trying to launch a HBB but it also has two backlash effects. The first is that eventually the over-use of catchphrases and slug-words causes the terms to lose any real meaning. In effect, the concept of “success” becomes buried in the mantra of running the business day-to-day. The trick is that because you keep seeing and saying those keywords, you still think they have a value. Put another way, your logical mind still sees words like “success” and processes them long after your emotional mind has become numb to them. The other backlash is that anyone who shows signs of faltering, of not making sales, of not having “success” is quickly culled from the herd. People in the network will distance themselves from you if you show an inability to produce. Not because they are mean-spirited, but because they are focused on their own venture and this is, after all, a business. But it can make the experience seem very cold if you bought into the kind of “group hug” that you were given when being recruited.

This technique is not necessarily a “bad” thing, though. In fact, it is pretty standard fare for corporate “team-building” exercises. There is nothing being done in the MLM that a lot of big corporations do not also do. What is different in an MLM is that these techniques are not being applied by professional managers or a Human Resources department. They are being applied by someone who a year ago may have been digging ditches or

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Inside the MLM Mindset

designing air-to-air missiles; neither of which prepares them to be your manager.

Repetition "If you can't describe what you are doing as a process, you do not know what you're doing." - W. Deming, Author and Management Consultant

When someone is recruiting you into a MLM or to buy into a HBB, there will be a common theme in how they describe the workings of the business model: “If you follow some simple steps you are almost guaranteed to make money.” You are told this for several reasons. The first being that this is how the person selling to you was trained, and how you would train others. Listen carefully to the pitch you are being given because you will be repeating it over, and over, and over again to prospects if you sign up. If you do sign up you will be given some kind of information kit which will outline the steps. They usually start with buying sales leads, then sending emails, the following up with phone calls that recite from a script of things to say. The very things your recruiter said to you in fact. On team calls you will hear repeatedly that you “just need to follow the steps” and you can’t help but close sales. And to some degree they are right. The averages that the company and the lead generation agency have indicate that the conversion rate for leads is reasonable and you should close a sale on your first or second batch. Just by following the procedure. What could be easier than talking on the phone and making money? The “simple steps” are also important in that they are what you will be teaching anyone you recruit to do. So not only are you being convinced that you can sell product with their system, you are also being convinced that you can teach others to do so – and build a fabulous team – and retire to Fiji in eighteen months.

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Inside the MLM Mindset

Beyond the simplicity of the concept of making money by following such a simple set of procedures there is a more powerful dynamic at work. It is helping to instill the belief that anyone – even you – even if you have no background in sales – can sell this product and build a team by following the steps outlined by your mentor. You would not join the MLM if you did not think you could make money, after all. This belief is reinforced by something we all know: that if you do something often enough you get good at it. It is such a simple message, yet it hits on so many core levels to instill a willingness to at least try the venture. And that is all they want. If you try the product first, sign up as a dealer, buy a full Starter Kit, whatever – they have closed a sale. Mission Accomplished. "Talent is cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work." - Stephen King, Author

The flip side of this belief is that there are a lot of people who could make money in an MLM and who are capable of being trained to follow a procedure. Maybe you are one of these, or maybe you have the talent to find them and get them trained. In either case you could, in fact, do very well at one of these ventures. The positive reinforcement of the group or team will give you the confidence and belief in yourself to try. And, as long as you are making sales, that positive reinforcement will always be there for you. In such cases – and they are rare – an MLM/HBB could be the best thing that happened to you. You could be making money by just doing something very simple and “easy” over and over again – maybe only a few days a week. But understand where the sudden burst of self-confidence that “I can do this” is coming from, and why.

Things To Ponder Can you follow a scripted procedure religiously if it means making money? No … really … can you repeat the same script twenty or thirty times in a day and sound like you mean it? Can you teach others to follow such a process? They will ask the same questions you did – and have the same doubts.

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Inside the MLM Mindset

If your recruiter can make money following these steps, why can’t you? Think about that … why wouldn’t this work for you? Picture yourself on the other side of the phone call. Do you have the belief in your selling skills that makes a MLM/HBB something that you wish you would thought to try years ago? Do you get bored with repetitious tasks? If you do, do you have other projects you can work on to keep you distracted so you won’t become bored? How do you define “success?” How much would someone in a HBB need to be making before you thought of them as a “success?”

