QUESTION: Grace in Oklahoma City wants to know about network marketing programs. Are they scams? Do they work? Dave says they aren’t and explains how they work.
ANSWER: No, they’re not scams. They have good parts and bad parts.
As you know, a multilevel marketing organization—network marketing organization—the people who make big money in those things (and I have several friends who make $1 million), they have a whole bunch of other people in their hierarchy. They have recruited people who recruit people who recruit people who recruit people who recruit people for years. You’ve heard the stories about people making $100,000 or $80,000 a month or something like that. Those stories are probably true in most cases.
The good news is you can, hypothetically, make a lot of money if you get a whole lot of people in your hierarchy. The good news is you work for yourself and control your time. Your destiny is up to you. There’s no glass ceiling. There’s no one telling you that you can’t win. Those are good things for a lot of people.
The downside is sometimes people get in these things and they forget what business they’re in. You’re not getting into the makeup business or the cookware business or whatever it is. You are getting into the recruiting business. If you want to be a person who hires and trains and motivates and manages a large sales force and is constantly filling back in for the high percentage of dropout, and if you’re willing to do that for many, many years, then you could be one of those people who make a lot of money. But you’re not in the business of selling makeup. That’s just the side thing, just something that happens. You have to understand you are going to be in the recruiting business.
It’s probably not a great supplemental income. The supplemental income is from you selling makeup. How good of a part-time job does this really end up being after the hours you spend to set up one show or one party or whatever? Then you buy the stuff and sell some of it. You make the net profit of the difference, your upline gets a cut, and those kinds of things. How does it really end up panning out as a part-time job? Usually not that great. You can run the numbers and determine that for yourself. It can be, but use a lot of judgment if you’re going to do this. I’ve met people who wanted to do this as a part-time job, and I look up and they have $3,000 worth of product in their garage. It happens to a lot of people because they get caught up in the excitement of the deal and the potential and the hype, and they overdo it. You can do that in any business.
There’s a percentage who are excellent people who do an excellent job, and they set reasonable expectations and they operate these things like a business instead of a false cheerleader camp or something. Then there’s a percentage in almost every one that they exaggerate to the point that there’s no other name for it but lying. Don’t get sucked into that.