Written by: Benjamin Mueller
Network Marketing, MLM’s, and Home Businesses, are great ways to generate extra money for the family or a primary stream of income that, over time, can turn into wealth for you and your family. No, it is not a “Get rich quick” “opportunity”, but a legitimate business that takes as much hard work as any business. The good thing here is that you usually have a low investment to get in and you incorporate the concept of residual income.
But, the most important aspect of starting a Network Marketing career is choosing the right company to be in. The following paragraphs will go into great detail about the reasons why people either end up being successful in Network Marketing, or fall by the wayside of the business. There are several factors and my desire is that, by the end of the article, you have a better understanding of why some are successful and what exact factors go into true success in the MLM field.
Residual Income and Product Quality
Residual income is also called passive income and can refer to any income generated through indirect involvement in something. It is the most sought after income in the world because of the indirect involvement. Network Marketing income, Rental income, royalties, website revenues and portfolio dividends are all types of residual or passive income.
It’s easy to understand the idea of residual income if you consider the word residue. A residue refers to something left behind as a result of something else. Think of residual income like this; imagine you had $1,000,000 sitting in a money market account that pays you 3% on that amount. That would equate to $2,500 per month (($1,000,000 x .03) / 12 months). That money is coming in regardless of what you do. Now, imagine you are with a home business that pays you $5,000 per month, which means, effectively, that you have a $2,000,000 asset. The asset (business), is paying you on a month per month basis for work that you have done once in the past.
The whole income structure in Network Marketing and MLM’s is residual. Your business in Network Marketing is made up of customers and business partners. Those business partners bring in other customers and business partners and so on. In a good Network Marketing compensation plan, you get percentages on all the levels of activity (sales). You could have someone that is a customer or business partner that is 10 levels below you and you are getting a percentage of their purchase every month that they order. Therefore, the initial work that you did finding your first business partner is not only paying off every month from that partner’s order, but you are now exposed to everything your first business partner brings in every month. This is the exceptional concept of residual income.
Now, residual income is great as long as there is a product that is a consumable product. For example, let’s look at health supplements. Every month, your customer or business partner is purchasing a month’s supply of their favorite nutritional supplement and using it on a daily basis. Consequently, you are receiving a percentage of the sale every month because they are going through their products.
The product also needs to be of high quality and is not something that is easily substituted. The reason being is that if you are in an MLM that sells cell phones for example, there is a lot of pricing pressure on the cost of the phone because there are so many substitutes on the market. If there is a ton of pricing pressure, there is no way that a company can build in enough of a margin on the product to pay its business partners well enough. If the product is unique and very effective, the market will pay a premium therefore allowing for enough margin for the company to pay a person well enough to continue building their business.
Main Factors To Network Marketing/MLM/Home Business Success & Failure
-High Residual Percentages Close To Your Position. The majority of MLM companies do not have high percentages in the first 3 levels of their pay plan. What ends up happening is that there becomes a “3rd World” make up of the company’s distributors. There are those distributors that started with the company at the beginning and end up having a large percentage of the company’s distributors under them. Because of this, they generate the most income. Because the pay plan does not pay people well enough initially, there becomes a “bath tub drain” occurrence with new people. Each month new people come in, may last a few months, and then quit, while new people come in. The initial business partners with the company always make a profit because the activity below them, but everyone else makes squat which is why they are considered “3rd World Pay Plans”.
This, of course, is why we hear, “Well isn’t that one of those things were the people at the top make all the money”. The true answer to this is “no”, but you can see how someone can get this impression.
What needs to happen is for there to be high percentages within the first 3 levels of a compensation plan so that new distributors get into profit immediately. For example, a very high percentage of companies offer this; 5% 1st level, 5% 2nd level, and 5% 3rd level. In order for a person to even break even in this matrix, they would need 15 people using the products. Most people do not have enough confidence in what they are doing in the first three months to even acquire this many new customers or business partners. Again leading to a person walking away because they are not successful quickly enough.
-High Cost Investment. In our economic conditions today, we cannot expect people to have a huge layout of cash to get into a home business. Time are tight enough and to ask for a “membership” fee, along with product purchases being in the neighborhood of $500-$5,000 to start, is counterproductive. Even if a person is interested in the profession, they may not have the capital layout to be able to even afford the entry fee.