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Inside the MLM Mindset

The Dark Side “Money often costs too much.” Ralph Waldo Emerson

One facet of the MLM which they do not disclose is just what some of the calls and “interviews” will be like. If you were unemployed or underemployed when someone from an MLM talked to you, what sort of people do you think you will end up talking to if you get into this business? That’s right – people even worse off than you. A lot of them. It can get very depressing because you more or less have to listen to the other person tell their tale. You need to sound interested because in a few minutes you will be telling this person you have the answer to their problems. All the negative energy from these calls can be quite a drain, though. Not just from all these people telling you their less than favorable life experiences, but from the 19-out-of-20 who end up saying “no” to your offer. During your indoctrination you may be told to think of these sales-recruiting calls as “interviews.” Which is technically correct – you are interviewing these people to see if they will join your group. But unlike the conventional interview process, there is no filter on MLM interviews. Anyone with a pulse and a credit card is a valid candidate. You will have no clue what you are getting when the other person picks up the phone – you will not have seen a resume before-hand, and the person will not know what job they are being interviewed for. All they know is sometime recently they filled out something that said they would be interested in a HBB. If they remember that at all. "No matter how far you've gone down the wrong road, turn back." - Turkish Proverb

You will call some people and hear all kinds of twisted weirdness in the background. Kids out of control; wives or husbands or who knows who yelling at each other; trains or aircraft traveling dangerously close to these people’s home; dogs barking – often several all at once; the TV or radio on full blast. The only good thing about these kinds of calls is that it makes whatever annoyances you may have with your home life seem inconsequential in

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Inside the MLM Mindset

comparison. But after some of these kinds of calls you just need to hang up the phone and go for a walk. Beyond the Soap Operas you will hear about as you talk to potential recruits, you will also run into a lot of other very frustrating things from people. If you are thick-skinned, these will not bother you. If not, you could start dreading your own business. Some examples of what you will encounter making sales calls are: •

People who say they want to join and just need to “wait until their next paycheck” so they can place an order – and then never get back to you and never return your calls again.

•

People who forgot that they answered an ad saying that they wanted to learn about a HBB and assume you are unsolicited telemarketer.

•

People who are just plain dumb and no matter how many times you explain the product or the company they just do not seem to understand

•

People who are so used to failure that you can hear it in their voice, but they say they are interested and waste hours and hours of your time before finally saying “Well, it probably will not work anyway”

The worst part comes about two or three weeks into you HBB. After the initial rush of learning the procedure has worn off and you start to become anxious about “when will the money start flowing in?” This is when it becomes very difficult to tell people what a wonder opportunity you are offering them. This is when you will start to feel like a liar. And some people will ask you “How much money have you made with it?” What will you say?

Failure "I have not failed. I've just found 10,000 ways that will not work." – Thomas Edison

And there is also a Dark Side to the way the MLM mindset itself works. The whole message you are fed is that success is possible, your dreams are attainable, and that “anyone” can make money selling the products that the MLM sells.

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Inside the MLM Mindset

So, what happens when, for whatever reason, you cannot make sales? That makes you a failure, doesn’t it? Not at all. There are any number of perfectly valid reasons why a particular HBB did not work for you, or you for it. For instance: •

You just are not a sales person.

•

You found that managing a team did not suit you.

•

You were looking for something that would show a profit sooner.

•

The products were not all they were supposed to be.

•

The start-up investment was more than you could afford.

•

The time it took to go through leads was more than you had available.

•

You felt you could more money doing something else with your time.

None of these indicate failure on your part. They simply indicate that you tried something and it just was not right for you. But the group dynamic of the MLM does not flow in this direction. Because this direction allows you to easily walk away; and if you walk away you are not producing for your manager. And remember the Culture of Success that was mentioned earlier. It is a very addictive and motivational force, but like any belief system when It is shown to “not work” for an individual it is very easy to believe it is due some fault in that individual. Worse still, the support you once got from your team members and manager will likely dry up if you fail to produce. This is nothing personal, it is just business. And in the time since you joined your manager has probably screened and interviewed fifty or more other prospects. Or, to take a different angle on this dynamic: more than nine out of ten HBB’s will not make it. It is the one in ten who make it who are the exception. Many of the HBB’s I saw fail were due to going in with the wrong expectations about how much time and effort it would take to reach a financial goal; not by any flaw in the people who tried to start the HBB.

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Inside the MLM Mindset

The Grind "When your ship comes in, make sure you are willing to unload it." – Dr. Robert Anthony

So what is it like running one of these businesses from home? Despite claims of “only working a few hours a day,” to make a sustainable, full-time income requires a large time investment. If you can only work on your HBB a few hours a week, expect to make a small amount of money. The Grind can comprise any or all of the following features in your new daily life: •

Making 10 or 20 or 40 follow-up calls in a day. These will be to people who either responded directly to one of your advertising campaigns or are part of a set of leads you purchased.

