MLM Business Success | Breakaway Plans are Hazardous to a Distributor's Wealth!

Many people have an extremely negative view of Multi-level Marketing (MLM) aka Network Marketing.  When approached with a MLM opportunity, their reactions are something like:  "Oh, @#$%&!, not another MLM promotion.  I hate MLM.  MLM is a ripoff.  No one I know ever made money in MLM.  Get out of my face!"

Guess what?  The negative perceptions most people have of MLM are totally justified.  That's right, totally justified.  That's because most MLM plans are ripoffs.  Most people don't make money.

Most MLM plans (including the granddaddy of MLM, Amway), have been "breakaway" plans.  These plans allowed a very few hardy and super charismatic souls, after years of work, to make tens, even hundreds, of thousands of dollars per month.  Great!  But 99% of the distributors never made enough to even cover their phone bills.  For every success story you may have heard, there were thousands of failures.  The same compensation plan that made it possible for a few to make huge amounts of money guaranteed thousands of failures.  This is where MLM started to get its bad name.  And most other companies -- NeoLife, Shaklee, Herbalife, etc., continued in that "tradition".

Then, within the past ten years or so, in an attempt to overcome the bad name breakaways have given the industry, other types called "binary" and/or "matrix" compensation plans have also arisen.  If you are considering joining, or remaining with, a company with one of these plans, you should also BEWARE.  The average distributor also has the same severe difficulty with these types of plans in getting into profit; see why in discussions of these plans elsewhere in this web site.

Back to the problems with breakaway plans.  There is a 4-1/2 page article by a former U.S. Marshall entitled:

"Warning:  Breakaway Compensation Plans Can be Dangerous to a Distributor's Health"

The article discusses the pitfalls of breakaway plans specifically, but many of the comments apply to the other types of compensation plans mentioned above, also.  This article, which I entitled similarly, is essentially a derivative of that one.

I state categorically that most MLM compensation plans ARE ripoffs.  A ripoff compensation plan is one that doesn't work for most people; but does work for a select few -- the company principals and a few hand-picked "heavy hitter" distributors.

As outlined in the article mentioned above, because of the way those compensation plans are structured, the new distributors, the low volume distributors, are chasing a receding target.  They can generate hundreds and thousands of dollars of business, but because of various twists in the plans, they rarely ever see any significant checks.  Breakaway plans are structured so that the average person will never make money.  Most of the money passes up to the heavy hitters and company principals.  That's the bad news.

The good news is that there are a few good MLM plans out there.  There are plans you can approach your membership, other interested parties, associates, and friends (your "warm market") with, with pride and confidence.

There is a type of MLM compensation plan that is fair to all involved.  It is called "unilevel".  Now, because a properly structured unilevel plan can be fair to all involved, unilevel is denigrated by most of the "heavy hitters" of the MLM industry.  Every dollar of sales goes somewhere.  The question is, where?  A plan that gives the new and or low-volume distributor a fair return on their efforts does take money away from the heavy hitters -- one of them once referred to it to me as "leaving money on the table".

Unilevel is really more like an extended "split commission" compensation method (as in real estate).  It is simple, straightforward, and easy to explain to others.  A rule of thumb:  Remember, if it is hard for you to figure out where each piece of the sales dollar goes, it is a ripoff.

No matter how the other types of plans are structured, they are not fair; it is inherently impossible for them to be fair and still remain one of those types of plans.  A unilevel distributor isn't pressured to fill a garage full of product in a futile effort to salvage his bonuses by keeping his volume up.  He doesn't "lose" his best people and their volume.  While unilevel is fair to the new and low-volume distributor, it is also very lucrative for the person who enrolls a large network of distributors.  But, frankly, not as lucrative as the ripoff compensation plans.  Which is why the heavy-hitting glad-handers don't like them.

So, you have a choice.  If you are super charismatic, a super salesman, even a con man (woman), you can probably make more money in a company with a ripoff compensation plan.  If you are more of an average person, you should look to a company which offers what I consider a more legitimate, fairer type of compensation plan, which gives you a realistic shot at making some money.

Unilevel plans can be "tricked up" so that they also can become unfair to new and low-volume distributors, but do they have the inherent ability to be structured fairly, while the other plans cannot be.

One problem with most unilevel plans is that they usually pay a very small percentage on each level for many levels.  Maybe even larger percentages on lower levels (further downline).  This sounds good to the naive and inexperienced networker, because tremendous income figures can be projected from these lower levels.  But, the reality is that it takes a large organization, as in the breakaway plans, just to get into profit, and a much larger one than most people can build, to make good money.  The fact is, everyone cannot build a large organization, but a lot of people can build small and moderately sized organizations.  Even with typical unilevel plans, most distributors reap little reward for their efforts.  To overcome that problem, the two-level (with group and infinity provisions) unilevel plan was developed, paying substantial percentages on the first two levels.  I think that this is the best type of compensation plan, by far, overcoming the problems of the breakaway plans and most binary, matrix, and multi-level unilevel plans.  It allows the new distributor to get into profit quickly with just a few people in his organization, yet allows important money to be made with a large organization.

My recommendations for your Network Marketing success is that you seek out Network Marketing companies with quality compensation programs and quality products at reasonable prices, as well as first class distributor support.

If MLM companies you are interested in do not meet ALL the requirements as outlined in "How to Evaluate a Network Marketing Opportunity", you will suffer frustration, undeserved loss of self-confidence, and serious loss of time and money.

You can't turn a sow's ear into a silk purse; you can't even turn something "close" into a winner, as I have found through bitter experience.  "Close, but no cigar" doesn't count; it's all or nothing.

To learn how to determine which Network Marketing companies will provide you a good chance of actually making some money, in addition to making available to you many of the products you will require for a long and healthy life, you really need to GET AND READ the VITALLY IMPORTANT book "How to Evaluate a Network Marketing - MLM Opportunity".

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