Therefore, there needs to be low investment options with your new company that brings the barrier to entry down to little risk. That range of investment should be $50-$200. With this range, almost anyone that has the entrepreneurial spirit can come in and build a business.
-Binary Compensation Plans. These plans are made up of two legs or sides. You basically are allowed only two people on your front line and do not start getting paid until both sides start getting filled up. So, let’s say you bring in a good business partner that takes off, but your “other side” is not moving, most companies won’t start to pay you until both sides are going. This plays into the whole phenomenon of people leaving the business if they do not make a profit in their first 90 days.
-Net Payout Comparisons. The average Network Marketing company pays out 38% on every dollar that comes into the company. Meaning, all bonuses, residual, and back end pay of a company equates to $.38 going out to distributors for every $1 that comes into the company. The point to this statement is that, when looking for a company to join, a good question to ask is, “What is the NET PAYOUT” of that particular company. Obviously, if all other factors are in line, you want to make sure that the payout is at least above 38% to be higher than the average.
-Quotas. Many MLM companies enforce a quota on a person’s pay check. This means that in order to get paid on a monthly basis, a person has to have a certain amount of activity in their organization and, if not, they either get a reduced check or none at all. This puts a lot of pressure on people specifically those doing this on a part time basis.
What if you were going along receiving $500 checks every month and you started to live within those means, then one month you have a down month and do not make the quota. All of a sudden, your budget is thrown into the wind. In my opinion, this is another reason why Network Marketing can get a bad name as people do experience this type of set up in some companies.
-Front End Bonus Loading. This is where a lot of MLM companies look good initially, but pay poorly over time. Remember, the main reason, from an income standpoint, to be in the business, is for the residual income. If you notice that a company dwells on how high of a bonus you get for signing people up, that is a red flag. Big bonuses are great, but the name of the game is to “work ourselves out of a job”, and that does not happen if I have to continue to enroll people just for a bonus with low residuals on the back end. A good compensation plan is going to have a moderate bonus but then good residual percentages on all levels.
-Attrition Rate. The MAIN problem with MLM companies is that they do not pay enough for momentum to start. Momentum means that once you start your business and start enrolling customers and business partners, that these new people are not leaving as fast as you can bring them in. Momentum has new customers coming in that are satisfied with the product and continue to use them and business partners that are making a profit quickly and continue to build their and your organizations.
Per my calculations over a 7 year period with other companies, you have 90 days to get new business partners into profit. If they are not in profit by then, 95% of them will leave the business. It can become an attrition rate nightmare! Therefore you have to have a pay plan that does not base itself off of large bonuses up front, but a residual plan that pays high in the first three levels. Once you have that, your business partners are able to develop a profit and if they are in profit by day 90, the statistic falls to only 10% leaving the business. Why would a person leave if they have their products paid for and have extra money coming in on top of their expense?
-Confidence, Success Breeds Success. In Network Marketing, it takes a year to develop the skills to be successful in this industry. Therefore, that first year needs to be spent learning the ins and outs of the profession and building the belief of the new partner in regards to the company, products, business model, and specifically themselves.
As a person grows in the business, their confidence increases and their “posture” becomes one of success. Unfortunately, many people do not wait for this transition to happen and they give up. This is another reason why, if you can help your business partner get to profit in the first 90 days that they are more likely to continue to grow and get to a place of full confidence.
Once the business partner is in a good posture, their success starts to help breed more success in their downlines. This is the point where a person turns into a Professional Network Marketer and the big money can start to come into their lives. On average, it may take up to 5 years for this to occur, but those 5 years are well worth the potential payout that is coming.
Unfortunately, most companies do not focus on developing people as much as they should. It is more of a conveyor belt mentality; if the person does not show enough aptitude or promise on their own, the upline moves on quickly to the next person when, if that person had a little direction, they could develop into a very successful Network Marketer.
The bottom line is that success is directly proportional to a person’s confidence and it is in everyone’s best interest to help the new person as much as possible.
-“Want It Yesterday” Society. Unfortunately, we live in a culture that says, “I want it all now!”. So when I say, in the line above, that it may take 5 years to become a professional, those with that thinking immediately block this intelligent option out of their lives. My question is, “Where would you be in 5 years if you didn’t do it?” and, for most, the answer is the same exact place they are now. Therefore, why not put some time and effort into a business like this, that in 5 years, could drastically change your financial life?