•

Making 2 or 3 sales calls a day. These can take an hour or more each.

•

If you are doing well you will bring in about one new person a week, that will chew up several hours in phone calls getting the person up to speed.

•

Spending an hour or so managing your sales pipeline management system. This can be an Excel spreadsheet or an online system. But somehow, some way you need to keep track of all the people you called and spoke to and where they are in the pipeline.

•

Spending an hour or so talking to people in your group. Especially the new people.

•

Spending up to 2 hours in a day on team calls and training calls.

•

Making trips to the Post Office to ship out product (you can get around this if you pre-schedule pick-ups, but you will rarely know more than a day in advance when you have something to ship).

•

Doing the book-keeping on your orders and your payouts from the company. There are all kinds of little fees and percentages you will need to keep an eye on; not to mention the calculation of commissions for the people in your group which you are entitled to.

•

Dealing with the business management issues – quarterly taxes, keeping track of separate expenses, etc.

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Inside the MLM Mindset

•

Everywhere you go and anyone you meet, you need to be looking for prospects. If you meet someone in the check-out line at the grocery store who says they just got laid off, you need to give them your card.

Not exactly glamorous. It is not really “hard” work, by most standards. But it is repetitious and the rejection rate is high – over 90%. So unless you are used to being in sales you will be getting a lot less positive reinforcement than you may be used to from a conventional job. On the other hand: •

You can work at home.

•

You can stay up as late as you want, wake up whenever you want, and work whenever you want.

•

No one else is limiting the amount of money you can make – just your ability and free time to apply yourself.

So it is not all bad. It really comes down to if that style of working suits you and if you can manage to excel at doing it. Which really is not that different than any other kind of job, when you get down to it. The truth is, they spin MLM’s and HBB’s into an almost mystical solution to corporate angst – and it really is just another kind of job when you step back and look at it.

Leading A Horse To Water We all know the saying about how you “can lead a horse to water but you can’t make him drink.” That same rule applies to a HBB. Should you take the plunge you will embark on your new venture, brimming with enthusiasm. That is how good the people in these systems are at indoctrinating you. You will want to make it work, you will see the potential for life-changing earnings, and you will want to share this with people you recruit. But a lot of people are not ready for running their own business. And a lot of people are stuck in a vision of their lives which will prevent them from grabbing an opportunity. And a lot of the people you try to recruit will be, for want of a better term, incompetent in one way or another.

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Inside the MLM Mindset

This cannot be helped. It is the nature of blind recruiting. What you will need to be wary of is how these events affect your mood and your view of the enterprise. You may feel betrayed; that people who agreed to join Your Team did not produce for you. You may feel frustrated; because you have money tied up in this business and after investing all this time in someone you now have to start over and have nothing but a small sale to show for it. And you may start to feel disillusioned; because the people who recruited you never really told you how unreliable people can be. They only told you what was “possible.” So, prepare yourself for this kind of disappointment. Do not take it personally, because it is not personal. Remember, if was not personal when you were recruited either. When you find someone who seems to have the “Right Stuff,” spend as much time as you need to get them productive. You will need a core of three to five people who report directly to you who are capable of building their own team of three to five solid performers. Your first priority is finding those people. If you recruit someone who can “probably make a sale or two a month,” that is fine. But these people will not be what propels your business. Your “job” is to find people who may be capable of succeeding in the business, getting them trained, and helping them get underway. It is not to help them sort out their lives, be their personal coach, or even be their friend. This. Is. Business.

Things To Ponder Since most people who try a MLM/HBB end up dropping it, does this mean that they are all failures? Is a MLM/HBB a business or a social gathering? How well do you handle rejection? How much does someone dropping their problems at your doorstep affect you? How will you feel about your HBB if it turns out to be just as much of a “grind” as the day job you want it to replace?

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Inside the MLM Mindset

The Bottom Line “What is hardest of all? That which seems most simple: to see with your eyes what is before your eyes.” - Johann Wolfgang Von Goethe

First and foremost understand that whoever is recruiting you is looking at just two things: •

Will you buy product?

•

Will you be able to sell product (i.e. recruit more people)?

That’s it. If they get the sense you will buy you will have a tough time getting rid of them. If they get the sense you will buy but then will not produce down the line, this will not prevent them from selling you thousands of dollars worth of product which will end up sitting in your closet for years to come. They are in this to make money. As will you be should you sign up. The things you will be told about how the MLM or HBB can “change your life” is theoretically true. Theory and reality are not always the same thing.

