Does low MLM startup cost = low risk opportunity?
One of the biggest turnoffs of a MLM business opportunity can be an extraordinarily high initial investment cost to new prospects.
Despite still being lower than the initial investment cost of a traditional ‘brick and mortar’ business, due to the nature of MLM many potential leads still find it hard to get around.
Realising this, one of the key marketing factors of a lot of recent MLM companies has been an advertised low entry point for new members. In doing this, one of the key marketing factors in turn becomes the fact that, because the MLM opportunity initial investment is so low, that this equates to little or no risk on behalf of the lead.
Today I’m going to tell you why this is not so.
Let’s take for example the initial investment in a MLM is $10. $10 in the real world can buy you what, a few cups of coffee, maybe a McDonalds meal with change to spare?
In other words, it’s nothing to lose sleep over.
Thus with the initial investment being so low the follow on is that the risk is then also low to prospects looking into the opportunity.
This is where I disagree.
When we’re looking at a business opportunity, beyond the initial investment the most valuable asset you can give to a MLM company is your time.
So keeping that in mind, where does the real risk lie?
The answer is in the MLM company itself.
As an entity, the risk to the investor is always going to lie with the long term viability of a company. If this viability is extremely questionable (as is the case with recruitment driven pyramid schemes or money scams), no matter what the initial cost the risk is always going to be high to those involved.
Why?
Because nobody can guarantee the longevity of the company itself. It might be collapse tomorrow, in a years time or maybe even two. When and if this happens, members are often left with nothing to show for it and have to either cut their losses and move onto something else, or start again with another MLM company.
This is the real risk of low initial investment MLM opportunities (as it is equally with high initial investment opportunities too).
Unfortunately it’s easy to overlook this fact when you’ve got a skilled MLM marketer going about the ridiculously low investment needed to ‘get started’. Think about the time you’re going to have to invest in the company however and whether or not the business model sounds sustainable.
As they say, time is money and once its gone, it’s gone. The last thing you want to wind up doing is dedicating a large chunk of your time and effort into an opportunity bound to collapse on itself.
That my friends, is the real risk when it comes to so called ‘low risk’ low startup cost MLM opportunities.
Come to think of it, MLM’s entry costs are ALREADY quite low, compared to regular businesses or self-employment. A regular business costs tens of thousands to set up. Most true MLMs can be started with only a few hundred dollars (intro kit and all that).
However, the true “cost” of a MLM is disguised because marketing costs are paid by the individual distributors, NOT by the company itself, and very often, the “cost” here is not in terms of money but of time, and “social capital” (i.e. your relationship with friends and family). Then there’s the “training” industry that tries to feed the distributor’s “need” to some sort of “shortcut” to lead generation and other members, and those ain’t free.
Thus the startup cost of a MLM cannot be measured solely in money, and the $10 startup cost sounds catchy, but is completely misleading.
Furthermore, what exactly *do* you get for that $10? Not a thing, apparently.