MikeKey.com

It was Wednesday morning, and I had dropped JorDanee off and had decided to get gas. So I pulled into the local Wawa, and it was busy that morning with folks at every pump. I got out an proceeded to pump my gas, my thoughts on business strategies, when a young man on the other side of the pump peaks over and says to me:

“Wow, nice Audi, what kind of gas mileage does that thing get?”

“I manage to get about 21-22 city and 27 highway” I said

“Awesome man!” he replied unusually enthusiastic.

“Hey, I saw your license plate, can I ask what you do?”

Then it hit me, this guy is an IBO, and I was suddenly leery of whatever sales pitch he would throw at me.

However, I was pretty candid in my response. “I enjoy life on a daily basis, but if you mean what do I do for an income, I own a web based business and help other companies improve their online presence. I also write a blog where I discuses entrepreneurship and lifestyle.”

“Oh wow, good deal man. I’m actually working with a business team out of Raleigh, North Carolina, helping folks develop web based businesses. We’re actually looking for some sharp folks like yourself who are looking to earn some extra income. Do you keep your options open?”

“Do I keep my options open? Yes. Do I keep them open for multi-level marketing? No.” I replied.

With that note, I finished pumping my gas and got into my car. He looked a little stunned with my response. Perhaps it was the fact that I had readily identified his pitch. Perhaps I was a little rude, but the number of times I get approached by people involved in an MLM is annoying.

If you have fallen victim for this ploy, chances are you gave your phone number to an IBO. He’ll most likely call you within 1 to 2 days to setup a time to do an in-person meeting. The entire point of this quick meeting is to gauge your interest in coming to see his business plan. He will ask if you are interested in making an extra two to three thousand dollars, and who wouldn’t? If you say yes, then chances are you are going to an open meeting where some guy will speak  to you about how to make money while drawing circles on a white board. If this has happened to you recently, do not return the phone calls of these people.

Since I was actually in a form of multi-level marketing for a couple of years, I’ll give you my perspective on the subject, and my warning. You see, I was in Quixtar (aka Amway, same company). And to be honest, it’s not 100% a scam. There are a lot of really decent and honest people in these systems, and it is slightly possibly to make money in them, about as possible as you winning the lottery.

The problem is, most people in Quixtar are going just short of broke. If you attend one of these business meetings you’ll be presented with a display of just how easy it is to get setup in business for yourself and to start making money. They’ll draw some circles to show you how fast you can be a millionaire. They tell you all you have to do is get 6 people under you and then you’ll be rich. They probably even give you a book called Rich Dad, Poor Dad (Which by the way,  Mr. Kiyosaki was sponsored by Amway to write that book.)

But there is a BIG FAT SCAM right in the middle of this whole “Business System” that you won’t see at first. Most people don’t realize there are two businesses at work here. Quixtar is just the same as say Avon for example. YES, you can make money in Quixtar and some people do. If you sell products, you get a portion of those sales. If you sign up other IBO’s, you will get a portion of their sales. Quixtar itself is not a pyramid scam. Pyramids are outlawed by the federal government and Quixtar is a valid, privately held corporation that does billions in sales annually.

The REAL SCAM and the scam that Quixtar itself turns a blind eye to on a regular basis is the training systems. You see, to become an IBO you have to be registered by another IBO, called your “upline”. Once registered you can sign up all of your friends and anyone else you’d like. The people under you are called your “downline”. Now generally once registered you’ll be a part of some business team. You could always go rogue, but I doubt many people ever do that or know that they can. Besides, it’s the team that is providing all the training you are going to receive to run your business successfully.

Once you join up and start going to these weekly meetings you will be reminded over and over again how important it is to cut off negative associations and to listen to the CDs promoted by the training system.You’ll be encouraged and reminded over and over again that you need this training to be successful in business. According to them, you can’t succeed in your Quixtar business without listening to their CDs, without attending their seminars and 3 day conferences. You will also be told to buy books from their system and sign up for over-priced web hosting, voice-mail and a half dozen other useless services you could get elsewhere for free.