We have to get away from this thought process of immediate gratification. It does not fulfill any purpose other than eliminating true growth in all areas of our lives. As we all know, NOTHING comes easy and fast, other than a lottery ticket!
-The Industry That The Company Is In. As discussed before, there are a lot of companies that are in industries where there is a ton of pricing pressure. Some of these include; telecommunications, travel, legal, and others that provide a MLM structure around a product that has barely any margin to begin with. You have almost no chance of becoming wealthy with products like this.
As a variable in the MLM success equation we need to consider those companies that have unique products. Not only do they need to be unique, but also VERY effective in what their intended use is. This way, because the products are doing something for someone that is not found anywhere else, the company can build a margin into the product in order to pay out well enough to distributors of those products.
-MLM Company Failures. From a company viewpoint, there are two reasons why many MLM’s fail; 1) they are greedy and want to keep a high percentage of the profits for the owners which ends up slitting their own throats down the road because distributors make no profit or 2) do not have a unique enough product or are publically traded and do not have enough margin to pay partners which end up leaving the company.
Unfortunately, because of these reasons and several others, 90% of all MLM’s go out of business in their first 10 years. Consequently, Network Marketing as a whole has been given a bad name. People get into the business, work hard, and the company goes belly up or, they come in and within 90 days, are not making enough of a profit and quit, then go and tell everyone they know that it doesn’t work.
So What Company Has All These Traits?
If the list of attributes I listed above makes sense to you, let’s me show you why Life Force International can be the vehicle you are looking for to change, not only your financial and health future, but many more people that you know futures. You may think, “Well of course he is going to present his own company”, but as we look at the data, please notice that a majority of this is based off facts.
-High Residual Percentages Close To Your Position. As mentioned above, the average payout in the first 3 levels of an MLM company is 5% on each level. Some companies are even less. Therefore, how does one expect to get into any profit right away?
With Life Force International, the first 3 levels are 5%, 40%, and 10%, for a total of 55%. This residual payout is absolutely mind blowing. With literally 2-3 people, a person can be in a profit position. The average person brings in 5-10 people in their first month as either customers or business partners. With this payout, and 5-10 people coming in that first month, distributors are in a several hundred dollar profit already. There are many that earn over $1,000 in their first month.
To give you some perspective, with 99% of all other companies reviewed, when you are making $100-$200 in other MLM companies, you would be making $700-$1,000 with the same amount of activity with Life Force International. Again, this is not a biased opinion, but reality. For that reason, why would you go with a company that pays you 86% less? It is like taking a job for $10,000 per year when you could be making $70,000 doing the same exact thing.
-High Cost Investment. Life Force International’s investment is as low as $47.50 and as high as $155 plus shipping. There are 3 levels of entry into the business; Associate 1 ($47.50), Associate 2 ($89), and Associate 3 ($155). There have been many that have come in the lower levels and increase their own investment once it mathematically makes sense to do so (i.e. they would be making more of a profit at a higher level).
Again, in this type of economy, a low investment is paramount and with a large percentage of people looking for extra income, it makes for a “perfect storm” of opportunity”.
-Compressed Compensation Plans. Life Force International’s compensation plan is a “Compressed” plan, meaning that one is not limited to the number of people on their front line and some of these plans can pay into infinity. With Life Force International, you can have as many front line business partners as you want. What this does is make it easier to get into mass income because you are not limited to 2 legs producing all your income.
In all the years of experience in this industry, I have had many, many people come into the business. Some have done very well, some a little, and some none. The great thing is that my income is based off all of these people, not just two of them.
This also debunks the “box you in” concept. Many companies only pay 6 levels deep, so what ends up happening is that if you have someone on your 7th level and they are going like gang busters, you have no income exposure to them. In Life Force International, we get paid to infinity until ranks start to bust it up. This means that you could essentially be paid on your 20th level unless a larger rank starts to emerge, but even if that larger rank emerges, you still have that larger rank in your organization.
Bottom line is that Compressed Plans maximizes a person’s ability to generate income and ultimately, wealth.
-Net Payout Comparisons. As discussed above, the average Net Payout is 38% for a Network Marketing company. With Life Force International, the net payout is a huge 60%, almost double the average. Basically, one has the ability to double their income in half the time with Life Force International.