Profits “Money is better than poverty, if only for financial reasons.” - Woody Allen

When you join a HBB system you will be given a lot to read. And in there someplace will be some charts and figures about how a sales team is structures, and how much commission (other terms like “override” are sometimes used … but It is the same thing) you get depending on your relationship to the person who sold some product. Generally speaking the bigger and deeper your group is structured, the more money you make. And if your group grows large enough in both dimensions, it can get to a point where you no longer need to make sales calls except to replace people who may have dropped out for whatever reason. And that is the goal of an MLM – to get to a sustainable income that only needs five or ten hours a week to maintain. But that can take years to accomplish.

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Inside the MLM Mindset

So what does the money really look like in the near term? It is not that bad, as things go in the price range. You will generally make a nice profit off of any item you personally sell. Certainly enough to support the business, certainly not enough to quit your day job. This is another area where you need to be careful of “what can be done” and not interpret it as “what will be done.” You cannot directly control the success rate for sales – no one can. You manager may tell you something like “If you can sell a couple of units in your first two weeks like Joe just did, then all your advertising expenses thus far are covered.” Which is all very true. And it sets a goal for you. But do not fall into the trap of thinking that because you said it that you already did it. It is a trap a lot of people who start HBB’s fall into. Then suddenly they find themselves six or eight weeks into it, having burned through a thousand dollars in leads and phone calls and other things “for the business” and they have only closed a couple of sales. Always remember: Until you deposit a check, you have no revenue. The revenue from your team will also take time. Here again your manager will tell you about best-case scenarios where you bring in three people and they sell ten units in their first eight weeks and recruit three people of their own, and then suddenly you have hundreds or even thousands of dollars of commission coming in. Yes, it is possible that this would happen. But, really, how likely is it? Think about the unknowns of: … your finding three red-hot candidates in the first month and then … these three people then each starting fast enough to move their Starter Kit inventory and then themselves each finding three redhot candidates and then … these nine new people then starting fast and selling their Starter Kit inventory in their first eight weeks. Odds do not look good when you break down the chain of events which must happen for the best-case scenario to happen. The managers will not want you to look at this. They will be trying to “motivate” you to accomplish it regardless of the odds. Why put the word motivate in quotes? Think about why your manager wants you to succeed? If you build a solid team he or she

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Inside the MLM Mindset

gets a nice commission from it. And if you cannot do it, then maybe the next recruit can. Of course, remember that if you join the MLM you too will be a manager. And the same things your manager does with you, you will be doing with others.

Expenses “About the time we think we can make ends meet, somebody moves the ends.” - Herbert Hoover

We saved the worst for last. And it is probably the question everyone asks first. But this aspect has been covered in great detail in countless other books and web sites. The important thing to keep an eye on with an MLM is not as much the big “Starter Kit” expense, but all the little fees which can add up to thousands of dollars over the course of a few months. For instance, in the MLM I was in, the following fees were part of the system: $40/yr

Dealers License

$10/mo

Dealer Web Site

$20/mo

Online Sales Management Service

$100 - $200/mo

Purchased Leads

For the most part MLM recruiters will tell you the cost of the “Starter Kit” within the first few conversations and leave all the rest of the expenses under the vague term of “marketing campaign” or “start-up costs.” They will make these expenses sound more businesslike than they really are – all you are really doing is signing up for online services which support your sales activities. The other common approach that they will take is to do some quick math about how if you sell “just one unit for every 10 leads you buy, you still make money.” Which is mathematically correct as that profit margin does exist and the top sellers in the MLM do convert about one person in ten they talk to – or at least get them to buy something. This formula does exert some pressure. Or incentive, depending on how you look at it.

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Inside the MLM Mindset

Then do not forget some other expenses. Like long distance phone calls. A lot of them. You will need to get a long distance plan that has a big block of time for a fixed rate; or get a cellular phone that comes with a lot of minutes and use that exclusively for business. Then you will need business cards, some kind of Internet connectivity (though if you are reading this you clearly already have that), a good phone headset, and somewhere to store all the stuff you will be accumulating (inventory, sales materials, newsletters, forms, etc.). Then also factor in the overhead of processing orders. The company that runs the MLM will likely be the credit card processing agent on your sales, and they take a percentage of each order for that. Then there is the actual shipping charges. These get passed on to the buyer, obviously, but until the order has been processed and you get a check, It is all done on your dime.