However, the money spent on this per month still seems trivial to the average cost spent on getting a traditional business off the ground. Most IBO’s never realize how much money they are actually spending in comparison to how much they actually make in Quixtar because the money invested is so low. Until you start to add up the money spent over the course of a year do you begin to see the real damage being done. The average IBO is typically in the red.

Let’s do the math, from my experience.

It cost $151.00 dollars to register, and I also had to buy my 100PV (Point Value of products purchased from Quixtar to get paid) which was $175.00. I was also signed up on the book/CD program which was $60.00 a month.

The very first month I had spent a total of $368.00 (Not counting the open meetings).

Each Tuesday I was suppose to come attend a weekly meeting, it cost $4.00 dollars to attend.

$4 x 52 weeks = $208 (If an important speaker came out, I had to pay $6).

Now lets add up 11 months of 100PV and 11 months of the books/CDs.

$175 x 11 = $1925.00

$60 x 11=$660.00

Then there was the 4 major conferences every year at $110 dollars a ticket  which equals $440.00 a year.

So far that’s $3619.00. I haven’t even included how much money was spent on gas and food.

Do you see where this is going yet? If your Quixtar business doesn’t earn you over $4000 dollars a year, guess what? You are broke and foolish. YOU MIGHT AS WELL DO THIS WITH YOUR MONEY:

The problem here is that the whole system is promoted like it is the most cost-effective way to do business. The truth is, it isn’t. You will be spending more money a year running your Quixtar Business than you are likely to ever make. Check Quixtar’s own stats. Most of their IBOs never make more than $100.00 a year.

Thinking about quitting then? You will be brainwashed to believe the people who fail or quit the system are weak and don’t want their freedom from the 9-5 bad enough.

BULL CRAP. I have watched good people in this system work and work and destroy their own marriages because they were working this broken business model as hard as they could, and today, they still aren’t free. They still work a JOB and pour that money into Quixtar, believing that someday doing the same thing over and over again will actually work.

So where is all this money coming from that these Kingpins, the Diamonds of Quixtar, are always talking about? Well it’s not Quixtar, because they limit how much you can make. You can only ever make $32,000 dollars from Quixtar. The real money-maker is the books, CDs, and conferences. That is where all the real money is that THEY are making off of you. I would attend a conference with a stadium of thousands of IBOs and listen to a fat man on stage tell me he put the whole event on just to make me successful. Bullcrap. How do you think a concert works? What’s $110 x 5,000 IBO’s. Answer: $550,000 dollars. More than enough money to bankroll production and have lots left over.

The  real kicker though was the local business meetings. I took it upon myself to find out how much money it cost to rent out the space they where using. I don’t want to get anyone in trouble, but by my estimation at $4 a head with about 500 IBOs in Va Beach, they where raking in $800 dollars every Tuesday after expenses. Whose pocket did that end up in?

You see, it’s not Quixtar, it is the training systems that are the real scam. I figured this out early on, but I, like many other people, stuck around because I believed in the other things they promoted. Things like helping people get free, living better lives, and fixing broken marriages, etc. I saw the business have a positive impact on the lives of people. Truly, at each conference I went to, I saw people give their lives by the hundreds to Jesus Christ.

While all of that is good and dandy, it is deceptive as well. The truth about the real money is never openly disclosed. Most people never truly succeed at this business, and I suspect most are going broke. A quick Google search will show you thousands of blogs and posts about people claiming it is a cult or scam. Most are angry victims who didn’t have a clue.

Be warned! Multi-Level-Marketing has its ups and downs. I quit the business, not because I’m weak, but because my heart was no longer in it. I still have a passion to see people succeed and achieve and break from the template lifestyle. That is the reason and purpose behind this whole blog.

I’m not denying that you can make money in an MLM, but I am highlighting what I think is an often glazed over and sweep under the rug.: the reality of how “successful” the business model really is.

(I would love to hear your thoughts on the matter below in the comments. I will allow all comments so long as you are not directly insulting me or another person. )