MLM Secret, a Compensation Plan Review

The chance is that if you've been around this planet for more than 18 years, you've been approached by people who had the "absolute opportunity of a lifetime!" Yes, I'm talking about a Home Based Businesses.

My name is Richard van Beek, I've been in the MLM business for a while, and I've seen a lot of good people with good motivations get squashed by this industry. If you're anything like most people in Network Marketing, you have spent a lot of time, money, and energy trying to get your business going.

Most distributors get involved in the MLM industry because they think it's going to be a piece of cake to earn a ton of money. They hear things like "oh, you don't have to talk to strangers...in fact, you don't have to talk at all! You just have to find 3 motivated people, and they can be people you already know! Just give them a DVD and a sample, and they will just walk right into business with you". This is one of the big reasons that many people fail with mlm.

But what happens when you go tell a friend or family member that they can make tons of money with your business? Their first question will likely be "how much money have you made with this business?" And unless you have made a ton of money, you will have to honestly answer "not very much". Then, your credibility is shot, your prospect tells you to take a hike, and you're left holding your free sample and your DVD, wondering what went wrong. You might be an expert in your comp plan, your opportunity, and even your product... but have you been trained to be an expert in marketing?

People buy expertise and leadership, and so do companies, even MLM companies. These leaders will then teach you to make lists, chase your friends and family, and do those silly 3-way calls to up-lines because it helps you help them to grow their business quickly. They know the 'average' person has no business even being in business, and no experience to make it work.

Do you ever wonder why those compensation plans for your business are so complicated? The concept of breakage is used by tons of different businesses to extend their profitability, but it's risky, and it's complicated, so it requires some real thought and preparation. To understand your MLM or home-based businesses compensation plans and why they pay that way, it might be easier to look at other industries that use breakage.

What would happen if suddenly everyone in a risk category started living much shorter than the actuaries had calculated? The insurance companies would go broke! Fortunately for all of us, that doesn't happen very often, but it caused major problems after hurricanes. Insurance companies weren't prepared, by any stretch, for that kind of payout in that short of timeframe.

Your MLM compensation is set up the same way. The reason they are so complicated is to protect the profitability of the company. If everyone started going to the top, if the success rate suddenly went up by even 20%, twice as many MLM companies would go broke over night.

In conclusion, I like MLM very much and I do market a company, but what I like most is business where you get paid directly for your efforts. The compensation plans are really simple and understandable and for most of all much higher in commissions than all the MLM-companies. If there is even a matching override bonus into the plan, now that's what it's best.