Avoid MLM
Failure
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Avoid
MLM Failure
Apply The Rule of 36
At least
once a week a fresh faced new MLM
distributor will call me, e-mail me or
write a postal mail with a breathless
presentation about the new super duper
MLM company they've just joined.
They'll go on and on about the:
Fabulous Product
Managerial Integrity
Lucrative Compensation Plan
Revolutionizing Whatever
Industry
They drone on until it becomes mind
numbing white noise somewhere off in the
background.
Their excitement is wishful thinking.
Think about it. In 1999 The
Wall Street Journal and the Small
Business Administration (SBA) estimated
that 70% of traditional businesses
failed within the first five to eight
years. These are traditional
businesses. MLM start-ups are
worse. My research shows an MLM
company has a 95% chance of failure
within the same time frame.
Why is this?
Just like their distributors, an MLM
company can begin business on a shoe
string. To get started, all they
need is a computer and a phone line.
The computer to track activity, the
phone line to respond to questions.
Everything else:
Payroll
Accounting
Warehousing
Product Shipment
Product Development
Can all be outsourced. With the
advent of the internet, it's worse.
Anyone can have a magnificent web site
saying whatever they want. And..
it's "Buyer Beware" because a lot of
people are willing to say anything.
So... given the high probability of
failure and the possibility of deceit,
why would anyone work with an MLM
start-up?
I don't think anyone should. By
applying Dave Zenker's "Rule of 36", you
can eliminate most of the bad MLM deals.
The rule states that you should not even
look at a company that hasn't been in
existence for at least 36 months.
Why is this?
I use 36 months because I believe
there is no practical way a company can
lie to it's distributors, customers,
creditors, and staff for that long.
If a company has been around for at
least 3 years, they're probably OK.
Does that mean that an MLM company 36
months old can't fail? No.
It means they're probably in compliance
with relevant regulations, they probably
have a good product at a good price that
people are buying and they're treating
their distributors fairly. They're not
just saying it, they're proving it.
They're demonstrating their staying
power through longevity.
Before you spend time and money
to promote an MLM business, you need to
know the company is in the game to stay.
They prove it by staying.
What's the alternative?
The alternative is to take the risk
or do the research. I used to do
the research. I'm a CPA. I
consider myself both intelligent and
insightful. When I first got into
MLM over 15 years ago, I would go to
great lengths to review source
documents, talk to principals of the
company and on and on. For me, it
made no difference. I made the
wrong decision over and over again.
You can't tell anything from the
source documents. Most MLM
start-ups don't begin with the intention
of failing. So... most MLM
start-ups have their source documents in
good order.
Talking to the companies founders is
a waste of time. If you speak to
an MLM company founder, principal or
financial backer, you
KNOW
what he's going to say.
Everything's super, great product,
fabulous prospects, yadda yadda, blah
blah. No one in that position is
going to be anything but unrealistically
upbeat and positive. So... why
waste your time talking to them?
Statistically speaking, regardless of
their intentions, honesty or integrity,
virtually all of these guys will be out
of business in less than three years.
Those are the odds. If you're
smart, you
never
bet against the house.
So what do you do? Select an
MLM company that has been around for 3
years or more. If you don't, you
make the start-up's problems your
problems. There's no rational
reason to do that.
Despite this advice, there are those
reading these words who are confident
their MLM start-up is different.
You may be right. You know what
else? If it is, it will be there
in three years. However, if your
start-up is talking about explosions,
massive growth, getting in on the ground
floor or any other such nonsense, walk
out the door and don't look back.
Even after saying all of this, I know
I could be wrong. The 5% chance of
selecting an MLM start-up that doesn't
fail is better odds than the lotto....
HOWEVER.. with the lotto, it only costs
a buck and you haven't spent hundreds of
hours on the phone, and way too many
dollars promoting a failure thereby
embarrassing yourself in front of family
and friends ... again. :-)
I'll tell you what. If you're
involved in a start-up and are not
discouraged by the failure rate, I'm
willing to comment on your opportunity.
During our conversation, I'll set aside
the "Rule of 36" and focus on other
critical elements of success, i.e,
product, compensation plan, etc.
I've been in MLM for over 15 years.
I'll let you tap that expertise.
MLM Giants is here to help you make
it in MLM. If you'd like to
discuss your MLM choice, contact us.
To Your Success!
Dave Zenker
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regarding how you can grow your
multi-level marketing business more quickly?
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