Things You Need If you have read this far and are convinced that you should start a HBB, there are some things you will want to get to make life easier. These obviously differ for different people and businesses, and some are not as essential as others: •

A good PC. While nothing you do on the computer will be that compute intensive, if you are spending a long time waiting for your spreadsheets to launch, then that is one more frustration to add to the picture. Also if your system is old and crashes a lot you are running a risk. Your business will more or less be stored on your PC, make sure it runs well.

•

Back-up device. CD burner, ZIP drive, something. If you PC explodes make sure all the data about your business is someplace safe so you can keep making money.

•

Telephone headset. Speakerphones sound bad in general and do not let you walk around the room or house while you talk. Invest in a good telephone headset, a wireless one is preferable.

•

CallerID. Make sure your phone service has this. You may want callerID software for your PC as well so you have it flash on your monitor who is calling.

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Inside the MLM Mindset

•

Accounts with UPS, FedEx, and USPS. This will let you print shipping labels at home and save a lot of hassle getting things sent out.

•

Something better than dial-up access to the Internet. Dial-up works, but you will be sending and receiving a lot of mail and data.

•

A web site. Most MLM systems provide hosting (for a fee). If they do not, get a site for yourself somewhere and make sure it is on your business card.

•

Organizational software – Personal Information Managers (PIM’s) and spreadsheets. You will need to keep track of a lot of information on people and products and sales and dates. Doing it on Post-It notes will not work for very long.

•

A good long-distance telephone plan. You will be running up a lot of long-distance calls. Get a plan with a large block of prepaid minutes. Also be sure you have call-waiting and conference calling. An Internet-phone service can also be good as that protects your home phone number.

•

A fax machine or e-Fax service. While so much is done with email, you cannot run a business without the ability to fax. While you are at it, a good printer is needed too. If you can get an “All-In-One” device with print/scan/fax that is best.

•

Bookcases or storage cabinets. You will have a lot of “stuff” to store and it needs to go somewhere. Brochures, order forms, inventory, product manuals, company manuals, shipping labels, and so on.

Things To Ponder Which part of this chapter worried you more: the cost of running the business or the number of things which need to go right in order to make a lot of money? Have you allocated a large enough budget to start a HBB, given the things you now know you will need? Given the information in this chapter, how does that affect your expectations for starting a HBB?

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Inside the MLM Mindset

The Decision “When you arrive at a fork in the road, take it.” - Yogi Berra

Should you start a HBB or join an MLM? And if you already have and are questioning that decision, should you stay with it? And for how long? I will not even pretend to make this decision for you. Only you can make it. The only certain advice I can offer is that if your MLM/HBB stops being “fun” odds are you will eventually walk away from it. Work is rarely fun, but if you start to find … •

that you start to dread making sales calls

•

that you start to worry about spending a lot more than you’re taking in

•

that the team calls start to sound repetitious and hollow

•

that the financial rewards are not giving you what you want, or are not living up to expectations

•

that the one or two successes out of twenty leads do not make up for the eighteen or nineteen rejections

… then odds are you are starting to drift away already. Our workman’s ethic tells us we should power through such feelings and work harder. And, yes, there is truth to that. For some people there comes a breakthrough where suddenly they are making sales and everything starts to come easy. But for most people this is not the case. If you start making money right away, though, odds are better you will stay with it. And this is an important point for those of you who have decided to try one of these ventures: your business gets much, much easier if anyone you recruit can close a sale in their first week or two.

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"I have never worked at anything to make money unless it was fun, too.” - A. Gilbert, developer of Erector sets

The bottom line is that this is your business, your new job. And like any job, if you hate doing it then the money doesn’t matter. And if the money is not what you need to be happy, then you will look for a better job.

Things To Remember Anyone who talks to you about starting an MLM or HBB is working from a script. Anyone who talks to you about starting an MLM or HBB has no emotional investment in your decision – it is just another sale. Anyone who talks to you about starting an MLM or HBB will tell you as little as they can about the actual company and business for as long as they can. Anyone who talks to you about starting an MLM or HBB is not necessarily a scam artist – most likely they are not – the conversation is just business. Anyone who talks to you about starting an MLM or HBB is not necessarily a great salesperson. They just became good at it with lots and lots of practice. It is possible you can do the same. Any statements made about “potential earnings” are true but they are just that: potential earnings, not guaranteed earnings. Over 90% of the HBB’s or MLM’s started fail – mostly in the first year. An MLM or HBB is still a business – it is a job – expect to put in 40-hour or longer weeks to get it started. Starting an MLM/HBB is not necessarily better than being unemployed – it only helps you if you make the sales. For the most part the products and services offered by reputable MLM’s and HBB’s are good to excellent. They have simply chosen this means of marketing and selling their products.

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Inside the MLM Mindset

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