The two main reasons why Life Force International is able to pay such a high rate of return is; 1) they are privately owned by Wayne and Gerri Hillman which means they do not have income generating pressure from the market and 2) they make ALL products in house which saves in the cost of producing the product. Wayne and Gerri have made Life Force International the most generous MLM company around today.
To see actual comparisons with other major Network Marketing companies, visit our Compensation Plan Comparison page.
-Quotas. Quotas are a big “no, no” in my book. Life Force International has no such thing in their pay plan. If someone is doing this business on a very part time basis, they do not need pressure to make a “quota” every month.
This is NOT what Network Marketing should or is about. It is not about pressuring people into doing things, it is about teaching and informing people that there is a better way in life through the business and products and quotas just promote a high pressure environment.
-Front End Bonus Loading. All companies have bonuses on the front end and the bonuses are a good aspect as they provide immediate cash flow for the new person. But, if a company bases the majority of a person’s income ability mainly off of bonuses, we are getting away from the whole residual aspect that makes this industry so attractive.
Life Force International has a very high “Fast Start Bonus” that pays people 55% on the first activity of a new customer or business partner. This allows a person to generate the total of the first 3 levels of the compensation plan with one sale, but then rewards them with the high residuals for any repeat business. Life Force International’s compensation plan is evenly weighed meaning the bonus is good, but not overly high and also great residual pay.
-Attrition Rate. Again, the main obstacle in Network Marketing is attrition rate. If one can solve this issue in the MLM industry, the rate of success sky rockets. Life Force International has a very high rate of stability throughout the company, both with customers and business partners. Per my calculations, nearly 70% of business partners stay with the company for long term, which makes it a heck of a lot easier to build momentum.
Another aspect that is not talked about enough is the percentage breakout of customers to business partners. In Life Force International, 70% of the people using the products are just customers, and only 30% are business partners. This suggests that there is a very strong product base. Many MLM companies have quite the opposite, suggesting that the whole business is based from a business aspect which never lasts over time.
-Confidence, Success Breeds Success. The main competitive advantage that Life Force International has in this area is the involvement of one’s upline in the new person’s success.
The training, involvement, and overall support is second to none. The Crown Diamonds (highest members in the company), are still very much involved in developing everyone, even if a person is several levels below them. Basically, when a new person comes into the business, they are taken by the hand and lead through the training until they feel comfortable enough to walk. With other companies, the new business partner is given a website and few instructions and is then expected to go out and “make it”. This is not a recipe for success.
-The Industry That The Company Is In. As discussed in length above, we need to have a unique product that allows for enough margin to be built into the price to pay distributors well. Life Force International is just that. The Company has an array of Whole Food Supplements that are packed with the nutrition our bodies are lacking plus have an innate ability to produce results. Not only are they unique, but consumable.
The other part of this is that the products need to be part of a growth industry. The Wellness Industry is one of the fastest growing industries in the world today. A major reason for this is that the Baby Boomers are getting to the age that they want to feel good naturally without popping a handful of pills to make it through the day. To get much more detail about this industry, please visit our Wellness Industry-Best Industry for MLM Growth page.
-MLM Company Failures. Remember the statistic that 90% of MLM’s fail within 10 years? Life Force International has been around since 1984 and is completely financially stable with no debt on the books. Hence, your risk of working hard and the company falling out of good graces, is little to none.
As you can see, from a comparable standpoint, Life Force International is the best Network Marketing, MLM, Home Business company you could choose. These attributes and compensation plans that have been compared come from a quantitative approach and allow us to compare apples to apples.
To learn even more about this rock solid company, Life Force International, please visit our “Opportunity” section of The Balance You Need website. You can also view a 25 minute presentation on the company, products, and business here.
Finally, if you would like to join a team of seasoned professionals in Life Force International, visit our Join Now page. The combined experience of this group is huge with our top level generating the highest income in the company.
We sincerely hope that this opened a door for you into the world of owning your own business. Remember, no action means no change.
The choice is always yours!
The Balance You Need Team
Health Disclaimer: These statements have not been evaluated by the FDA. The statements and products are not intended to diagnose, cure, prevent or treat any diseases.
Income Disclaimer: This article does not guarantee that you will make a large income in Life Force International. The article is written to show you that it is possible if you put in the hard work. The company is set up to help new people truly change their lives, but with so many variables outside the control of the company, we can never guarantee an income stream.