Bad MLM Companies - Your First 4 Layers Of Tactical Defense

In military training there is a basic tactical system called "the scale of escalation of force" which was designed to prevent loss of life & material. This defense tactic is all about spotting threats & avoiding or neutralizing them before damage can occur or get out of hand. If you want to avoid becoming a network marketing casualty, then you need to learn this skill.

As I've mentioned in previous posts Pillar #1 (company management experience with integrity) is the first in a 5 part business success system. In military & business operations time is a precious commodity. So it is critical to have a long-range layer of threat detection, & in the case of Pillar #1 this first layer has 4 parts. Here are the 4 quick tips to help you protect your long-term business goals.

1. Long Contract - 20, 30, 40 pages or more is a good indication the company has huge overhead. Long, complicated policies& procedures make hiding "gottchas" to steal your check & team easy.

Companies like these kinds of contracts because they just might need your money some day to pay for their bloated business expenses & greedy life style. Hundreds of network marketers have built a substantial residual income only to be robbed, terminated & then black balled as "bad people" by the companies they so loyally built with.

2. Products Found On Auction Sites - Companies with a comp plan that promotes recruiting over product movement often have reps selling products under assumed names or through third parties.

In this scenario reps "garage qualify", or buy loads more product than they can use per month just to get a check. The comp plan is promoting recruiting over product movement. Since most reps only recruit 2 or 3 people in their entire career some resort to making money any way they can. The company & master distributor are the only ones making money here.

3. Front End Loading - 200% to 300% mark-up over that of the same product in a different MLM company, screams, "There's no money in retailing the product!"

Once again, recruiting is all that's being rewarded & reps buy products just to earn a check. After all, why else would you pay $129 for a product you can get somewhere else for $39.95? That's just nuts!

4. The $10,000 Question Goes Unanswered - Whatever company you're in you need to know, "How many people do I need retailing product to earn $10,000 each month?"

Many corporate officers & master distributors blow smoke or change the subject when this question comes up. They know if people learn the truth, then they're gone. Some companies require 4,000 to 5,000 retail customers for you to earn a $10K monthly check, while others require as few as 400 to 500 people to do the same thing. Same work, different pay. Which makes more sense to you?

Before you join any MLM company do your homework. The 4 red flags outlined above will save lots of time by helping you spot threats to your business success long before you encounter them first hand.

Greedy, uncrupulous companies usually have long, complicated contracts. Companies that reward recruiting instead of retailing have reps garage qualifying & using auction sites because the products are too expensive to buy without getting paid. The more people it takes to make $10,000 a month the greater chances are that your business will fail.

The first 4 layers of the 1st Pillar for Success will help you spot bad MLM companies while they're still on the horizon. Such companies require greater scrutiny before you trust them with your future. On the other hand, maybe you should avoid such companies altogether.

I appreciate you

Bill Tessore

MLM Comp Plans - Uni-Level Breakage

In "MLM Comp Plans - Why Companies Love Uni-Levels" I revealed why companies find uni-level compensation plans so attractive. Now let's move on to the breakage in a uni-level compensation plan.

Basic uni-levels have two forms of breakage.

• Limited depth.
• Product price.

Here's how limited depth creates breakage.

Let’s say you’re in a company with a 3-deep Uni-Level pay plan. You sponsor Betty, Betty sponsors Jim, Jim sponsors Darla, and Darla sponsors George. In this case you get nothing for Darla's sponsoring efforts because breakage occurs with George (on level 4).

How about the price related breakage?

Most of the products marketed through a uni-level are either intellectuals (e-books), or some other one-time purchase item with little to no cost to the company offering them. These products offer the company a gigantic profit margin. Let's take a closer look at what this means.

Most MLM companies claim they need to maintain between a 55% to 65% profit margin to pay the bills and pay commissions. But is that really necessary? Take a look at the chart below for a $20 product to see where the money goes.

Your	% to	% to	Your	Co.
Team	You	Co.	Profit	Profit
Betty	20%	80%	$4	$16
Joe	10%	90%	$2	$18
Darla	5%	95%	$1	$19
Fred	0%	100%	$0	$20
Totals	8.75%	91.25%	$7	$80

As you can see from the example above the company is making an average of 91.25% profit from your team efforts compared to your 8.75%. Wow, they must have a lot of overhead! Oh, and check out how much the company values your contribution.

Network marketing companies like Uni-Level comp plans because they’re easy to explain and they're highly profitable (to the company). Plus there are plenty of folks out there who think they are in that 0.01% of MLMers that can recruit at will to keep making money.

Most networkers are in MLM to build a large, stable, and profitable income so they can retire. If you’re a super sales person or a sponsor monster that probably doesn't matter to you. You’ll do well with a Uni-Level, because you’ll just go wide.

However, if maintaining communication with your team and building depth for strength of long-term stability are important to you, then a uni-level plan will be the kiss of death to your financial independence.

Your dreams should not be limited by your company's comp plan. So look for a company that rewards well for building enough width to be able to keep up with your front line, while building maximum depth for team strength.

I appreciate you,

Bill Tessore

In "MLM Comp Plans - Why Companies Love Uni-Levels" I revealed why companies find uni-level compensation plans so attractive. Now let's move on to the breakage in a uni-level compensation plan.

Basic uni-levels have two forms of breakage.

• Limited depth.


• Product price.

Here's how limited depth creates breakage.

Let’s say you’re in a company with a 3-deep Uni-Level pay plan. You sponsor Betty, Betty sponsors Jim, Jim sponsors Darla, and Darla sponsors George. In this case you get nothing for Darla's sponsoring efforts because breakage occurs with George (on level 4).

How about the price related breakage?

Most of the products marketed through a uni-level are either intellectuals (e-books), or some other one-time purchase item with little to no cost to the company offering them. These products offer the company a gigantic profit margin. Let's take a closer look at what this means.

Most MLM companies claim they need to maintain between a 55% to 65% profit margin to pay the bills and pay commissions. But is that really necessary? Take a look at the chart below for a $20 product to see where the money goes.

==========================

Your % to % to Your Co.

Team You Co. Profit Profit

------------------------------------

Betty 20% 80% $4 $16

Joe 10% 90% $2 $18

Darla 5% 95% $1 $19

Fred 0% 100% $0 $20

------------------------------------

Totals avg. avg. $7 $80

7.75% 91.25%

============================

As you can see from the example above the company is making an average of 91.25% profit from your team efforts compared to your 8.75%. Wow, they must have a lot of overhead! Oh, and check out how much the company values your contribution.

Network marketing companies like Uni-Level comp plans because they’re easy to explain and they're highly profitable .. to the company. Plus there are plenty of folks out there who think they are in that 0.01% of MLMers that can recruit at will to keep making money.

Most networkers are in MLM to build a large, stable, and profitable income so they can retire. If you’re a super sales person or a sponsor monster that probably doesn't matter to you. You’ll do well with a Uni-Level, because you’ll just go wide.

However, if maintaining communication with your team and building depth for strength of long-term stability are important to you, then a uni-level plan will be the kiss of death to your

financial independence.

Your dreams should not be limited by your company's comp plan. So look for a company that rewards well for building enough width to be able to keep up with your front line, while building maximum depth for team strength.

Bill Tessore