What do people in MLM use to assess the business opportunity financially?

Being that all MLMers tell you its a business, I am wondering what business principals are used to assess the opportunity from a financial point of view.





For instance, last year I bought an apartment building and my investigation of whether it was a good financial opportunity consisted of looking at the gross and net incomes for the prior 3 years (verifying income and expenses) , looking at the market rents and occupancy rates, and calculating the average sales prices (on a per unit base) over the past 6-12 months within a 1 mile radius. All that information was used in my financial assessment of the deal and to help me decide whether it was worthwhile.





Looking at financial statements is key in buying any business, but I have never heard of this in MLM. Other than statements made at a meeting or from their sponsor, what financial criteria is being used to decide whether the MLM "business opportunity" makes sense financially and is it ever verified?

What do people in MLM use to assess the business opportunity financially?
MLM's make 90% of their money through turn-over. Constantly repeating a cycle of recruiting, training, selling and quitting.





Most people will join, sell what they can to friends and family, then quit.





It's only an opportunity for those willing to recruit and train. Problem is, once you realize you are selling overpriced crap to your friends and family, most people won't be able to recruit anyone if they don't believe in the product they are selling.





Bottom line, MLM's are tough for most people to make any real money at, unless you stick through it long enough to recruit lots of people below you, where you make money on their sales.





And of course no one wants to show you their books or really look at hard figures, because it's all pie in the sky.
Reply:Interesting. Compensation plan, that sounds like you are working for someone else, not running your own business. All that is is commissioned sales. Report Abuse

Reply:Have you ever heard of a compensation plan?


I looked at the gross and net incomes for the prior 3 years, incomes were verified, I looked at the market trends, I calculated the income on each unit I sell, within a world wide radius. I then factored in the fast start bonus, the matching bonus, advancement bonuses, which are all factored in whether I only sell product myself, or whether I take advantage of the duplication system and sponsor people into my organization so that they have the same opportunity I do.





I then decided it was more than worthwhile.





You are comparing apples to oranges here when you say you look at financial statements to purchase an apartment block. There is no correlation whatsoever.





I'm not sure where you get this that we are all idiots who take the word of our sponsor over facts. Newsflash! I am educated. I am able to look at what the company's compensation plan has to offer and make an educated decision. I don't know which company you were with, but Wow! I'm glad I wasn't involved with one that expects everyone to be sheep and only listen to your sponsor.





I think that went out with Noah and his Ark!

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