Thanks to Lou Abbott founding editor of this site for this excellent video “Would You Ever Join A Start-up MLM Company?”
We’ve been warning people for years not to join prelaunches or startups, but have not had the stats to back up our claims. In our article ‘The Wizard Of Odds’, we cited the accepted industry failure rate of 90% in the first year, followed by another 90% failure rate in the second year. The chances of a prelaunch company seeing its second birthday is about 1%.
Lou has gone a dozen steps farther by gathering some powerful information from the Direct Sellers Association and Direct Selling News. Here are some points he makes in his video:
- The number one fallacy is that you have to get in early. It’s true for pyramids, but not for legitimate MLM companies.
- In the US in 2008, sales by MLM companies were $30 billion. Worldwide in over 100 countries, sales were $114 billion.
- At any time, there are 2000 or more MLM companies in operation. How do you choose?
- Tens of thousands of MLM companies have come and gone in the past 60 years.
- Only 65 companies in the World, and only 44 companies in the US have ever reached $100 million in sales.
- Many startups claim they will be the next billion dollar company, but in 60 years, only 11 companies have ever reached $1 billion in sales.
- Many of the $100 million and $1 billion companies are now out of business.
- Perhaps 50000 companies have come and gone, but let’s be conservative and say 10000.
- We are looking for long term leveraged residual income. That’s quality, generational income.
- What are your chances of reaching your goals if your only criterion is to get in early?
If we consider a $100 million company still in business to be successful, and if only 65 of 10000 companies have ever attained that, we have just a 0.65% chance of picking a winner based on getting in early.
Lou warns, “There’s a 99% chance you will fail. Do you like those odds?”
How about picking the next Billion Dollar Company? The odds are 11/10000 or about 0.1% That’s a 99.9% chance of failure.
Lou recommends, “Do your due diligence carefully. Choosing the wrong company can cost you time, money, reputation, friends, and worse, your dreams. If a company goes down, it doesn’t matter how good you are.”
We say that if you are in the wrong vehicle, it doesn’t matter how well you drive.
So don’t join a company with less than five years of consistent respectable growth. For your due diligence, Lou recommends his 12 Critical Success Factors.
Dabbling is dangerous. Take the choosing process very seriously. You need more and better criteria than just getting in early. We recommend making sure that your company of choice has The Five Pillars. All of them.
Protect yourself and your family. You can start making an educated decision by reading the free report ‘Big MLM Lies.’