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The Multi-Level Myth.

By Julianne Frank, - Email Editor

Date : Aug 23, 2007

Dear Subscriber:

Have you ever leisurely picked up lunch from the neighborhood café and been embraced by a colorful brochure enticing you into the next entrepreneurial “opportunity?” Caveat emptor (buyer beware)...you just may be the next buyer.

Giving credibility, certainly, there exist successful companies who rely on the multi-level marketing concept. The cosmetic company, for example, is a NASDAQ company that has remained a household name for over 100 years. How many obscure companies and such household names can you conjure? What should you do when your family, friends and neighbors come peddling products and programs that they insist will enable you to “get rich quick?”

First, ask yourself how many people you know who have truly achieved wealth through one of these “opportunities?” You may know someone who accomplished early retirement, or earned the pink Cadillac for outstanding sales, but the real question is, are the majority of these entrepreneurs “moving up to the East Side” as the videos and infomercials claim?

I am aware of only one person who has experienced some level of prosperity from participation in such a venture, and even he ended up a client when the multi-level company changed the rules on him mid-stream. It should not be surprising that the word “scheme” seems to associate with the words “multi-level marketing.”

Companies will have you believe that it is all about “the product”--where lies the truth?

The simple reality is that most multi-level marketing companies expect but a small percentage of their distributors to succeed. The economic justification for participation, based on a mass consumption target, is necessary to support cash flow through layers of distributors. The business model is almost perfect--that is, if you are one of the distributors at the top. (Have you ever heard the saying “get in early!?”) Those at the top experience a constant turnover of enthusiastic worker bees disseminating product to end buyers. The company incurs little or no overhead other than downstream commissions; these payable only to a few who have succeeded, who in turn must share with lower on the food chain.

As I took mental inventory of the lives ruined and dollars wasted, I found myself aghast at the misery that I have seen multi-level marketing engender. Business failure is never pretty, but the end of a multi-level marketing career is particularly ugly, and its psychological implications are unusually devastating. The failure represents the bleak final chapter in a desperate bid to be unleashed from one’s unfulfilling “day job;” the fatal tumble is often embarrassing, humiliating and compounded by the fact that its victim usually drew in (and sometimes, took down) friends, relatives and neighbors. Integrity, self-esteem and financial security vaporize, leaving the entrepreneur with “product”-- shelves of cosmetics, water filters and vitamins.

Investment of savings in a multi-level marketing scheme may be comparable to buying a boatload of lottery tickets. From the experience of my clients, you would have as good (and possibly a better) chance at striking it “big.” Common sense should lead to the business approach that it is unrealistic to gain wealth whimsically. These companies hook you on a miracle type product, sell you on the worker bee “get rich” scheme, and teach you the philosophy of using OPM (other people’s money) and OPW (other people’s work).

Before you invest your life savings into someone else’s sales force, make an analysis of the success of those who have gone before you, and you are likely to find someone who is on their fifth or sixth multi-level company (usually recovering from the previous ones). They will likely tell you, “yes, you should invest.”

If you think I am being too harsh, then I will leave you with this advice. After you are approached by any of these companies, wait a week (or two) before you sign anything or buy anything. As with any get-rich-quick scheme, assume it is too good to be true. Know the facts before you make any major decisions with your hard-earned dollars.

Julianne Frank, Esq.

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